The chairman of the Public Utility Commission of Texas huddled with Bank of America utility analysts on Tuesday as pressure mounted on him to reverse about $16 billion in emergency power pricing that would hurt power plant operators.
The meeting came two days before PUC Chairman Arthur D’Andrea was due to rule on rescinding billions of dollars in charges levied on electricity marketers. If he reverses those charges, it would help retail marketers and hurt traders and power generators that stand to collect the money.
The state’s power grid operator raised power prices sharply during a February freeze to induce more power during a blackout. However, prices were left at about 450 times their usual level long after the emergency passed, moves that benefited traders and generators.
Bank of America has market analysis and power and gas trading arms deeply tied to the Texas crisis. Securities analysts on the call with D’Andrea give investors advice in whether to purchase securities in publicly traded utilities that could lose from any repricing.
D’Andrea was not available for comment. PUC spokesman Andrew Barlow rejected any conflict of interest in the meeting, saying it was routine and did not reveal confidential information. The call was “a rehash of previously openly discussed information,” he said.
Barlow said he had no transcript of the call, and Bank of America also declined to make a recording or a transcript of the call available.
On Friday, D’Andrea, as the sole PUC commissioner, will consider clawing back power price that hit $9,000 per megawatt hour, about $16 billion in all, and another $1.5 billion in fees tied to those prices. The commission rescheduled its hearing for a day to attend legislative hearings.
Citing grid rules, a state market adviser has recommended the pricing and related fees to be cut. Top state officials this week also called on the PUC and grid operator to “correct” the pricing and rescind about $16 billion in charges.
Previously, D’Andrea rejected a rollback, arguing “it is impossible to unscramble the egg,” insisting the decision to raise prices during the cold snap was known to all grid users.
The need to settle electricity trades that same day on the Intercontinental Exchange Inc (ICE), ruled out any change, D’Andrea said last week. Since that decision, the governor, lieutenant governor and 28 of 31 Texas state senators have demanded a rollback.
“These corrections are squarely within your authority, whether by your own action or an order to ERCOT,” the senators told D’Andrea in a letter on Tuesday.
ICE this week indefinitely delayed settling trades for ancillary services contracts tied to grid operator Electric Reliability Council of Texas (ERCOT). The exchange has closed its much larger, systemwide contracts and has no authority to reopen settled contracts, said people familiar with the matter.
In a note on Wednesday, analyst Julien Dumoulin-Smith wrote since D’Andrea’s rejection of repricing “recent days have seen greater uncertainty reemerge,” citing the governor and lieutenant governor’s comments.