The Public Utility Commission (PUC) of Texas has directed the state’s main grid operators to raise energy prices, as millions of people are enduring below-freezing weather without power in their homes.
The PUC met in an emergency open meeting on Monday evening to address concerns that “certain pricing mechanisms were not generating an optimal response” to the electricity crisis sparked by the extreme winter weather in the state, according to a news release issued on Monday.
The winter storm has disrupted power in the state and led to an exceptionally high demand for electricity that exceeds the current available supply.
Following the meeting, commissioners issued an order to modify pricing models to “more accurately reflect the scarcity conditions in the market.”
The order also directed the Electricity Reliability Council of Texas (ERCOT), which monitors the state’s power grid, to adjust past prices to reflect the current shortage of energy.
In the emergency order, the PUC explained that ERCOT had informed them that energy prices across the system were clearing at less than the current system-wide offer cap of $9,000. The caps ensure customers are protecting from massive price hikes.
At various times on Monday, emergency prices across the system were clearing as low as approximately $1,200.
The commission said it believes this is inconsistent with the fundamental design of the ERCOT market.
“Energy prices should reflect scarcity of the supply,” the order said. “If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest.”
The PUC and ERCOT have been contacted for additional comment.
Around four million households in Texas were without power on Monday night as the state continued to experience unusually snowy weather and bitterly cold temperatures.
ERCOT initiated rotating outages after the extreme winter weather caused many generating units to trip offline and become unavailable.
In a news release on Monday, it said power had been restored to around 500,000 households.
“ERCOT and Texas electric companies have been able to restore service to hundreds of thousands of households today, but we know there are many people who are still waiting,” ERCOT’s president and CEO Bill Magness said in a statement.
“It’s also important to remember that severe weather, mainly frigid temperatures, is expected to continue, so we’re not out of the woods.”
Originally published at https://www.newsweek.com/texas-utility-commission-orders-energy-price-hikes-1569554 on .