Public Utility Commission appeals winter storm pricing ruling to Texas Supreme Court

AUSTIN — The Texas commission that regulates the state’s power grid has appealed a court ruling to the Texas Supreme Court that has the potential to upend billions of dollars spent and made on energy during the deadly 2021 winter storm.

The appeal from the Public Utility Commission was expected but notable for indicating that the regulator of the state’s self-contained electricity grid intends to fight on behalf of companies that made billions selling electricity while nearly half of Texas was plunged in darkness.

The Texas 3rd Court of Appeals made a blockbuster ruling on March 17 that opened the door for so-called repricing — an effort to change the cost of electricity sold during the disastrous winter freeze that killed more than 200 people.

That court ruled the PUC exceeded its authority by pegging the electricity price at an artificial cap and keeping the price there long after power began to be restored to Texans.

The state’s independent market monitor for the Texas electric grid has said the PUC order cost Texans $16 billion in overcharges. Sky high electricity and natural gas prices during the storm sent several power providers into steep debt and has led to numerous bankruptcies and lawsuits.

The appeal headed to the Texas Supreme Court is in a case filed by a subsidiary of Irving-based Vistra Energy. Power provider Calpine has already signaled its wishes to participate in the suit, and several other electric companies likely will follow their lead in the high-stakes legal battle.

“Given the magnitude of issues that are on the table, it’s absolutely expected that this will be appealed to the Supreme Court,” said attorney Michael Jewell, who represented a wind energy company that intervened in the 3rd Court of Appeals.

The possibility of forcing the PUC and the grid’s operator ERCOT to reset the prices of electricity bought and sold more than two years ago recalls efforts from Lt. Gov. Dan Patrick to achieve something similar through legislation during 2021′s legislative session that ultimately died in the House.

Patrick had declared a victory of sorts after the 3rd Court of Appeals issued the ruling, issuing a statement that he, “couldn’t be more pleased.”

“We were right,” Patrick said. “Texas electric utility customers got the short end of the stick.”

In a statement Tuesday, Patrick said he continues to support repricing.

“I thought the PUC was wrong in setting prices at the highest level in 2021 and nothing has changed my mind,” Patrick’s statement said. “The PUC has a right to appeal, but I still believe there should have been a roll back in pricing.”

A PUC spokeswoman declined to comment on the appeal, citing a department policy against commenting on pending litigation.

The PUC voted to appeal the ruling on March 23 and is seeking to reinstate two orders that set the price of electricity at $9,000 per megawatt-hour during the storm, a price hundreds of times greater than typical electricity prices.

In a legal petition filed last week, the grid regulator said the appeals court injected its opinion into the state’s electric code, which outlines how Texas’ electricity market functions. The brief states that the court’s interpretation that competitive pricing trumps grid reliability was wrong.

“For good reason: courts are not institutionally suited to determine — sometimes years after the fact — whether a certain policy would actually have had the ‘least impact’ on competition,” the PUC’s attorneys wrote.

The effect on Texans’ electric bills is unclear. Several power providers have raised consumer prices as a result of the storm, and Texans will be on the hook for an estimated $7 billion in government-backed debt issued to soften the blow of the spike in electric prices during the storm.

While a ruling favorable to Vistra at the Texas Supreme Court would likely lead to changes in electric prices, it does nothing for natural gas prices, which also spiked during the winter storm. Efforts had been underway to use a portion of the state’s budget surplus to pay off $3.9 billion in natural gas utility debt, but that provision was recently stripped from the spending bill under review in the House.