Texas Supreme Court sides with state regulators hiking prices during 2021 winter storm

The Texas Supreme Court sided with state regulators over their decision to set prices at the maximum level during the 2021 winter storm.

The decision bankrupted some companies and cost others millions. The expenses eventually trickle down to everyone else.

In the midst of the deadly 2021 storm when power generators were down and homes growing colder, state regulators jacked up prices to their highest level.

The move aimed at coaxing power generators to do more and large industrial users to lessen their power. It stayed in place for four days and left some companies with hefty bills.


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Despite an appeals court last year ruling that state regulators should have let competition rather than regulation solve the problem, the Texas Supreme Court on Friday sided with the regulators.

The Texas Supreme Court said, in part, "The [Public Utility] Commission has the expertise to manage the electric utility industry; the courts do not."

Ed Hirs is an expert in energy economics at the University of Houston. He says the Supreme Court decision signals competition shouldn't be driving the market.

FORT WORTH, TX - FEBRUARY 16: Transmission towers and power lines lead to a substation after a snow storm on February 16, 2021 in Fort Worth, Texas. Winter storm Uri has brought historic cold weather and power outages to Texas as storms have swept ac

"That's where there's a huge divergence between an understanding of what a competitive market is and an understanding of what a top-down, government-controlled market is," he said.

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The court ruling comes as the state seeks to avoid a repeat of 2021 with signs electricity demand will essentially double over the next six years.

At a hearing this week, state regulators warned a big driver of that could be bitcoin mining and artificial intelligence data centers.

Hirs says the ruling is more proof that power generators can make more money when supply is scarce.

"If it's not going to do anything to encourage the building of new power plants across the state, it's going to reaffirm this game that's played where, if we take a few offline, we can drive the price up against the top," he said.

In the wake of the storm, the independent monitor for ERCOT estimated the artificially raised prices resulted in $16 billion in overcharges.   


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