Texas PUC Chair resigns, following pressure from governor, refusal to reprice $16B ERCOT overcharge

Dive Brief:

Texas Public Utility Commission Chair Arthur D'Andrea resigned Tuesday, upon the request of Gov. Greg Abbott, R.
The chair's resignation follows a leaked recording, reported by Texas Monthly, wherein D'Andrea promises investors he'll put the "the weight of the commission" behind preventing a reversal of billions of dollars in overcharges related to the winter storms that struck the region last month. Those statements were released amid a growing dispute among the PUC, the two chambers of the state legislature, the governor and lieutenant governor about how the state should handle those charges.
Though the Texas Senate on Monday passed a bill that would mandate the Electric Reliability Council of Texas (ERCOT) reprice the overcharges, something Lt. Gov. Dan Patrick supported, the House speaker on Tuesday said he did not believe the grid operator's decision was an "error." Gov. Abbott had made the issue an emergency item for the legislature to address, but on Friday seemed to side with the PUC chair in a letter sent to the lieutenant governor. "I agree with the position of the PUC Chair about his inability to take the action you requested," wrote the governor.

Dive Insight:

D'Andrea was the last of three commissioners to resign from the PUC, in the latest fallout following widespread outages across the state last month.

He was facing pressure from the lieutenant governor, in particular, to follow the advice of ERCOT's independent market monitor and attempt correct the $16 billion in overcharges borne by an extended period of scarcity pricing. Actual resettlement numbers on a reversal in pricing would have come out to around $5.1 billion, the market monitor later confirmed.

Though Abbott had ordered the issue to be taken up as an emergency item by the legislature, he'd also indicated he disagreed with the lieutenant governor that repricing was the obvious solution.

"It is clear to me there is a difference of opinion of whether there was a billing error or there was a deliberate decision to take action to save the lives of Texans in their homes. That issue will ultimately be decided by courts," he wrote on Friday in a letter to Patrick, adding later, "The Governor does not have independent authority to accomplish the goals you seek. The only entity that can authorize the solution you want is the legislature itself."

Following questioning of D'Andrea and other stakeholders, the Senate quickly passed a bill on Monday that would require ERCOT to reprice. But that legislation hit a wall in the House of Representatives Tuesday after Speaker of the House Dan Phelan also questioned whether ERCOT's pricing had been a mistake, calling it a "management decision ... based on ensuring the reliability of the grid," not an "error."

"I believe that these decisions may have saved lives," he said in a statement.

Amid these disputes, a recording was leaked to the Texas Monthly, in which D'Andrea, in a March 9 call hosted by Bank of America Securities and closed to the public, apologized to investors for the "uncertainty" discussions on repricing had caused. "It's a contentious political issue. The best I can do is put the weight of the commission in favor of not repricing," he said on the call.

D'Andrea had consistently argued against repricing — "it's just nearly impossible to unscramble this sort of egg," he said during an open PUC meeting, following revelations from the market monitor that ERCOT had kept the market at its cap of $9,000/MWh 32 hours longer than was necessary.

Abbott, in his statement announcing D'Andrea's resignation, did not clarify whether the repricing issue played a role in the governor's request for the chair to step down.

"Tonight, I asked for and accepted the resignation of PUC Commissioner Arthur D'Andrea," Abbott said in a press release. "I will be naming a replacement in the coming days who will have the responsibility of charting a new and fresh course for the agency. Texans deserve to have trust and confidence in the Public Utility Commission, and this action is one of many steps that will be taken to achieve that goal."

D'Andrea's resignation leaves the commission without any commissioners. Former Chair DeAnn Walker resigned earlier this month, followed by Commissioner Shelly Botkin. Seven members of the ERCOT board have resigned and CEO Bill Magness was fired, all in response to the February events.