Ex-Texas utility commissioner assured investors he would protect profits amassed during historic power crisis

Ex-Texas utility commissioner assured investors he would protect profits amassed during historic power crisis

Texas' recent energy nightmare found millions of people in the Lone Star State experiencing freezing temperatures without heat, electricity or running water. But not all Texans lost power during the cold snap, and some of the ones who didn't found themselves being socked with electric bills of $15,000 and $16,000 because of the variable-rate plans they had signed up for. And while some Texans were still fuming over the bills they had received, journalist Loren Steffy reports in the Texas Monthly, then-Texas Public Utility Commission Chairman Arthur D'Andrea was — according to The Texas Monthly — insuring investors that they wouldn't be losing any money.

Earlier this week, D'Andrea — an appointee of Texas Gov. Greg Abbott — resigned. But D'Andrea was still serving as Texas PUC chairman when he "discussed the fallout from the February power crisis with investors" on March 9, the Texas Monthly's Loren Steffy reports.

The Monthly has obtained a recording of that March 9 phone conservation and posted the audio along with Steffy's article.

"During that call, which was hosted by Bank of America Securities and closed to the public and news media, D'Andrea took pains to ease investors' concerns that electricity trades, transacted at the highest prices the market allows, might be reversed — potentially costing trading firms and publicly traded generating companies millions of dollars," Steffy explains.

Steffy notes that D'Andrea, during that conversation, told investors, "I apologize for the uncertainty."

According to Steffy, "The conversation shows a coziness between a top Texas regulator and some of the biggest players in the electricity market at a time when the PUC's oversight is under fire from lawmakers. At one point, during a discussion about whether natural gas — which also saw huge price spikes during the crisis — would be 'repriced,' D'Andrea said no, adding that most legislators understand that gas is priced by global markets and is out of their purview."

Steffy points out that D'Andrea, during the March 9 conversation, "focused on the issue of repricing some of the most expensive electricity trades during the crisis."

"Wholesale power prices rose 10,000 percent during the third week of February, hitting the state-imposed maximum of $9000 per megawatt-hour and staying at those levels for days," Steffy explains. "The PUC mandated that the $9000 prices stay in effect for 32 hours after the market had returned to normal — a move that has angered many municipal utilities and retail electricity providers. Those providers are now struggling with huge bills that they say are unjustified and could push them into bankruptcy, while potentially eventually driving up bills for millions of residential and commercial consumers in Texas."

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