Business News: Financial crisis in Texas electricity sector intensifies as more costs surface.
The Texas electricity industry is facing “insurmountable difficulties” as more gas and utility bills have to be paid, energy industry officials said Thursday in a hearing on the financial impact of the February blackout in the state.
Prices soar for emergency fuels and companies with an energy load that sell, transmit and generate electricity in the state with about $ 47 billion in storm-related costs. Those costs led to the bankruptcy and bankruptcy of two retailers in the state.
Citizens who face bills for broken water pipes and food leaks will see higher prices if costs are passed on through rate hikes or not choice in suppliers, officials said. Future spending on weather protection and grid interconnection could add billions of dollars to the recovery. San Antonio City Corporation anticipates approximately $ 1 billion in additional costs.
“The market is facing a financial crisis and it is a very serious financial crisis,” Catherine Webking, executive director of an industry lobbying group, told state lawmakers at a hearing in Austin on Thursday. “You will see more and more insurmountable financial difficulties,” as natural gas bills and financial guarantees arrive in the coming weeks, he testified.
Vistra Corp., one of the largest utilities in Texas, predicts that buying natural gas at high prices triggered by the storm and selling energy at fixed prices will reduce its profits by between $ 900 million and $ 1.3 billion, vice president Vistra senior Bill Quinn testified.
Vistra’s power plants operated between 20% and 30% below capacity due to a lack of natural gas, Quinn said. “Providing gas to them has been a challenge,” he said, noting that all four of the company’s gas suppliers have been unable to meet their fuel commitments.
On Wednesday, the Electric Reliability Council of Texas (ERCOT) grid operator revealed that 12 energy companies and two municipal utilities were $ 2.21 billion overdue for energy and services in February.
Part of the deficit was covered by tapping the internal network accounts, but the rest will eventually be passed on to all network users, straining those who covered their initial bills, an official said.
ERCOT has little means to cover up the allegations, said Kenan Ogelman, network vice president for commercial operations. Collects money from payment providers and generators, usually in four days. Texas may need to consider providing financial support during future emergencies, he said in response to a question.
“This event showed some consideration for a networking tool,” Ogelman said. Multi-billion dollar service charges have led to warranty claims in addition to fuel bills. The short period to pay both of them led to “cascading worries,” he said.
The decision to keep power rates high to keep power plants running even after the emergency passed was management’s judgment, he said. “In retrospect, it would seem that it wasn’t necessary. In real time it seemed like it was needed, ”Ogelman said.
The State Utilities Commission (PUC) on Friday is expected to vote on a proposal to recover some charges for standby power and other services that were not provided. It could save network users about $ 1.5 billion, Carrie Bivens, an independent market advisor to the state, told the PUC on Thursday. He previously estimated that the storm would raise state-level energy costs by $ 47 billion. (Reporting by Gary McWilliams; Editing by David Gregorio)