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State gives Texas grid operator the OK to 'modify pricing' as demand skyrockets

The speaker of the Texas House said legislative hearings will "cut through the finger-pointing" to find out why the grid failed and how to fix it.

AUSTIN — The Texas Public Utility Commission in an night-time emergency meeting late Monday gave the state's grid operator the go-ahead "to modify pricing models" after demand for electricity skyrocketed during the winter storm as supply plummeted.

How and when the order will affect customers, millions of whom have been without electricity amid record freezing temperatures and heavy snow in much of Texas, will depend in large measure on the nature of their contracts with electricity providers, a PUC spokesman said.

Meanwhile, Texas House Speaker on Tuesday instructed two legislative committees to launch hearings into how the state's electric grid collapsed in the midst of the one of the state's most extreme weather emergencies.

"We must cut through the finger-pointing and hear directly from stakeholders about the factors that contributed to generation staying down at a time when families needed it most, what our state can do to correct these issues, and what steps regulators and grid operators are taking to safeguard our electric grid," Phelan said in a statement.

In its jargon-laced order, the three-member commission that oversees Texas' competitive electricity market listed several factors that prompted its action, including "exceptionally high natural gas prices," with directly affect the cost of electric generation.

"The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply," the order states. "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."

Since overnight Sunday, Texas' energy grid has been turned on its head as generators fueled by gas, coal, wind and nuclear sources were knocked offline amid near-zero temperatures and widespread demand for power.

More:AEP Texas directed to increase number of service interruptions

A figure crosses a parking lot in the blowing snow at North Second and Shelton streets in Abilene Sunday Feb. 14, 2021. Abilene received a record 14.8 inches of snow, according to the National Weather Service.

That led to millions of Texas suffering for hours without the electricity need to keep the lights on, heat homes and businesses and even cook meals.

A woman and a girl in Houston died from suspected carbon monoxide poisoning at a home without electricity from a car running in an attached garage, police said. Law enforcement also said subfreezing temperatures were likely to blame for the deaths of two men found along Houston-area roadways.

Power outages are expected to continue at least into Wednesday.

Andrew Barlow, the spokesman for the utility commission, said a system glitch knocked the market price that would have been at $9,000 per megawatt down to $1,200. The commission's action, in effect, allows the price to rise above that artificially low level, he added.

Customers in the competitive electric market who opted for fixed-price plans will so no change during their present contract period, he said. Those with flexible price plans, which allow them to save money when generation supply is high and demand is low, will likely take a hit, Barlow said.

Meanwhile, Dan Woodfin, the senior director of system operations for the Electric Reliability Council of Texas, acknowledged Texans' frustration while offering a ray of hope.

"The number of controlled outages we have to do remains high," Woodfin said. "We are optimistic that we will be able to reduce the number throughout the day."

ERCOT, which manages and coordinates the state's intricate network of power generators and electric transmission infrastructure, first called the blackouts "rolling outages," suggesting that power interruptions would be short.

But as hours extended into days without power for thousands of Texans, political leaders of both parties let their own frustrations be known as customers took to social media and other forums to vent both fear and anger.

"I'll echo what many others have said: the widespread power outages in Texas represent a catastrophic failure of leadership," said state Rep. Chris Turner of Grand Prairie, the state House's Democratic leader. "The immediate priority is and must continue to be getting the power restored and helping those most vulnerable — the young, the elderly, the he sick."

Turner made the remarks via Twitter early Tuesday, who had been without electricity and cell phone service for 24 hours.

“The statewide blackouts raise questions about the reliability of our electric grid and its ability to withstand extreme weather events in the future," said East Texas Republican state Rep. Chris Paddie, who chairs the House State Affairs Committee, one of the two panels that will examine the outages.

Rep. Craig Goldman, who chairs the Energy Resources Committee, said the hearing will seek answers on the failure from industry officials, regulators, and grid operators.

"This is unacceptable," said Goldman, R-Fort Worth.

This is a developing story and contains material from Texas Associated Press. Please check back for updates.

John C. Moritz covers Texas government and politics for the USA Today Network in Austin. Contact him at jmoritz@gannett.com and follow him on Twitter @JohnnieMo.