- Texas residents who managed to keep the power on during last week’s deep freeze are now being hit with shocking electricity bills
- Some residents have been slapped with bills of up to US$17,000 (roughly A$21,600) after Texas’ electrical grid failed due to the severe weather, sending the spot price of electricity soaring 10,000 per cent
- This meant consumers who had signed up for variable-rate electricity contracts — which rise and fall with supply and demand — copped massive bills
- Texas lawmakers are working to ease the burden on residents hit with the sky-high bills, saying some funds from federal disaster assistance will be used to help residents pay the bills
- Lawmakers are also launching an investigation into the power grid failure to figure out exactly what went wrong
Texas residents who managed to keep the power on during last week’s deep freeze are now being hit with shocking electricity bills for the power used during the storm.
Some residents have taken to social media to share the electricity bill they received after the storm, showing figures upwards of US$5000 (around A$6300).
In extreme cases, residents received bills of up to US$17,000 (roughly A$21,600).
So, how did this happen, and is it legal?
Unregulated power: risk vs reward
Texas is the only state in the U.S. that operates its own electrical grid in a deregulated energy market — meaning residents typically choose between several competing electricity providers to find the best deal for them.
Some of these providers offer fixed-rate contracts, meaning while it may not be the best price, consumers always know what they’re going to get.
Other providers sell electricity at variable wholesale prices that rise and fall with supply and demand. It’s these prices that skyrocketed when the severe winter storm last week caused a power grid failure and left millions of homes without any heating or electricity.
Real-time wholesale market prices on the state’s grid operator, the Electric Reliability Council of Texas (ERCOT), surged 10,000 per cent in two days, reflecting the cost of congestion and losses at various points across the grid.
As such, those with the variable price deals who were able to keep the fridge running and the house warm are copping the massive bills.
very awesome time to be a texan 👍🏼 pic.twitter.com/zbn9bbxlim— badgirIkiki (@badgirIkiki) February 19, 2021
Of course, the flip-side of the variable price model is that when energy prices are low — as they were throughout 2020 — those willing to take the risk can end up paying half as much for their power as those on fixed-rate plans.
In last week’s case, the risk certainly didn’t pay off.
Nevertheless, it seems Texas lawmakers are working to ease the burden on residents hit with the sky-high bills.
Last week, President Joe Biden approved a major disaster declaration for Texas, unlocking federal funds and resources to help the state recover from the storm.
Republican Texas Representative Michael McCaul said the plan is to use some of these resources to help homeowners pay their bills on top of home repairs due to water leaks and burst pipes.
Texas Governor Greg Abbott said in a statement on Sunday it is “unacceptable” for Texans to be hit with such high energy bills after suffering through the freezing cold for days.
Senator Ted Cruz also took to Twitter to slam the power companies sending out the enormous bills.
This is WRONG. No power company should get a windfall because of a natural disaster, and Texans shouldn’t get hammered by ridiculous rate increases for last week’s energy debacle.— Ted Cruz (@tedcruz) February 21, 2021
State and local regulators should act swiftly to prevent this injustice. https://t.co/Qo2e4pwv4z
While Texas lawmakers are launching an investigation into the state’s power grid, what sort of support homeowners who received the high energy bills will receive is not yet known.