Texas Lawmakers Weighing Financial Rescue for Power Grid
(Bloomberg) -- Texas leaders have held multiple talks with financial institutions as lawmakers weigh options for easing the liquidity crisis facing the state’s power market following last month’s energy crisis.
“There are multiple options on the table,” said state Senator Kelly Hancock, who chairs the business and commerce committee which has held hearings on the matter. “We just want to make sure that there were no stones unturned.”
The arctic blast that left millions in the dark and drove electricity prices to record highs has pushed many power providers to the brink of bankruptcy and stressed Texas’s electricity market. The Electric Reliability Council of Texas, which manages the grid, is grappling with a shortfall of more than $2.4 billion -- $1.6 billion of which remains outstanding as more than a dozen companies have fallen behind on payments in the wake of the crisis. Moody’s Investors Service downgraded Ercot on Thursday and revised the grid operator’s credit outlook to “negative.”
Lawmakers are now weighing what, if any, aid may be needed to shore up Ercot’s finances, and are trying to do so “on a compressed timeline,” Hancock said. “We are going to get this right and we are going to provide stability in the marketplace and I think we will see that come about soon.”
Five companies have already defaulted and been terminated from the market, officials for the grid operator, known as Ercot, said during a board committee meeting Friday. More defaults are expected. One company, Brazos Electric Power Cooperative, has declared bankruptcy. If Ercot isn’t able to cover the shortfall, it will be split among all market participants. But under current rules, paying off the debt would take 50-80 years, officials said.
Earlier Friday, the state’s Public Utility Commission declined to rescind $16 billion in alleged overcharges for electricity during last month’s blackouts. The commission didn’t immediately respond to a request for comment about the talks for financial assistance.
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