Texas chooses not to fix a $ 16 billion power overload

“It is impossible to disentangle these types of eggs,” he said.

Mr. D’Andrea said there are so many hedges and private transactions out of the committee’s view that taking a step to help consumers could have unintended consequences. “You think you are protecting the consumer and it turns out that you are a cooperative or a city going bankrupt,” he said.

The committee met Friday morning to consider a recommendation from its independent market monitor, which concluded that Texas was holding wholesale prices artificially high for 33 hours longer than was warranted during a winter shutdown last month, resulting in $ 16 billion in additional costs for consumers.

Amid the freeze, which resulted in massive blackouts that left millions of households in the dark for days, the three-member panel appointed by Texas Governor Greg Abbott, the state’s grid operator, ordered wholesale prices for power. increase to the peak price of $ 9,000 per megawatt. hour.

The market monitor said in a report submitted Thursday that those prices should have been lowered when the grid operator stopped instituting power outages, not when it ended the energy emergency a day and a half later. It recommended reversing $ 16 billion in costs.

Earlier this week, the previous committee chairman, DeAnn Walker, resigned under criticism, leaving as sitting Commissioners D’Andrea and Shelly Botkin, who also indicated on Friday that she was reluctant to order new awards.

Several market participants and consumer groups had urged the commission to reset and cut prices from $ 9,000. Vistra Corp.

VST 1.26%

, which is one of the largest power generators in Texas and also owns a major electrical retailer, said failure to revise prices “would lead to unfair and unreasonable results.”

Texas is facing huge financial ramifications after last month’s electricity crisis, with the state utility committee and the power grid operator disagreeing on exactly what went wrong.

A few hours after the power outages, the utility committee took the unusual step of giving up the market-based pricing mechanism and ordering wholesale power prices at the $ 9,000 limit until the grid-based power outages ended.

The grid operator stuck and kept prices at the maximum price after it stopped ordering power outages, but at the time, local electricity companies were still struggling to turn the lights back on and some power outages continued to be widespread.

The extended four days of $ 9,000 prices – an exponential increase from normal Texas prices, which averaged $ 22 per megawatt hour last year – took a huge financial toll on some market participants.

Vistra said it suffered losses of between $ 900 million and $ 1.3 billion. Many wind farm operators, who had to buy electricity due to hedging contracts, are in financial need. A large electrical cooperative has filed for bankruptcy protection.

The utility committee has not voted to reject the independent market monitor’s suggestion, leaving the door open for a policy change in the coming weeks.

Senator Nathan Johnson, a Democrat from Dallas, said he viewed the agency’s decision as a mistake. He said he would have backed a clawback to address concerns among power producers and retailers about regulatory intervention in setting market prices.

“That would have sent a stronger market signal,” he said.

—Katherine Blunt contributed to this article.

Write to Russell Gold at [email protected]