Cantwell on Texas Energy Grid Crisis: “Price Gouging Should Not Be Tolerated In These Emergencies,” Questions Witnesses on Exorbitant Energy Bills in Aftermath of Winter Storm Uri
Cantwell: “We just need better tools to protect consumers and businesses from these kinds of spikes in rates
WASHINGTON, D.C. – This morning at a Senate Committee and Energy and Natural Resources hearing, U.S. Senator Maria Cantwell (D-WA) spoke on the need for a “smarter, cleaner, more secure, more resilient grid” and questioned witnesses from the energy sector on the exorbitant energy bills charged to Texans in the aftermath of Winter Storm Uri, which left four million Texans freezing in their homes without electricity or access to clean water and was responsible for at least 17 deaths.
“According to watchdog firms, Texas power markets [ERCOT] overcharged energy users $16 billion dollars,” Cantwell said to former Federal Energy Regulatory Commission (FERC) Chairman Pat Wood. “That left prices at the nine thousand per megawatt-hour grid emergency standard for longer than necessary. Are you familiar with this analysis and do you agree with those conclusions?”
She continued, “That’s what I’m actually worried about, that the consumer here, just like in the Western Energy Market, so, do you think consumers should be reimbursed?”
“That issue, the [Texas] legislature is having a hearing on it today. Were I in that seat, I would have agreed with the independent market monitor,” said Wood.
“Do you know of any Enron traders who were involved in both the Texas and California markets that are employed in ERCOT trading now?
“I will have to check. I’m not aware of any,” Wood replied.
“I think we've seen what happened here, at least in the detail, and I’m not talking about the crisis itself but in the aftermath. And I think we just need better tools to protect consumers and businesses from these kinds of spikes in rates. Mr. Wood knows that I fought diligently against our state having to pay 3,000 times the rate in long-term contracts that were fraudulently manipulated. So we passed laws here to try to protect people. Mr. Chairman, you said it best, price gouging should not be tolerated in these kinds of emergencies.”
Earlier in the hearing, Cantwell also asked witnesses to comment on the importance of investing in critical grid updates, including high voltage transmission capacity: “There was an MIT study and then a University of California study that investing $100 billion in transmission expansion could achieve a higher cleaner grid and help use wholesale cost… [Do] you think modernization of our grid is an investment we should be seeking?... At what level, and what’s the mix of federal and private investment?”
In response, Wood said: “We do need the backbone… And I think that's probably a nine-figure number. It's a lot of money. But it's over time, and it’s, quite frankly as we learned in Texas, when you spend money on transmission, you save a lot more than you spend on getting low-cost power into your power system.”
James Robb, President and CEO of the North American Electric Reliability Corporation, chimed in: “This concept of a national transmission grid is something that's very worthy of consideration… I would probably concur with your assessment as to the cost of it.”
Cantwell has long championed grid modernization. Her Grid Modernization Act of 2019 authorizing more than $2.2 billion to fund programs at the Department of Energy aimed at modernizing our nation’s electricity grid, was signed into law in December.
Cantwell has aggressively fought throughout her career to protect consumers from energy price manipulation. In the aftermath of Enron’s schemes that cost Washington ratepayers billions, Cantwell authored an amendment to the Energy Policy Act of 2005 that gave FERC authority to investigate and punish energy market manipulation. Today, by committing additional resources and assembling a team of experts capable of understanding the complex energy and financial markets, FERC is using that law to root out fraud, impose civilian fines and disgorge illicit profits from energy manipulators. Cantwell also successfully fought in 2007 to give the Federal Trade Commission oversight of the wholesale petroleum markets. In 2010 under the Dodd-Frank Consumer Protection Act, she worked to give the Commodity Futures Trading Commission oversight in the derivatives markets. From her first days in office Cantwell pushed to expose Enron’s manipulation of deregulated energy markets. On December 2, 2001 Enron filed for Chapter 11 bankruptcy leading to the dismissal of more than 22,000 employees. Cantwell helped uncover numerous ‘smoking gun’ audio tapes and memos that detailed the tricks Enron used to artificially drive up electricity prices.
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