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Climate and Credit Risks Collide in the Aftermath of Uri


By Bob Smith, Sage President & CIO
According to a recent letter written to the Texas Public Utility Commission (PUC) by Potomac Economics, the Electric Reliability Council of Texas (ERCOT) made a $16 billion error in pricing during the week of Winter Storm Uri. This reportedly occurred because the PUC directed the grid operator to set wholesale power prices at $9,000 per megawatt hour for two days during the storm the maximum market price allowed. Retail power providers then bought power from the wholesale market to deliver to consumers, because they were contractually obligated to do so. Because ERCOT failed to bring prices back down on time, those companies had to buy power in the market at extremely inflated prices. ....

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