Name: The fight over who will pay for Texas blackouts gears up
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The fight over who will pay for Texas blackouts gears up

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This article was published more than&nbsp;1 year agoCommentGift ShareWhen the temperature dipped to 9 degrees inside his Austin mobile home, Laron Limuel took to sleeping in his Kia Optima sedan to try to stay warm. After days without power, a burst sprinkler pipe inundated Rosemary Sepeda’s apartment, ruining her walls, furniture and rugs even as the water crystallized into ice. The February cold snap that devastated nearly all of Texas sent Emily Kathleen Cahill to the St. David’s Medical Center emergency room.Yet just eight miles from Limuel’s darkened home, Austin Energy’s Decker Creek Power Station operated most of that frigid week at close to full capacity. Ten miles from Sepeda’s wrecked apartment, the company’s Sand Hill Energy Center kept firing on most of its units, and though it dipped significantly for 12 hours on Feb. 15, the plant was never offline entirely. Farther afield, 65 miles southeast of Cahill’s south Austin apartment, the Fayette Project coal plant, co-owned by Austin Energy, churned out power as usual except for a five-hour stretch on Feb. 17.It was a vivid example of the inconsistencies of the supposedly market-driven electric grid system in Texas. For 4 million households in the state, the consequence of the February freeze was life without power, and for many, without drinkable water. Dozens died. But for the companies that have a stake in that market, the blackouts meant that billions of dollars went chasing after diminishing electrons, and while some firms stand to lose fortunes, others — the ones with power to sell — have been reaping .AdvertisementNow, the fight over who will pay, and how much, is gearing up. The action is taking place in federal bankruptcy courts, in state courts and in the Texas legislature. The state’s attorney general has ruled that customers of one company needn’t pay their bills. And more than 200 Texans have joined what is expected to be a flood of liability suits, a Washington Post review of court records found.In Austin, Sepeda, Limuel and Cahill are all consulting with lawyers. They understand that this is just the beginning of the legal wrangling, as the cases could take years to be decided. That’s true, too, for the energy companies and financial firms squaring off against each other.As those court cases are being prepared, state political leaders in Austin are feeling intense pressure to recast the electricity market to try to avoid another debacle — yet Texas flirted with one again on Tuesday. Mild weather, warmer than predicted, led to higher loads than the system was ready to handle, as customers turned on air conditioners. With about a quarter of the state’s power plants down for maintenance to be ready for summer’s heat, “we are in a condition that’s very tight,” said Woody Rickerson, vice president for operations of the agency that dispatches power, known as Electric Reliability Council of Texas, or ERCOT.AdvertisementERCOT on Tuesday called for voluntary conservation measures, and incredulous Texans enjoying the spring weather saw the wholesale price of power once more temporarily leap, this time about 60-fold higher than normal.This event seems likely to concentrate the minds of the state’s legislators as they wrestle with ways to fix the system. Whatever course they choose — even if it’s to do nothing — there will inevitably be winners and losers. Lobbying by the energy companies is already in high gear.The companies are looking to the future but also trying to shape the view of that long cold week in February, all of them finding fault with some other firm, some other agency.In Galveston County, the district attorney has promised a .“There’s no doubt there’s a lot of sinning here,” said Brent Coon, a Houston lawyer who is signing up plaintiffs. “There’s a lot of moral wrong. The question is, was there legal wrong?”In the state’s unregulated and almost entirely self-contained electricity market, the freeze saw some utilities cutting off their own customers while selling power on the suddenly lucrative spot market.AdvertisementAustin Energy is a city-owned utility, and even as its power plants churned out electricity, it flipped the switch on thousands of its customers for days under ERCOT’s orders to “shed load.” Austin’s power was put to use elsewhere, in parts of the state grid where the generating systems had failed entirely.And because that power was sold on a wholesale spot market where prices had jumped 300-fold, the company says unexpected revenue from those five days of sales , or more.In a statement provided by Jennifer Herber, public information manager for Austin Energy, the company said it had to comply with ERCOT’s orders to cut off its customers to shed load, and that the scope of the reduction was too great to allow rolling blackouts. At the peak, 220,000 customers were without power, it said.Massive bills hit some utilities after stormLimuel, 51, who is unemployed and lives with his 28-year-old son in a mobile home he inherited from his grandparents in the Rosewood neighborhood, said he thinks the electricity industry is corrupt and blames Gov. Greg Abbott (R) for not ensuring “that the system is running right.”In south Austin, Cahill, who at 32 said she has an irregular heartbeat and asthma, has been working during the coronavirus pandemic to nurture a small theater company she founded to explore issues of child and domestic abuse. She said she thinks the electricity debacle was a “power play” that allowed companies to take advantage of people.AdvertisementSepeda, 67, who injured her left arm 20 years ago while working in a meatpacking plant, is still living at her daughter’s place, a mile from her home at Rosemont at Oak Valley. She said she doesn’t know where to assign blame, “but I want my apartment back.”San Antonio has a municipal utility, too, a 161-year-old company now known as CPS. It wasn’t as lucky as Austin Energy.The company said it is facing $800 million in bills for the natural gas it purchased that week, as gas prices also spiked in a closely related market move. And with its power plants hobbled by the cold, the company said it has been hit with a to settle the electricity purchases it had to make on the spot market.In a lawsuit, the utility seeks to block ERCOT from collecting that bill and from imposing a surcharge to help defray the losses stemming from other companies’ defaults. It describes ERCOT as “presiding over one of the largest illegal wealth transfers in the history of Texas.”AdvertisementIn Amarillo, in the Texas Panhandle, the weather turned cold on Feb. 9 and kept getting colder. The high on Feb. 14 was 7 degrees. Some of the early signs of trouble for the grid began with wind farms, as turbines iced over.A wind farm company called Canadian Breaks, for example, reported that it lost 60 percent of its capacity in Oldham County, outside Amarillo, on the evening of Feb. 13.But throughout the next day, the system that processes and supplies natural gas to power plants and other customers was also freezing up.A big gas processing plant in West Texas, operated by Occidental Permian, had gone down in the morning. Then one near Lubbock shut off, and another in Loving County, west of Odessa. Compressors at a plant outside Corpus Christi, across the state, froze up.The price of gas, for any company that could still get it, shot up. But equipment at gas-fired power plants was also starting to freeze.Demand for electric power grew steadily at first, as Texans tried to keep their homes warm, and on Feb. 14, between 6 and 7 p.m., demand reached an all-time high.AdvertisementA few hours later, just after midnight, breakdowns in power plants began to snowball.At 1:25 a.m., Feb. 15, ERCOT began ordering utilities to shed load. There was too little power coming into the system and too much demand from customers across the state. More orders to cut off circuits went out in quick succession.Electricity had become a precious commodity.Father’s death came after hours in coldEarlier that evening, at Monique Juliangarza’s home in the Greenwood Forest section of Houston, the whole family had sat down to a Valentine’s Day dinner. Her 76-year-old father, Michael Julien, a onetime firefighter and later a worker for the Chicago water department, had lobster for the first time.A little past 2 a.m., the lights and electric baseboard heaters shut off. It was heading down to 18 degrees outside.AdvertisementHer family buys its electricity from a company called Just Energy, which purchases it wholesale from the generating companies and routes it to customers through local utilities — in Juliangarza’s case, CenterPoint Energy. In the morning her husband called Just Energy but was told that the blackouts were the responsibility of the utilities.CenterPoint, like utilities across Texas, was told by ERCOT how much power to shed and made its own decisions about how to proceed. It announced, as did its counterparts all around the state, that it was imposing “rolling blackouts,” so customers would share in the burden and no one would be left without power for long. “There may be temporary interruptions of your electric service,” the company tweeted.“Okay, give it two to four hours,” Juliangarza recalled thinking. Her father and mother were upstairs. As the house grew colder and colder, she said, and the power didn’t come back on, she could see Julien’s condition deteriorating. At 6:30 that evening, after nearly 17 hours without electricity, she was torn about what to do but decided she had to get him out of the house.AdvertisementIt was a long, icy walk to the car, but she and her husband got him into it. He was shivering uncontrollably. They drove around looking for a hotel with heat but had no luck. Finally, Juliangarza reached a cousin whose house had a small generator, and she took her parents there.By that evening Texas electricity was selling for the wholesale price of $1,200 per megawatt hour, up from $30 the week before. Members of the Public Utilities Commission, which oversees ERCOT, thought that something was wrong — not that electricity was too expensive, but too cheap. The legal cap is $9,000, and in a case like this, where electricity was becoming so scarce, they couldn’t understand why the price hadn’t been driven higher on what was supposed to be a free market.In an emergency meeting, the commissioners ordered ERCOT to fix the price of electricity. It was to cost the full $9,000 for every megawatt hour bought and sold.That, , would be a sufficient incentive to bring more power back online. It was the theory behind the state’s entire energy market.But for the next 36 hours, no additional power came on. It was only on the afternoon of Feb. 17, when the temperature began to rise above freezing, that plants thawed out and began operating again. The price, nonetheless, remained where it was.In Houston’s Greenwood Forest, Julien couldn’t recover. He had spent Tuesday huddled with Mary, his wife of 45 years. Early Wednesday, he collapsed. After an ambulance crew was unable to revive him, he was taken to a hospital where he was declared dead of coronary heart disease, complicated by hypertension and sarcoidosis, an inflammatory disease that affects various organs. Juliangarza has no doubt it was the cold that killed her father.“He didn’t complain the whole entire time,” she said. “He was that kind of man. He was an advocate, a role model. He was like king of our house. Strong-willed, poetic, humorous. He could charm the pants off you.”Her parents, she said, had moved in with her and her family in Houston in 2019, leaving Chicago because they wanted to get away from the cold.“Someone needs to be held accountable, so something like this never happens again,” she said. She and her family are suing CenterPoint over Julien’s death, claiming the company is responsible because it failed to rotate power outages as it had promised to do.“How can you leave people in the cold, and not even care? It’s crazy talk, it’s selfish, it’s ignorant. We’re not in a Third World country. This is the United States.”CenterPoint cut power “to the most vulnerable areas for long periods of time,” the suit argues. “The failure to adequately inform Plaintiffs of the length of the black outs prevented them from properly preparing for the lack of power or leaving the area. … Accurate information would have saved Mr. Julien’s life.”The family’s lawyer is Tony Buzbee, a onetime candidate for mayor of Houston, who said he has about 46 cases filed or ready for filing stemming from the blackouts. “What makes so many people upset,” he said, “and is so galling, with all the public utilities, it was the misinformation we received. ‘Rolling blackout.’ What instead happened was the power was just literally off for three, four, sometimes five days. We had people dying of hypothermia in the energy capital of the world.”CenterPoint said it took a $1.25 billion hit in Texas because of the skyrocketing price of natural gas. In a court filing, it denied the Julien family’s allegations. The company declined to comment on pending litigation.In testimony at a Texas House hearing on Feb. 25, Kenny Mercado, an executive vice president of the utility, said that ERCOT’s load-shedding orders had continued to come so fast on the morning of the 15th that CenterPoint “could no longer automatically rotate customer outages on our system. Our internal experts understood that the entire ERCOT grid was on the brink of collapse and that we were in a grave and unprecedented event.”He said that CenterPoint was responsible for 25 percent of all the load shedding in the state.‘The lawyers are swarming’The blackouts created a compounding problem that no one had anticipated. Electricity to natural gas facilities was cut off in at least four cases reported to state officials, further reducing the supply of fuel to power plants. The overall flow of gas through the state’s processing plants dropped by about 75 percent, according to Bernadette Johnson, a senior vice president at Enverus, an energy data and analytics firm.The price of electricity remained fixed at $9,000 until the morning of Feb. 19, 32 hours after ERCOT had lifted its last load-shedding order. That became an issue of sharp debate in the Texas legislature. The Senate passed a bill retroactively rolling back the price increase from that latter period, Feb. 17-19, but the House hasn’t acted on it.Austin Energy, a winner in the freeze, lobbied strenuously against the bill, that a loss in revenue would end up costing its customers. Arthur D’Andrea, who was chairman of the PUC, assured investors that he would do everything in his power to prevent a rollback. When that call was , the governor fired him.That’s only one front, though, in the struggle over which companies will be able to reap huge profits from the disaster that left Michael Julien and dozens of others dead, and that left millions suffering in the cold and dark.Just Energy, which sold power to Juliangarza, has filed for bankruptcy to escape its debts from the cold snap. So has the Brazos Electric Power Cooperative, created by the Rural Electrification Act of 1936.“As the month of February 2021 began, the notion that a financially stable cooperative such as Brazos Electric would end the month preparing for bankruptcy was unfathomable,” the company said in its filing. But now it faces an ERCOT bill of $2.1 billion to cover just one week. That’s twice the cooperative’s annual revenue.On March 15, a company called Griddy, which gained notoriety for sending eye-popping bills to customers for the week of the freeze, declared bankruptcy. State Attorney General Ken Paxton said its bills would not have to be paid.Carrie Bivens, ERCOT’s independent market monitor, told a Texas Senate hearing that she expects “cascading bankruptcies” in the weeks to come.San Antonio, in its suit against ERCOT, is invoking what lawyers call force majeure: that an unforeseen circumstance beyond the utility’s control frees it from the terms of its contract. It’s just one of at least 40 lawsuits that name ERCOT as a defendant, including one brought by Cincinnati Insurance arguing that ERCOT’s legal damages from the freeze are not covered by its insurance contract. that based on precedent it is entitled to sovereign immunity that protects it from legal action.Canadian Breaks, the firm with the wind farm outside Amarillo, is pursuing a strategy of force majeure in a suit against J.P. Morgan. It had a hedging contract that enabled the financial company to reap the benefits of the price spike at Canadian Breaks’ expense.Two gas companies, Targa Energy and an ExxonMobil affiliate called XTO Energy, have sued an Australian financial company, Macquarie, on the same grounds. Targa’s gas facilities were especially hampered by the cold, according to reports the company made to the Texas Commission on Environmental Quality.“The mismanagement was on every single level you could think of,” Buzbee said. “The lawyers are swarming.”The latest: | | Power outages: | Photos: CommentsGift ArticleTOP STORIESVisual StoriesTired of reading? Stories that explain the news through charts, maps, photography and videos.Try a different topic or to save your preferences

This article was published more than&nbsp;1 year agoCommentGift ShareWhen the temperature dipped to 9 degrees inside his Austin mobile home, Laron Limuel took to sleeping in his Kia Optima sedan to try to stay warm. After days without power, a burst sprinkler pipe inundated Rosemary Sepeda’s apartment, ruining her walls, furniture and rugs even as the water crystallized into ice. The February cold snap that devastated nearly all of Texas sent Emily Kathleen Cahill to the St. David’s Medical Center emergency room.Yet just eight miles from Limuel’s darkened home, Austin Energy’s Decker Creek...

The fight over who will pay for Texas blackouts gears up

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