Potomac Electronics, the watchdog that monitors the power market in Texas, says that the grid operator in the state, the Electric Reliability Council of Texas (ERCOT) made a $16 billion pricing error during the winter storms that knocked out power across most of the state.
ERCOT kept power prices much higher than they should have been for over a day after the widespread outages ended on February 17, according to Potomac Economics. Potomac Economics is the independent market monitor for the Public Utility Commission of Texas and are responsible for monitoring ERCOT.
“In order to comply with the Commission Order, the pricing intervention that raised prices to VOLL (value of lost load) should have ended immediately at that time (late on Feb. 17),” Potomac Economics said.
Instead, the company continued to maintain prices at VOLL by inflating the Real-Time On-Line Reliability Deployment Price Adder for a further 32 hours, leading through the early hours of February 19. Potomac Electronics say this error cost ERCOT’s markets a further $16bn.
These findings were originally reported by the Texas Tribune and Bloomberg on Thursday.
In an unrelated incident, the ratings agency Moody’s Investors Service downgraded ERCOT from A1 to Aa3 and changed its credit outlook to “negative” on Thursday.
ERCOT responded to the outages by ousting former chief executive Bill Magness on Wednesday. The power outages left many Texans without power, heat, or water for two days.
The winter storms knocked out around half of the generating plants in Texas, leading to outages that caused dozens of deaths and pushed power prices to over 10x the normal rate.
Many directors at ERCOT also resigned over the past week and the head of the Public Utility Commission in Texas also resigned over the incidents.