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Texas' sole utility regulator resigns

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The resignation of the PUCT chair marks the latest fallout from the brutal February storm.
Source: Thinkstock

Arthur D'Andrea, chair of the Public Utility Commission of Texas, resigned March 16 following the release of a call in which he told BofA Securities analysts that he would work against repricing billions of dollars worth of sky-high electricity transactions that occurred during and after February's deadly winter storm that nearly caused Electric Reliability Council Of Texas Inc.'s power grid to collapse.

The Texas Monthly on March 16 released a recording of a private, 48-minute analyst call during which D'Andrea said he has tried to "tip the scale" against repricing some $16 billion in transactions.

"Tonight, I asked for and accepted the resignation of PUC Commissioner Arthur D'Andrea," Republican Gov. Greg Abbott said in a statement released just after 8:30 p.m. local time, just hours after publication of the call. "I will be naming a replacement in the coming days who will have the responsibility of charting a new and fresh course for the agency. Texans deserve to have trust and confidence in the Public Utility Commission, and this action is one of many steps that will be taken to achieve that goal."

D'Andrea's resignation, effective upon the appointment of a replacement, brings even more turmoil to Texas as it attempts to stabilize its electricity market. D'Andrea was the only remaining commissioner on the body. Two members previously resigned in the wake of the crisis.

D'Andrea at the top of the call said: "I took that first step to tip the scale as hard as I could in favor of [the repricing issue] being resolved and that being the status quo and to provide some calming force."

"But it's also become a political question in the state," he said. "There's some very important people who do not want to reprice, full stop. And there are some very important people who do."

A moderator in the call assured participants it would not be released to the media. The call was initially scheduled before the storm slammed the state. It is unclear how the Texas Monthly obtained the recording.

The PUCT did not immediately respond to a request for comment.

During the February storm, the PUCT ordered electricity prices to the $9,000/MWh cap after load shedding artificially reduced power demand. State politicians are in a fierce debate about whether to retroactively bring down the prices of some $16 billion worth of transactions to prevent more bankruptcies among market participants, particularly public utilities and retail providers. The issue has caused a public rift between the two top Republicans in Austin. Gov. Abbott has said the Legislature must resolve the repricing issue. Lt. Gov. Dan Patrick, who is also president of the state Senate, has forcefully stood in favor of repricing.

D'Andrea noted in the call that the 30-day window during which market transactions can be adjusted would close by the week of March 15, and that lawmakers were unlikely to pass a bill resolving the issue by then.

The release of the call follows the state Senate's passage of Senate Bill 2142. The bill orders the PUCT to reprice wholesale and ancillary service transactions in the ERCOT market that occurred between Feb. 17 at 11:55 p.m. and Feb. 19 at 9 a.m. The storm first hit Feb. 14.

Advocates of repricing have argued the Feb. 15 PUCT order to send prices to the legal cap expired Feb. 17 after load shedding stopped. Bill Magness, the outgoing president and CEO of ERCOT, has testified to lawmakers that he kept the prices at the cap because he feared lowering them would encourage more power consumption and destabilize the grid.

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The Texas House on March 16 did not take up the Senate bill, which says the PUC "shall order" ERCOT "to correct the prices of wholesale power and ancillary services sold in the ERCOT market" during that 32-hour period. A PUCT order should "reflect the prices of wholesale power and ancillary services that would have been paid in the ERCOT market during that period absent any action" by the commission to raise prices.

Republican Rep. Dade Phelan in a March 16 statement said he believed the decision to keep prices at the cap "may have saved lives."

"Repricing based on disagreement with PUCT and ERCOT's management decisions is an extraordinary government intervention into the free market, which may have major consequences for both residential and commercial consumers going forward," Phelan said. "The House will continue to examine this issue that touched the lives of every single [Texan] directly and indirectly."

D'Andrea has publicly maintained that he currently has no authority to reprice transactions, but he has also defended the commission's order to do so, saying regulators wanted to save lives.