Appeals court says state agency set electricity prices too high during 2021 winter storm

AUSTIN (Texas Tribune) — A Texas appellate court surprised the electricity world Friday by ruling that the Public Utility Commission overstepped its authority during the deadly February 2021 winter storm when it raised the price of electricity to the maximum, $9,000 per megawatt-hour.

The price was set that high on Feb. 15 and Feb. 16 by the commission in charge of regulating Texas’ electricity in an effort to tell the market that more power generation was urgently needed. Its leadership believed that the financial tool meant to adjust the cost of electricity was malfunctioning as electricity generators had fallen offline and grid operators cut power to homes and businesses, the ruling explains.

The price of electricity is fluid in Texas; it goes up when demand is high in order to incentivize more production and keep the grid from being overloaded. But the state’s electricity market monitor said in the aftermath of the storm that Texas overcharged retail electricity providers by $16 billion for the power that they then pass on to the residents and businesses throughout the state.

The electric utility Luminant appealed the pricing decisions in the month after the storm. It argued that the commission exceeded its authority in setting the price at the maximum, among other points. The Austin-based Third Court of Appeals agreed in the ruling it issued Friday. But the consequences for its decision were not immediately clear, as the court remanded the case for further consideration.

The Public Utility Commission declined to comment.

This developing story. Check back with the Texas Tribune for updates.

This article originally appeared in The Texas Tribune at www.texastribune.org.  The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans - and engages with them - about public policy, politics, government and statewide issues.