UPDATED: March 16, 2021: The Texas Senate passed a bill Monday that would force ERCOT to reprice the billions of dollars the grid operator overcharged during the outages in February. It now faces the House of Representatives.

Dive Brief:

• Texas' head utility regulator on Thursday doubled down on his refusal to reprice the $16 billion overcharge reported by the independent market monitor following last month's rolling outages.
• Chair of the Texas Public Utility Commission Arthur D'Andrea, in testimony before the state's House of Representatives, reiterated previous arguments that repricing could significantly harm some market participants, and said there was new evidence that pricing had not been as high as previously claimed by the region's independent market monitor.
• But in an email the market monitor, Carrie Bivens of Potomac Economics, clarified that while the amount of money the PUC should actually correct for was smaller, $16 billion was still an accurate reflection of how much the market was overpriced.

Dive Insight:

D'Andrea has faced increasing pressure from the state's governor, lieutenant governor and other stakeholders since the Electric Reliability Council of Texas' independent market monitor revealed last week that the market was overcharged $16 billion. The issue was caused by longer-than-necessary scarcity pricing that held the region at its market cap of $9,000/MWh for 32 hours.

The IMM had recommended the commission reprice that period of time in order to remove the "inappropriate pricing intervention that occurred." D'Andrea declined to take the market monitor's advice last week, citing fear of harming market participants, in particular public power entities and electric cooperatives. But backlash in response to his decision prompted Gov. Greg Abbott to make repricing an emergency item, sending D'Andrea to the state capital Thursday.

Facing lawmakers, the chairman and sole remaining member of the PUC, following the resignations of the other two commissioners after the crisis, maintained his argument against repricing, arguing that it could bankrupt municipal or public power providers, and is unlikely to achieve customer cost savings. He also said that the market monitor had come back with a different, lower number — $3.2 billion — in a "revised position."

"I said, 'That's great. Thank you ... for being honest and reconsidering, will you please file that officially in our docket?' and they were gracious enough to do so," D'Andrea said.

But Bivens in a email clarified that the $16 billion was accurate, and their filing is not a retraction but a follow-up recommendation.

"[W]e stand by the [$16 billion], we are just following up with how dollars will actually move based on hedges," she said in an email.

The number that D'Andrea cited was part of the market monitor's recommended $5.1 billion that would actually be resettled, if the commission were to act.

"Correcting [ERCOT's] error will not reduce costs to consumers by $16 billion because a substantial share of the demand is served by owned generation or forward contracts," Thursday's letter from the market monitor read. "Given the deliberations currently underway regarding our repricing recommendations, this letter provides our estimates of the changes in settlement costs that would result from our recommended price corrections."

Those estimates include +/-$3.2 billion to represent the pricing "error" impacts on net energy buyers and sellers in the real-time market.

The PUC is holding another hearing Friday morning to revisit the issue. Former ERCOT market monitor Beth Garza, now a senior energy fellow with R Street Institute, said that while she does not envy D'Andrea's position, she thinks repricing is still the right call.

Although the chairman is correct that, as he put it, "unscrambling the egg" or retroactively changing the price despite all the decisions that are made after a price is set is risky and difficult, this situation may call for it, said Garza.

"Unfortunately, I think the dollars are just so big, we're going to have to go through some effort to try to unscramble the egg," she said.