Texas public power utilities take action to help customers financially
March 8, 2021
by Paul Ciampoli
APPA News Director
March 8, 2021
Texas public power utilities are taking a number of actions to help protect customers financially in the wake of the Electric Reliability Council of Texas (ERCOT) last month entering emergency conditions and initiating rotating outages in the state in the wake of an arctic blast.
The Austin, Texas City Council on March 4 approved $10 million in emergency bill relief for customers experiencing financial difficulty as a result of Winter Storm Uri or COVID-19.
The approved funding is effective immediately and is made possible through a combination of rate reductions, utility bill credits and a funding infusion to the “Plus 1-Customer Assistance Program” from Austin Water and Austin Energy.
The Plus 1–Customer Assistance Program, which increased funding levels in April 2020, on March 4 received an additional $5 million funding infusion from Austin Water and $5 million from Austin Energy.
It has helped nearly 16,000 individual households and provided more than $11.7 million in assistance to Austinites experiencing financial difficulty due to COVID-19, serious illness, recent job loss or other emergencies.
The Austin City Council also approved a series of measures designed to avoid high utility bills as a result of last month’s extreme freezing temperatures.
Meanwhile, San Antonio-based CPS Energy on March 5 said that it is continuing to fight for customers to keep their bills affordable while pursuing prudent business practices that ensure the utility and San Antonio remain financially stable and strong.
CPS Energy will begin releasing February 2021 bills on March 8, 2021, it noted.
CPS Energy said it is currently assessing the validity of the additional fuel and purchased power costs from the winter storm and is currently not passing them through to customers.
As a precaution, CPS Energy officials suspended billing for customers on February 19 to confirm that energy bills did not include any rate changes or fuel adjustment costs related to the historic winter storm, and to ensure that billed usage is based on actual meter reads and not estimations. “That important step has been completed; February bills do not include any additional exorbitant fuel or purchased power charges from the winter storm,” the utility noted.
Additionally, CPS Energy is also reviewing the accounts of customers who were most impacted by the February 2021 extreme winter storm and expects to provide helpful credits in those cases. The company’s credit plan will be announced in the next 30 to 45 days.
Electronic and paper bills began to be released on March 8. Depending on a customer’s billing cycle, it could take until Saturday, March 13, 2021 for a customer’s delayed bill to be sent.
As a result, customers may receive their February bill close to their March bill. CPS Energy said its energy advisors were standing by to work with all customers to discuss their bills and to assist with helpful payment arrangements. Additionally, no late fees will be charged to customers for their February bills or in the case of a customer being on a payment plan.
CPS Energy noted that the suspension of energy disconnections announced in March 2020 is still in effect and late fees are waived on unpaid balances for customers who participate in a payment plan.
Meanwhile, the Residential Energy Assistance Partnership (REAP), a partnership of CPS Energy, the City of San Antonio and Bexar County, provides energy bill assistance twice a year to those in need, CPS Energy said.
And the utility’s new Energy Angels program fills a need not currently met by REAP. The Energy Angels program allows an individual to give the gift of energy to a specific individual or business account. This financial gift is not tax deductible, but the recipient is not required to meet an income-qualifying threshold. The gift will appear on the recipient’s bill as a credit to their account.
To help customers during the COVID-19 pandemic and winter storm disaster, CPS Energy is actively making phone calls to customers to share bill assistance and REAP information with them.
Bryan Texas Utilities
On March 3, Bryan Texas Utilities (BTU) said that it was continuing to monitor the financial issues and discussions surrounding the recent historic winter weather event as it affected the energy market.
“While there are financial settlements still to be resolved in ERCOT and the situation changes daily, BTU expects no changes to customer rates. The Bryan City Council, BTU Board and staff will work diligently to ensure rates are kept as reasonable and predictable as possible,” the public power utility said.
In order to maintain strong financial stability, the Greeneville Electric Utility System (GEUS) Board of Trustees will consider securing short-term financing, GEUS said on March 5. A public hearing will be held to discuss this matter on March 11.
Short-term funding will provide GEUS with the ability to pay the increased energy costs for the month of February while continuing to manage the financial health of the utility, it noted.
“At this time, the costs of this event are being absorbed by GEUS,” said GEUS Board of Trustees Chair Sue Ann Harting.
GEUS said that “there are many questions about the legitimacy and even legality of some costs that were incurred during this event. We will continue to monitor the developments affecting pricing as financial settlements are resolved and will diligently work to ensure no unfair costs are passed on to GEUS customers.”
City of Georgetown
The City of Georgetown, Texas, on March 5 said it plans to issue $47.8 million in a 10-year bond to pay for energy used during February’s winter storm. The City Council in a March 2 meeting directed staff to pay the debt over 10 years from electric utility revenues at current rates.
“Even as we got word on the exorbitant cost of energy while we were in the middle of the disaster, there was never a question of whether we would not keep the power on as much as we could,” Mayor Josh Schroeder said. “Our focus was delivering electricity to our customers and controlling the variables we could. Another variable we have some control over is the burden placed on Georgetown electric customers as a result of this event, and the steps we took Tuesday will mitigate additional costs for our customers,” he said in a statement.
As a result of the planned bond issuance, Georgetown electric customers will see no difference in their electric rates, despite the high energy costs during the storm.
The city’s bill currently is due at the beginning of April. However, what the city owes continues to change as electric generators and providers, Public Utility Commission of Texas (PUCT), and legislators evaluate the financial situation and weigh options, it said. Any changes to rates or the bond needed because of an amended bill will be brought before the council for discussion and direction.
At the direction of the city council, the city plans to use the existing power cost adjustment (PCA) of $0.01375 per kilowatt hour to help cover the cost of the bond as it is paid back over 10 years. The PCA was on track to be eliminated in 2022 due to the end of a purchased power contract. The current PCA generates about $6 million a year, which would cover the additional, annual debt payment of $5.4 million from the 10-year bond.
The city also is pursuing a surety policy to cover an additional $6.4 million in reserves, which will be required to maintain debt service coverage ratios after the costs from the winter storm. The one-time, up-front payment (expected to be in the hundreds of thousands of dollars) for the policy will be paid for using existing revenues.
Georgetown said that customers might see higher-than-normal electric bills for February due to increased usage. Even with the mandated power outages from ERCOT, heating and reheating of a home consumes considerable energy and is likely to result in higher bills this month, it noted.
The city “has multiple options to help you pay your electric bill, such as funding assistance through partner agencies and in-house customer programs you may qualify for,” it noted.
On March 11, Schroeder, City Manager David Morgan and electric general manager Daniel Bethapudi will participate in a presentation and live question and answer about the electric costs facing the City of Georgetown as a result of February’s winter storm.
ERCOT board dismisses CEO in wake of power outages
In other news, the Board of Directors of ERCOT on March 3 voted to dismiss ERCOT President and CEO Bill Magness in the wake of rotating outages implemented by ERCOT after an arctic blast hit the state last month.
“The ERCOT Board of Directors met this evening and directed the Corporate Secretary to exercise the 60 days’ termination notice to ERCOT President and CEO Bill Magness pursuant to the employment agreement with ERCOT,” ERCOT’s Board of Directors said in a March 3 statement.
“During this transition period, Bill will continue to serve as President and CEO and work with state leaders and regulators on potential reforms to ERCOT. The ERCOT Board is expected to begin an immediate search for a new President and CEO, and will continue to discuss the transition plan at future meetings during this time period,” the board said.
DeAnn Walker on March 1 resigned as chairwoman of the Public Utilities Commission of Texas, days after she faced questions from state lawmakers at a hearing that examined rotating outages implemented by ERCOT in the wake of an arctic blast.
On Feb. 25, Walker appeared before a hearing held by the Texas Senate’s Committee on Business and Commerce. Magness also participated in the hearing.
TMPA’s Bob Kahn selected to serve on ERCOT’s board
Bob Kahn, general manager of the Texas Municipal Power Agency, has been selected to serve on the board of ERCOT, the Austin American Statesman reported on March 7.
Kahn served as President and CEO of ERCOT from July 2007 to November 2009.
Kahn was an ERCOT board member from 2002 to 2006 and was also the deputy general manager at Austin Energy.
PUCT votes to claw back ERCOT ancillary services payments made to generators
Meanwhile, the PUCT on March 3 voted to “claw back” ERCOT payments made to generators for a special category of power reserves they failed to deliver.
Known as ancillary services, the electricity reserves are contracted in advance to help ERCOT support the transmission of energy to users while maintaining reliable operation.
The PUCT situation was brought to the PUC’s attention by ERCOT’s Independent Market Monitor? who identified a number of instances between Feb. 14 and 19, in which ancillary services were not provided in real time because of forced outages or decreases in the available capacity of electric generating units.
While ERCOT operators would traditionally note the ancillary services’ “failure to provide” so that payments would not be made, the pace of activity surrounding the grid event caused this function to be overlooked, the PUCT said. As a result, the ERCOT payments must be returned.
U.S. House subcommittee launches probe of ERCOT’s role in Texas power crisis
On March 3, U.S. Rep. Ro Khanna, D-Calif., and Chairman of the House Subcommittee on the Environment, sent a letter to Magness, seeking information and documents “regarding the lack of preparation” by ERCOT for the recent winter storm. The subcommittee is also seeking information regarding ERCOT’s response to the winter storm and its preparedness for future storms.
“Extreme winter weather events in Texas have occurred repeatedly over decades and ERCOT has been unprepared for them,” wrote Khanna.
“ERCOT’s own consultant has predicted that such extreme winter weather events will continue to occur every decade. The subcommittee is concerned that the loss of electric reliability, and the resulting human suffering, deaths, and economic costs, will happen again unless ERCOT and the State of Texas confront the predicted increase in extreme weather events with adequate preparation and appropriate infrastructure,” the lawmaker said.
U.S. House Energy and Commerce Committee Chairman, others seek answers from ERCOT
Meanwhile, House Energy and Commerce Committee Chairman Frank Pallone, Jr., D-N.J., Energy Subcommittee Chairman Bobby L. Rush, D-Ill., Oversight and Investigations Subcommittee Chair Diana DeGette, D-Colo., Rep. Marc Veasey, D-Texas, and Rep. Lizzie Fletcher, D-Texas wrote to Magness on March 4 to inquire about ERCOT’s role in preparing for and responding to the recent extreme weather event.
“The ongoing crisis raises significant questions regarding Texas’ grid resilience and regulatory regime, and ERCOT’s stewardship of the grid prior to and during this crisis,” the lawmakers wrote. “According to reports, ERCOT was aware of the possibility of a significant winter weather event as early as Tuesday, February 9, 2021, but may not have appreciated the seriousness of the event or its possible implications.”
The lawmakers stressed in their letter that more must be done to protect communities disproportionately impacted by winter power outages.
They pointed to a 2011 report from the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) that made a number of recommendations for the electric and natural gas industries intended to help prevent blackouts and natural gas curtailments after another major storm event that year.
“Several of these recommendations were directed at ERCOT, but it is unclear the extent to which ERCOT implemented any of these recommendations,” the lawmakers said. “With extreme weather events becoming more frequent due to climate change, it is critical that ERCOT and Texas apply lessons from earlier emergency events in order to increase the strength and resiliency of the grid and prevent future blackouts.”
The lawmakers requested a briefing and information regarding the outages, including:
- To what extent were winterization or other preparation efforts made in advance of the extreme weather event that began on February 14 and were any recommendations from the 2011 report by FERC and NERC implemented?
- What protocols did ERCOT have in place to notify the public of the extreme weather event and associated power disruptions?
- Describe the process for implementing outages and address reports indicating that the loss of power to gas production facilities in the Permian Basin was a major problem that contributed to the broad and long-lasting blackout throughout much of Texas.
- Would increased connection with the Eastern and Western Interconnections in the United States have allowed Texas to import more power to alleviate the electricity shortages experienced within the state?
- Explain if scarcity pricing worked as intended during this extreme weather event and why, in many cases, generators were physically unable to provide power but customers ended up with utility bills in the thousands of dollars.