Month: August 2021

Gas companies seek more cash from consumers

Gas companies seek more cash from consumers

The Austin Monitor, August 17, 2021 by Jo Clifton

Texas Gas Service, as well as other utilities throughout Texas that provide natural gas to consumers and businesses, is asking the Texas Railroad Commission to allow it to put a surcharge on customers’ bills in order to pay for natural gas used during Winter Storm Uri. TGS filed its application with the commission to recover costs of the storm on July 30.

Consumer advocate Paul Robbins, who has studied documents filed with the commission, has concluded that the gas companies are seeking an order that will allow them to add about $5 a month to customers’ bills for 10 years. Larry Graham, manager of regulatory affairs for TGS, declined to offer an estimate of the cost to consumers.

According to an analysis by Bloomberg News, because of Texas’ unregulated market, natural gas producers – as opposed to companies that sell gas to consumers – made $11 billion in just five days during the unprecedented winter storm.

Although TGS and the other gas companies that provide gas to consumers each filed a separate request for a hearing on their securitization case, all the cases have been consolidated. More than 50 cities throughout the state have joined a coalition to intervene in the case before the commission. Central Texas cities that have joined the Texas Cities Alliance include West Lake Hills, Taylor, Goliad and Killeen.

While Austin is not on the list, city officials confirmed late Monday that Austin has joined in intervening on the matter. Thomas Brocato, the lead attorney representing the alliance of cities, told the Austin Monitor that other cities still have time to join the coalition.

Graham insists that the matter before the Railroad Commission is not a “rate case,” but a proceeding to allow securitization financing. As he explained, under Texas House Bill 1520 the gas companies will be able to extend the period of time during which they can recover costs associated with Winter Storm Uri.

According to documents filed with the commission, charges for natural gas during the winter storm left TGS with about $290 million in debt. Robbins said all told, the companies that provide gas service directly to consumers have more than $3.6 billion in fuel debt that they want to securitize.

Graham said, “The price at that moment in time went berserk … it happened to every gas utility in the state of Texas. Our company had to take a big loan out to pay the bill.”

As Graham explained, under the legislation signed by the governor in June, the commission will decide the amount to be recovered by each gas utility. After the commission determines the amount each company can finance, it will issue a financing order directing the Texas Public Finance Authority “to issue customer rate relief bonds.” The commission has 90 days to issue the financing order and the state financing authority has 180 days to issue the bonds.

Graham said via email, “Securitization is expected to provide a lower monthly cost compared to recovery over nine months through the existing cost of gas clause tariffs in Texas Gas Service’s service areas.” In other words, customers’ bills would be much higher if the gas company attempted to recover its costs through existing agreements.

Graham concluded, “We empathize with our customers’ concerns about higher bills and want to assure them that we are working on their behalf. As a fully regulated utility, our current tariffs would have us recover the amount over only a nine-month period. We believe that securitization is the best option for helping our customers by extending the period to recover the extraordinary costs from Winter Storm Uri. Additionally, as a distribution company, we do not profit on the cost of gas.”

The Texas Legislature has taken no action to ensure that the same scenario will not recur.

Energy in the News: No, the Texas Power Grid is Not Fixed

Opinion: No, the Texas power grid is not fixed

By Paul Robbins, Austin American Statesman

August 7, 2021

Gov. Greg Abbott signed two laws on June 2 to fortify the Texas power system. He proclaimed then that “everything that needed to be done was done to fix the power grid in Texas.” On what planet?

In the land of laws and sausage (two things you never want to see made), the Legislature was tasked to find solutions to the Texas-size electric system collapse that occurred in February. Lawmakers passed some measures but left too much unfinished for anyone to feel comfortable.

Power Plant Resilience: The largest reason for grid failure was that many power plants were not properly weatherized to withstand severe low temperatures. One of the laws Abbott signed now requires this, but there is no official date for when the weatherization must be done. The rules implementing these weatherization requirements will not even be finalized until November.

It will also take time and money — by one estimate, $430 million — for weatherization to be completed. The Texas Competitive Power Advocates, which represents power plant owners, is currently haggling with the Public Utility Commission over who should pay for the weatherization, consumers or power plant owners. The group has even stated some power plants may not stay online unless they receive consumer funding.

The only upside is that it is unlikely that a winter storm of the magnitude that occurred in February will reoccur again next year. But if a similar disaster strikes, there is no assurance that Texas will be ready.

Apparently, many Austinites feel the same way. There has been a run on emergency natural gas generators. A public record search revealed that there have been permits for 164 such installations pulled in the first half of 2021, compared to 44 in all of 2020.  Almost all of these permits were in wealthy areas of the city.

Building Efficiency: Another thing that Texas sorely needs to reform is its laggard programs for energy efficiency.  A friend of mine survived the winter storm in a newly-built, energy-efficient home without a fireplace. Despite three days without heat, the temperature never went below 47 degrees. While uncomfortable, it was survivable, at least compared to Texans who had icicles on their ceilings.

A 2017 benchmark study by the Electric Power Research Institute estimated that in 2020, Texans would only achieve 11% of their total potential savings from energy efficiency, while 38 states and Washington, DC had higher rates of achievement.

Sadly, building efficiency has become a partisan issue because it is advocated by people who want to lower carbon emissions. But I am having a hard time accepting that freezing to death is part of the Republican platform.

Maximum Charges: The Electric Reliability Council of Texas, which operates the state’s power grid, allows huge electric charges during periods of extreme demand in order to incentivize the building of costly new power plants. These charges can be as high as $2 to $9 per kilowatt-hour, compared to 2 cents to 3 cents per kilowatt-hour during average times.

Unfortunately, neither the Public Utility Commission nor the Legislature has eliminated or decoupled these extreme charges from emergencies such as disastrous weather events. If another severe winter storm were to happen next year, price gouging could happenagain.

Repricing: The record-breaking cold spell last February is only surpassed by the record-breaking price gouging that occurred in the energy markets. Estimates of this pillage range widely, but easily approached $16 billion and may be over $46 billion. The Legislature could have ordered a repricing of the market for some or all of these costs, but ultimately did nothing.

Texans who froze last winter deserve more than sound bites to address one of the worst emergencies in the state’s history, and the record-shocking economic fallout that followed. Fixing these problems should be the main priority of the next specially called legislative session.

Robbins is an Austin-based environmental activist and consumer advocate who has worked on energy issues for over four decades.