13 Investigates' Ted Oberg asks Texas PUC's chair what promise he makes to residents

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Thursday, February 17, 2022
13 Investigates tracks how much you'll pay years after 2021 freeze
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13 Investigates how much 2021's February freeze grid failure will cost Texans and found electric consumers can expect to pay at least $240 more every year.

AUSTIN, Texas (KTRK) -- As he was lying in bed, bundled beneath layers of blankets, Eduardo Elizondo said he could see his breath every time he opened his mouth.

Elizondo was among millions of Texans who lost power for days during the peak of the February 2021 freeze. Nearly 250 people died and most of those deaths were caused by hypothermia or extreme exposure to the cold, according to the Texas Department of State Health Services.

SEE RELATED STORY: Deadly Texas winter storm power outages were due to freezing or lack of winterizing, report finds

"No one anticipated it to be as cold as it got for as long as it did," Elizondo told 13 Investigates' Ted Oberg. "It worries me that it happened, but what worries me even more is that it may happen again."

State leaders said they've made changes and promise the widespread outages won't happen again. There's no clear answer to what the upgrades will cost taxpayers, but 13 Investigates found the bills from last year's failure will be passed down to consumers for years.

WATCH: Action 13: 'Winter Storm - One Year Later' town hall

The 13 Investigates team set out to calculate how much of that bill Texans can expect to pay and found the cost was so high that state lawmakers allowed gas and electric companies to spread them out over decades.

Alison Silverstein, an independent energy consultant, said electric consumers can expect to pay 14% more on their electric bills. For the average Texas electric consumer, that is an extra $240 annually.

"I don't think Texans are going to forget about this one," said Silverstein, who previously worked as a senior advisor at the Public Utility Commission of Texas and the Federal Energy Regulatory Commission. "I think people here are going to carry the scars, and they're going to be pissed off for a really long time."

SEE ALSO: 48 hours without power a 'nightmare' as residents demand answers

Tim Morstad, associate state director for AARP Texas, estimates the electricity and gas that was generated during 2021's freeze cost about $6 billion and will be passed down to consumers little by little.

"Consumers have been left out in the cold," Morstad said. "Consumers are really going to get hit over the next few decades, just to kind of settle the score and balance sheets between electric companies. Then on top of that, we're going to have additional costs to try to strengthen the grid and to try to reduce the likelihood we may have an outage again."

The Electric Reliability Council of Texas (ERCOT), which runs the state's electrical grid, did not have enough supply during last year's storm.

ERCOT increased electric costs 360 times above what it was just days before the height of the storm, hoping to incentivize more power generation. But, Morstad said the cost of natural gas to make electricity also spiked, meaning the state's electric providers are on the hook for about $3 billion in increased electric costs and $3.4 million in gas bills.

Morstad said he expects it will take at least 20 years to pay off the winter storm debts and that doesn't even include the cost of what it will take to winterize, or protect the equipment from future extreme cold weather events. The state legislature has allowed the bills to be spread out as long as 28 years.

"It's a lot of money and most people don't know that it's not picking up any of the expense to harden the grid, to make improvements that we need to avoid this next time," he said.

13 Investigates checked the rates the PUC put out for 12-month 1,000 kilowatt-hour plans after the February freeze and compared it with the rates available on the Power To Choose website. It shows every single electric company's rate is up compared to 2021. On average, residents are paying 32% more, or $45 more every month not including any fees to pay for last year's freeze, according to our analysis.

Peter Lake, who took over as chair of the Public Utility Commission of Texas in April of 2021 after the storm, said upgrades to the state's electrical supply and grid will cost residents upfront, but it is expected to save money long-term. Lake's state agency regulates electric utilities and oversees ERCOT.

"Texas will pay for those (upgrades) out of the gates because we want more reliable power," Lake said. "We don't ever want to have a tragedy like that again."

Still, when pressed in an interview at the PUC's Austin Headquarters, Lake said the latest estimates the PUC has received showed the adopted reforms will increase the cost for consumers by 7$ to 8%, but he quickly added it's only an estimate.

Silverstein followed the state PUCs deliberations closely as they set out to fix and reform Texas' grid.

When it became clear to her that no one was providing Texans a clear cost for the reforms, she sought out to find one. Silverstein said she dug through regulatory filings, PowerPoint presentations and PUC testimony to add up all the costs and found more than $6 billion in added costs to Texas consumers.

In a filing with the state, she estimated it will add up to a 14% increase to consumer's bills and said it could have been prevented if companies implemented recommendations following past extreme weather events.

"So many people and institutions made a lot of mistakes and we, the people of Texas, deserve better," she said.

'Could have avoided this'

Last year, 13 Investigates found state leaders were aware of proposals a decade earlier to winterize energy equipment following a February 2011 storm. During that storm, ERCOT cut the power to at least a million Texas homes amid a record-breaking cold snap.

The state did not act on those recommendations by the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) to make power plants winterize their equipment to withstand not just the average Texas winter, but also "unusually severe events."

RELATED: 13 Investigates consumers' pain after years of power grid neglect

Silverstein, a former senior advisor at FERC, said it's been clear for decades that Texas gas production, pipelines and power plants freeze and that work needed to be done to improve the system and protect it from future widespread outages.

"What is frustrating and what is maddening is that we could have avoided this had we ordered that power plants be winterized 10 years ago after 2011, had we actually acted like we were a state that gave a damn about energy efficiency, which isn't about virtue. It's about saving money," Silverstein said. "The old jokes were, 'Turn on your light. Burn all you want. We'll produce more.' That's not a sustainable approach for most Texans with limited incomes (and) nobody likes waste."

When approving legislative bills prompted by the deadly freeze, Morstad said lawmakers chose to pass down some of the costs associated with it down to consumers. But, he said, because of the state's inaction in previous storms, consumers should not be the ones responsible for paying the multi-billion-dollar bill.

"Consumers never got to vote to create the system of deregulated electricity and gas, and so I don't think it's fair that consumers should have to pick up the tab for the system that they really didn't create," Morstad said.

RELATED: 'Time will tell' what Texas could have done to prepare for mass outages

Elizondo said he's not happy consumers like him are stuck paying the price for what happened last year and is worried another deadly freeze and isn't confident state leaders did enough to prevent future outages.

"It's something where I believe that, as consumers, we are being unjustly penalized for a problem that should have been theirs to fix," he said. "We're the ones that are having to foot the bill when in actuality, they should have been the ones to do it."

State leaders have promised the changes they've made over the last year will work.

Lake said lawmakers have fixed the issues that resulted in financial costs burdening the state and consumers.

"We've reduced the highest price in the market by almost 50% and most importantly, we've gotten away from that crisis-based business model that incurred those costs to focus on a reliability-based business model that puts people before companies and that is a 180 degree shift from the way ERCOT was previously run," he said.

Lake wasn't with the PUC during last year's electrical grid failure but said since taking over he has zero concerns that it will happen again. Still, he acknowledged it will cost consumers more upfront.

"We know we don't have enough reliable power in Texas, which is why we're putting these longer-term reforms in place, so going forward we will know that every time someone at home flips the light switch on, they have reliable on demand power," Lake said. "Those costs will, just like anytime you buy something new, they'll be a little more expensive out of the gates."

'The lights will stay on'

When Oberg interviewed Lake last week in Austin, he asked, "What promise do you make to the people of Texas?"

"The grid will perform and the lights will stay on," Lake said. "Rain, shine, hot, cold. Absolutely. Our job every day, every night is to keep the lights on for the people of Texas. That's what we have done. That's what we're going to continue to do."

In 2021, Texans faced 44 hours of straight freezing temperatures and a zero-degree wind chill, according to our ABC13 meteorologists. In 2022, we saw 19 hours of freezing temperatures with a low of 27 degrees.

Even though winter this year hasn't been as severe, Lake said the work done by state leaders and regulators over the last year have helped.

"Our job is to keep the power on every day, regardless of what Mother Nature throws (at) us, hot, cold, wet or dry," Lake said. "(This year) was cold and wet. We kept the power on like we said we would and we had enough reserves to well exceed what the estimated peak would have been last year. We're confident in the work we've done."

SEE ALSO: Year-round storm suffering deserves year-round prep

When it comes to protecting consumers financially, Lake said the competitive market will help drive down costs.

"The way we protect the consumer is by making those operators compete for that consumer, so out of the gate, yes, we'll have a little higher prices because we're buying more reliability, but over the long term, those costs are going to go down," he said.

Despite the estimated $6 billion in outstanding electricity and gas bills for the State of Texas, Morstad said the public doesn't really know how much it's going to cost them.

"We should have a running tally. We should have a truth in energy regulation where people know exactly what's been proposed, what's been done and how much it costs that way they can appropriately weigh in," Morstad said.

Although electric companies have taken steps to protect their equipment from freezing temperatures, the natural gas supply used to power those electric generators have not been sufficiently improved, Morstad said.

"State leaders are engaging in a risky gamble," Morstad said. "They are gambling that we're not going to have the type of temperatures that we witnessed last February, because the truth is that the grid isn't fully prepared to handle that kind of hit again. The necessary improvements haven't been made."

In Houston, Elizondo said he expects to lose power during hurricanes, but never expected to lose power for days during the winter freeze.

A year after the freeze, he said he knows the families of those who died during the winter storm haven't forgotten their loved ones. But, he's afraid state leaders will soon forget just how tragic the power outages were for residents across Texas.

"It's good for all of us to remember to try to prevent the preventable," Elizondo said.

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