The financial consequences of the Texas blackouts are beginning to emerge in the state’s electricity market, with some players not paying for the power they bought last week and others revealing sizable losses.
The Electric Reliability Council of Texas, which operates the state’s power grid, said on Friday that electricity retailers had failed to make $ 2.12 billion in required payments, about 17% of the total amount owed during a stretch last week. .
Ercot, which collects that money and uses it to pay power plant operators, said it would use $ 800 million in a revenue account to pay them part of what is owed to them, but that $ 1.32 billion would be missing.
It also said it had started getting collateral payments from retailers that failed to pay their bills, a sign that some are no longer creditworthy.
An Ercot spokeswoman said she was unsure if this was the full amount owed by the retailers or if late payments would be disclosed later.
The shortfall in payments will trigger a bitter fight in Texas over how to fill the gap. In the rare cases where market participants are unable to pay their bills, Ercot spreads the costs among the remaining electricity retailers, municipal power companies, and others who purchase electricity.
This could put further pressure on the remaining retailers, some of which are already refusing to pay.
Denton, a city in North Texas that saw its energy costs skyrocket during the crisis, filed a lawsuit against Ercot, arguing that such additional payments were “an illegal and unconstitutional raid by [Ercot] in the credit of the cities that operate electrical services “.
In a statement, the city said it would “explore all legal options to protect the financial assets of the City of Denton and its taxpayers from misuse,” adding that it had obtained a restraining order against the network operator for non-profit purposes. profit.
Electricity costs in Texas soared last week when freezing temperatures forced numerous power plants of all kinds to go offline, dramatically reducing electricity supplies and causing millions of people to lose power for days.
As the crisis deepened, the state Public Utilities Commission ordered market prices to rise to the maximum level of $ 9,000 per megawatt hour until the end of the emergency, up from $ 1,200 per megawatt hour at the time of your order last Monday. Prices stayed at that maximum price for approximately 90 hours. Previously, the Texas market had only hit that $ 9,000 level once, in 2019, for a total of three hours, according to a filing with the Texas Public Utilities Commission.
The result was a massive increase in electricity costs for retail electricity providers, local utilities, and ultimately businesses and consumers in Texas, where energy prices averaged $ 22 per megawatt hour for the year. last.
, which is a large power plant owner in the liberalized Texas market and a retailer that sells power to more than 2 million homes, said Friday morning that it had lost between $ 900 million and $ 1.3 billion.
The company’s shares fell 24% on Friday. The company said it had enough to cover the loss, but was concerned that smaller electricity retailers would not.
“Billions of dollars changed hands in a week. People are going to go broke because of it, ”said Vistra CEO Curt Morgan.
On Friday, S&P Global Ratings put Vistra on alert for a lower credit rating due to the impact of the storm on its cash flow. S&P also downgraded or put a negative credit watch on eight Texas cities, power cooperatives and power authorities due to unexpectedly high costs.
The rating firm put San Antonio’s gas and electricity system on alert for a downgrade, noting that its financial obligations for event power purchases were potentially $ 1 billion, more than it spent in total on such. purchases during your last fiscal year.
Earlier in the week, electricity retailer Just Energy Group Inc.
It said it had suffered an estimated loss of $ 250 million, buying high-priced wholesale electricity on behalf of its customers.
Until now, companies that did well in the wild market have been silent about their windfall profits. Macquarie Group of Australia Limited.
it raised its annual guidance to indicate that it made $ 215 million moving gas and electricity.
Banks and Wall Street trading desks have also been quiet about their gains or losses. Royal Dutch Shell PLC, which operates one of the largest energy trading desks, said it was still finding out how its office and partners performed.
“Throughout the week, we were in close contact with our Shell Energy North America customers and relevant regulatory agencies and that continues to be the case as we continue to assess the aftermath of this devastating weather event,” said Shell spokesman Curtis. Smith.
Write to Russell Gold at [email protected]
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