Lt. Governor Dan Patrick led the State Senate Monday, March 15, to quickly pass a bill with bipartisan support that would order the Public Utility Commission to reverse billions of dollars in overcharges by ERCOT for electricity on the wholesale market during last month’s power outages.
But House Speaker Dade Phelan announced in a statement Tuesday, March 16, that he opposes the bill calling such a move an “extraordinary government intervention into the free market.”
In Dallas Wednesday, March 17, CBS 11 asked Governor Abbott specifically if he supports the Senate bill or Phelan’s position.
The Governor said, “I already made multiple comments on that, and I’ll just leave those comments. You can pull them up.”
Governor Abbott considers the issue an emergency item that needs to be ironed out by the legislature.
During a news conference in Houston Monday and before the Senate’s bill passed, the Governor expressed concerns about reversing the ERCOT charges.
“For one, there’s a constitutional provision on that. It’s in the Texas Bill of Rights, section 16, where you cannot do things retroactively. Section 17 involves takings of property. Section 16 also concerns impairing the obligation of contracts and so it’s very complex and that’s exactly why we need hearings to determine would there be a taking, would there be an impairment of a contract that has now already been executed. These are very complex issues, and that’s why the legislature is the right body to investigate this to weed out all these complexities and make sure if legislation is passed it will satisfy the requirements of the Texas Constitution.”
On Wednesday, Texas Attorney General Ken Paxton issued an opinion saying the “Utilities Code authorizes the Public Utility Commission to oversee and investigate the independent organization ERCOT as necessary.”
It goes onto say “Within the regulatory timelines, ERCOT can also revise pricing on the wholesale electricity market if certain events occur… Such authority likely could be interpreted to allow the Public Utility Commission to order ERCOT to correct prices for wholesale electricity…” and that “such corrective action by the Public Utility Commission… does not raise constitutional concerns, namely under article 1, sections 16 and 17 of the Texas Constitution.”
The Governor’s appearance in Dallas Wednesday comes after he requested the Chairman of the Public Utility Commission, Arthur D’Andrea, resign Tuesday.
The move comes just two weeks after the Governor promoted D’Andrea from a PUC Commissioner to Chair.
It also follows a story by the Texas Monthly magazine Tuesday that released audio of a conversation D’Andrea had with Wall Street investors on a private call last week.
The investors wanted assurances the state wouldn’t reverse or reverse or reprice ERCOT’s overcharges.
During the recording obtained by the magazine, D’Andrea told investors he was doing all he could to keep that from happening. “I took the first step to tip the scale as hard as I could in favor of it being resolved and that being the status quo.”
He said the state had only until the end of this week to reverse the charges, otherwise they would become final.
But D’Andrea also cautioned investors. “I wish there were a way I could tell you it would never get repriced but you can’t because if there’s enough legislators who want something done, then they can pass a bill and get it done.”
D’Andrea earlier this month said he opposed recommendations by an independent firm hired by Texas to watch the wholesale electricity market to reverse the overcharges.
At the time, he said it would create more problems, including lawsuits.
Carrie Bivens of Potomac Economics, the state’s independent market monitor, has testified in legislative hearings that during last month’s power outages, ERCOT mistakenly kept charging the maximum rate for electricity in the wholesale market for two days after the crisis ended.
She said the overcharges should be reversed which would help Texas consumers.
Some experts have said they believe regardless of what happens, many consumers will pay more for electricity.
CBS 11 asked Governor Abbott why he asked D’Andrea to step down and if it had anything to do with his comments to the Wall Street investors.
He said, “We want to make sure that we are going to show the vision to our fellow Texans. We are charting a new and fresh course for the Public Utility Commission and the action that I made is one of many steps that will be taken to achieve those goals.”
The Governor didn’t elaborate.
In a tweet earlier Wednesday, the Lt. Governor said, “From D’Andrea tape, it appears prices were manipulated for profit and now profits are being protected.”
Patrick tweeted late Tuesday night, “I hope the House will reconsider the false witness and expressed motivation of @PUCTX Chair and correct the pricing error before Friday. We must act now to save TX ratepayers billions.”
But as of late Wednesday afternoon, the House had not yet referred the State Senate’s bill to committee for consideration and a vote.