Some are concerned Texas’ new ERCOT reform bills will cost customers

Texas

AUSTIN (KXAN) — There are concerns new laws intended to prevent massive power outages like what we saw during February’s winter storm don’t go far enough.

On Tuesday, Gov. Greg Abbott signed legislation requiring power companies to prepare for extreme weather.

“My roommate and I were sitting in the living room and heard like a loud popping noise,” said Taylor Smith.

That’s when they saw water gushing into their Austin apartment.

“It’s the wall that backs up to my bedroom… I knew for a fact that my wall was wet,” Smith said.

Her apartment complex eventually deemed her unit unlivable about a month after the winter storm.

It’s one of countless stories the governor wants to prevent from recurring by signing Senate Bills 2 and 3, which include required weatherization.

“It’s unfunded, and it’s going to leave it up to the consumers to end up paying for this,” said Shane Cawood of Hartman Income REIT, a company that owns and operates commercial real estate.

Cawood worries because there’s no allocated funding for that weatherization, customers will end up footing the bill.

SB 3 still limits how much groups like Austin Energy pay for power and that, in turn, supporters said, would keep prices down for regular customers.

“If wholesale market prices were much higher, then rates would be a lot higher, but if they stay lower, then rates should stay lower,” explained Joshua Rhodes, Webber Energy Group associate researcher at the University of Texas at Austin.

Cawood said the legislation doesn’t address what groups already had to pay during the winter storm when those wholesale market prices spiked.

“It also ignores a really important part of what happened back during the freeze where we had about 32 hours of charges,” Cawood said.

An amendment that would have given about $350 back to residents for their utility bills was also stripped.

“That’s still something up for discussion; it might be visited again,” said SB 3 author State Sen. Charlies Schwertner. “The larger concept of securitizing and allowing for the spreading out of costs both on the natural gas side as well as on the electric side at electric co-ops, regular generation and municipal-owned utilities was accomplished and will have direct impact on rates going forward, keeping those low.”

But that may also end up being passed to customers, said Cawood.

“Whether you feel it immediately, if you already felt it or if you’re going to feel it when you start renewing your fixed-rate contracts and the costs have to be passed on to the customer,” he explained.

“Because companies are having to take on these enormous costs, rates are going up,” said Brandon Young, CEO of Payless Power, a family-owned electricity provider in Texas.

Supporters, like State Sen. Kelly Hancock (R–Bryan), who also authored SB 2, said if that happens, customers can shop elsewhere.

“If their provider chooses to go up when their contract’s up, they don’t have to stay with that provider, they’re able to go shop again, which is the beauty of our system that we wanted to maintain… through the securitization,” he said.

Still, with so many power companies affected by the storm, Rhodes said it may be inevitable that most providers increase rates.

“It’ll be interesting to see how some of those costs are allocated to to Austin Energy customers,” Rhodes said.

KXAN reached out to Austin Energy about how it plans to handle these new rules and what that impact might be to its customers. We’ll let you know when we hear back.

According to the new laws, power generators that don’t meet the new weatherization requirements could be fined up to $1 million per violation. The requirements kick in in six months.

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