Tag Archives: Texas

Texas regulator warns lawmakers against rollback in storm power prices

(Reuters) – The head of Texas’s power regulator told lawmakers on Thursday that any effort to retroactively reduce the power prices levied during a recent storm would lead to lawsuits that the state could lose.

The state’s power grid operator raised power prices sharply during a February freeze that pushed two power companies into bankruptcy. Others have warned of potential bankruptcies. Top officials this week called on the Public Utility Commission (PUC) of Texas to immediately reduce about $16 billion in power prices.

Any repricing would trigger lawsuits that the commission would lose, PUC Chairman Arthur D’Andrea bluntly told lawmakers at a hearing in Austin. Commodity contracts used to hedge power have closed and any repricing “will have consequences” for the state’s power, agriculture and other markets, he said.

“If I do it, I get sued and lose right away,” he told a state committee. The legislature could attempt to change the pricing by passing a bill, but it also would face lawsuits and could lose, he added.

The state independent market adviser has recommended a pricing of the final 32 hours of the five-day emergency and called for some service fees to be cut, citing grid rules. Emergency charges amounted to $16 billion for power and about $1.5 billion for service fees tied to the power price.

The state’s governor, lieutenant governor and 28 of 32 state senators this week also called on the PUC and grid operator to “correct” the final 32 hours of power pricing, citing the recommendation and impact on utilities.

“These corrections are squarely within your authority, whether by your own action or an order to ERCOT,” the senators told D’Andrea in a letter on Tuesday, referring to the state grid operator by its acronym.

“I disagree” with the senators’ call, D’Andrea said. He has continually ruled out a power price rollback, arguing “it is impossible to unscramble” insisting the decision to raise prices during the cold snap was known to all grid users.

D’Andrea pushed back against the market monitor’s estimate of the power overcharges, telling lawmakers the amount was much smaller, about $3.2 billion.

Intercontinental Exchange Inc. (ICE), which handles Texas power trades, last week closed contracts that covered billions of dollars in state power trades and has no authority to reopen settled contracts. ICE has deferred settling four contracts tied to the service fees that are much smaller in value, people familiar with the matter told Reuters.

(Reporting by Gary McWilliams; Editing by Marguerita Choy and Daniel Wallis)

Texas sheds coronavirus mask, occupancy restrictions

By Brad Brooks

LUBBOCK, Texas (Reuters) – Texans awoke on Wednesday with a statewide mask mandate and occupancy restrictions in businesses lifted, a move some heralded as freedom and others as foolishness.

On paper, Texas’ rollback of coronavirus mitigation efforts is the most sweeping seen in the United States, along with a similar measure in Mississippi. In practice, vast swaths of Texas have rarely enforced mask or occupancy mandates in the past year, anyway.

Several major retailers, grocery and restaurant chains in Texas said they would still require that masks be worn in their stores, which under Abbott’s order relaxing restrictions is their right to do.

Still, some expected to see standoffs between maskless customers and store employees on Wednesday.

Texas was one of the first states to reopen its economy after the first wave of pandemic cases last May, and the nation’s second most populous state led the way again last week when Governor Greg Abbott announced the relaxation amid declines in new daily COVID-19 cases and with the rollout of vaccines.

As of Sunday, 18% of the U.S. population had received at least one dose of a vaccine, according to the Centers for Disease Control.

County officials in regions where COVID patients take up 15% or more of hospital beds for seven consecutive days can enact new mask and occupancy restrictions, under Abbott’s order, but no regions are currently in that situation.

Austin’s city council voted to still require masks – and dared state officials to sue the city.

“In Austin, we’re committed to saving lives,” city council member Greg Casar wrote on Twitter.

The Texas Education Agency’s guidance for public schools is for the continued use of masks, while nursing homes in the state will not loosen restrictions.

The Dallas Jewish Conservatives organization plans to host a party Wednesday evening with about 200 people. There will be a moment of silence for the pandemic’s dead, refreshments for the guests and a bonfire into which folks will be encouraged to toss masks.

“It’s about freedom, liberty and personal responsibility,” said Benjie Gershon, founder of the group. “The act of throwing a mask into the bonfire … is in no way meant to belittle or undermine the tragic numbers of individuals who have fallen ill to COVID.”

(Reporting by Brad Brooks in Lubbock, Texas; Editing by Robert Birsel)

Some Republican governors stand by mask mandates as Texas and Mississippi accelerate reopening

By Gabriella Borter

(Reuters) – While Texas and Mississippi announced complete rollbacks of their states’ COVID-19 mitigation measures this week, several governors of other Republican states have made clear they are not abandoning their mask mandates despite political pressure.

The sharp decline of new daily COVID-19 cases and the rollout of vaccines in the United States have prompted state and local governments to ease business restrictions in recent weeks, with movie theaters set to open at limited capacity in New York and indoor dining resuming in San Francisco on Friday.

However, the decline in cases plateaued last week with new infections rising in 29 out of 50 states compared with the prior week. Texas saw a 69% rise in cases in the week ended Feb. 28.

Few of the rollbacks have been as sweeping as in Texas, where Governor Greg Abbott on Tuesday said the state’s mask mandate would be lifted and most businesses could open at full capacity next week.

The move drew immediate criticism from some politicians and public health experts who have urged caution while the nation’s vaccination program is still underway.

President Joe Biden said on Wednesday that decisions to end the required wearing of masks – such as those made by Texas and Mississippi – amounted to “Neanderthal thinking” given the ongoing deaths being caused by the pandemic.

“I think it’s a big mistake. Look, I hope everybody’s realized by now, these masks make a difference,” he told reporters.

Public health experts agree face coverings are essential to slowing the spread of the virus, which has killed more than half a million Americans. But over the last year, resistance to public health measures in the United States, especially mask-wearing, has become politicized, with many Republican states enacting fewer and looser COVID-19 protocols than Democratic states.

In some Republican-led states, including Florida and South Dakota, there has never been a statewide mask mandate. In others, like Alabama and Ohio, mask mandates remain in effect.

Including the upcoming change in Texas, 34 states mandate that residents wear face masks in public, along with the District of Columbia and Puerto Rico.

In Ohio, U.S. Senate candidate Josh Mandel on Wednesday called on Republican Governor Mike DeWine to follow Texas’ lead and repeal the statewide mask order. The governor quickly rejected the idea.

“Ohio will be keeping its mask mandate to protect Ohioans who have yet to receive the vaccine. Vaccine supply is increasing, and there is light at the end of the tunnel, but the virus is still here and the pandemic is still ongoing today,” a spokesman for DeWine told Reuters in an email.

Governor Jim Justice of West Virginia, a Republican, said on Wednesday he was not ready to ease any restrictions, including an indoor mask mandate.

“All businesses must continue to follow the safety guidelines,” Justice said.

Abbott’s executive order in Texas will lift all mask requirements statewide as of March 10 and forbid local authorities from penalizing residents who do not wear face coverings. It will remove all restrictions on businesses in counties without a high number of hospitalizations.

Local officials can still apply limits to businesses where hospitalizations remain high, according to the order, but are prohibited from mandating that they operate at less than 50% capacity.

As of Monday, Texas was seeing about 7,500 new cases per day on a seven-day average, according to Reuters data, and it was ranked 47th in the list of states that have vaccinated the highest percentage of their populations.

Mississippi Governor Tate Reeves, a Republican, on Tuesday also lifted his state’s mask order and removed all restrictions on businesses.

But Louisiana Governor John Bel Edwards, a Democrat in a majority Republican state, doubled down on his state’s mask order even as it increased capacity to 75% at restaurants and retail businesses on Wednesday.

“Louisiana’s mask mandate is still in place,” Edwards tweeted. “As we vaccinate more and more people, masks are still our most effective tool in stopping the spread of COVID-19 and saving lives.”

(Reporting by Gabriella Borter, Peter Szekely, Jarrett Renshaw and Carl O’Donnell; Editing by Colleen Jenkins and Lisa Shumaker)

Texas electricity regulator cuts some emergency fees tied to winter storm

By Gary McWilliams

HOUSTON (Reuters) – The Texas electricity regulator on Wednesday ordered cuts to emergency fees paid to generators amid a financial crisis in its power market, but adjourned without acting on calls to protect consumers from price spikes.

A mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate. About $47 billion in one-time costs are threatening companies that sell, transmit or generate electricity in the state. Consumers will see higher prices as the costs are passed along.

In its first meeting since the blackout, Public Utility Commissioners (PUC) agreed to revoke charges for standby power services that were not provided. The size of the charges have not been disclosed.

“The PUC has acted with urgency and taken a big step in the right direction,” said Brandon Young, CEO of electricity provider Young Energy LLC. He said the changes would relieve some of the stress on providers and consumers.

The two-person PUC separately endorsed an independent market adviser’s recommendation for an about $2 billion reduction in other fees but took no immediate action.

As the state and federal governments launched investigations into the storm, commissioners backed a state audit of emergency prices that soared when demand spiked during severe cold weather. U.S. lawmakers on Wednesday demanded the state’s grid operator turn over documents and communications with officials from during the storm.

The state’s independent PUC adviser, Carrie Bivens, recommended cuts that could shave about $2 billion from business fees, though she provided no estimate of the total. Commissioners will meet Friday to consider that recommendation.

“I can’t understand why there was no action on immediate relief for consumers” at the hearing, said Tim Morstad, associate state director for consumer advocacy group AARP Texas. His group asked the PUC for protections for consumers being shifted to new utilities.

If left in place, the service fees could force out a quarter of the state’s about 100 providers and concentrate up to 80% of the market among three large utilities, industry experts said.

“There could be a number of retail service providers who aren’t able to remain in business if ERCOT does not relent on the demand for payment,” said Catherine Webking, an attorney who represents companies seeking fee cuts.

The PUC supervises grid operator Electric Reliability Council of Texas (ERCOT), which is facing a $2.46 billion shortfall from companies that have not paid their bills. ERCOT on Monday said it would begin naming businesses that have failed to pay and disclose the amounts each owed.

The crisis claimed its first victim Monday when Brazos Electric Power Cooperative Inc, whose members provide power to about 660,000 in the state, filed for bankruptcy after receiving bills for $2.1 billion from ERCOT. Brazos this week said storm charges could increase consumer bills by 2 cents per kilowatt hour.

(Reporting by Gary McWilliams; Editing by Leslie Adler and Chris Reese)

Texas governor lifts state’s mask mandate, business restrictions

(Reuters) – The governor of Texas lifted most of the state’s coronavirus pandemic restrictions, allowing businesses to reopen at full capacity as of next week and telling residents that masks were no longer required.

The move by Governor Greg Abbott marks the furthest any U.S. state has so far gone to roll back harsh restrictions on businesses and residents imposed by political leaders in the face of the COVID-19 pandemic.

“It is now time to open Texas 100%,” Abbott said at an afternoon news briefing. The full lifting of the mandates will take effect on March 1, he said.

Abbott’s order comes as COVID-19 infections have plummeted in recent weeks across much of the world, including the United States.

According to a Reuters tally roughly 68,240 new cases have been reported on average each day this week, or 27% of the peak daily average reported on Jan. 7. The United States has recorded 28,681,793 infections and 513,721 coronavirus-related deaths since the pandemic began.

(Reporting by Brendan O’Brien in Chicago and Dan Whitcomb in Los Angeles; Editing by Leslie Adler and Matthew Lewis)

How private equity squeezes cash from the dying U.S. coal industry

By Tim McLaughlin

BOSTON (Reuters) – Private equity firms are proving there’s still plenty of profit in the U.S. coal industry despite a decade of falling demand for the fossil fuel. They are spending billions of dollars buying coal-fired plants on the cheap – and getting paid even when they are not providing power.

Since the end of 2014, at least five U.S. private equity firms have bought coal plants in markets where regulators pay them to be on standby to provide emergency power when demand surges with extreme hot or cold weather, according to a Reuters review of U.S. regulatory disclosures and credit-rating agency reports.

The lucrative investments illustrate how fossil fuels will remain an important part of the energy mix – and continue spinning off cash for investors – even years after demand for them peaks as the world transitions toward cleaner energy sources.

The need for reserve power was on display during the utility crisis this month in Texas – the only U.S. grid system that operates without such an emergency system. A cold snap knocked out several of the state’s generating plants and triggered widespread blackouts, leaving a wake of human suffering including several dozen deaths.

The so-called capacity payments are given out in most U.S. power markets, and regulators tend to favor coal-fired generators that store heaps of coal on site when other power sources might be disrupted. In the Pennsylvania, Jersey, Maryland Power Pool (PJM), which has the largest standby market, capacity revenue payments average more than $100 per megawatt per day – an insurance policy that costs about $9 billion a year and aims to make sure the grid’s 65 million customers avoid blackouts during heat waves and Arctic blasts.

“The capacity power market is a certain source of revenue for coal plants that might otherwise be uneconomical,” said Sylvia Bialek, an economist at New York University’s Institute for Policy Integrity.

The administration of former President Donald Trump, a Republican, encouraged capacity market incentives for coal-fired generators. But President Joe Biden, a Democrat, is likely to change those policies in the coming years as part of an effort to slash nearly all of the U.S. power sector’s reliance on fossil fuels by 2035.

In the meantime, private equity firms are in a good position to compete for capacity payments because traditional utilities are under pressure from activist shareholders to reduce greenhouse gas emissions and to limit debt.

The private equity owners of Ohio’s Gavin Power Plant in the PJM grid, for example, have squeezed hundreds of millions of dollars out of the facility since buying it four years ago, even though it only runs about 60% of the time.

Lightstone Generation LLC – a joint venture between Boston’s ArcLight Capital Partners LLC and New York-based Blackstone Group Inc – took on $2.1 billion in debt from Wall Street banks to buy the plant and three much smaller gas-fired units from American Electric Power Company Inc in 2017, according to term sheets viewed by Reuters.

From 2018 to 2020, Lightstone’s power plant operations produced about $1.1 billion in operating profit, according to estimates from Moody’s Investors Service. Up to 50% of Gavin’s cash flow comes from being on standby for emergency power, according to several economists and credit analysts.

About 18 months after the Gavin acquisition, ArcLight and Blackstone went back to Wall Street to finance most of a $375 million special dividend they paid to themselves, according to credit rating agencies. Such dividends are a way for private equity firms to lock in profits and shift risk to their debt-holders, which are often mutual funds. If the business does well, the debt gets paid off at a premium. But if the business fails, the debt-holders end up with equity stakes in plants of declining value.

ArcLight did not respond to requests for comment. Blackstone declined to comment.

The private equity firms’ backers have also been making money on the investments, according to filings. The state of Connecticut’s retirement plan, for example, invested $85 million in ArcLight’s Energy Partners Fund VI, which holds stakes in the Gavin plant along with other energy investments, and has seen returns of about 8%.

Meanwhile, mutual funds that invested in Lightstone’s debt are receiving payments pegged to a floating interest rate that has ranged from 4% to 6% – far higher than about 1.4% on the U.S. benchmark 10-year yield.

‘ABSOLUTELY VITAL’

Other private equity firms have also been betting on coal power capacity payments.

Atlas Holdings, for example, led a joint venture to buy New Hampshire’s Merrimack Station coal plant in 2018, the centerpiece of a $175 million acquisition of generators from New England-based utility Eversource Energy.

Atlas declined to comment.

The coal plant hardly runs but has been eligible to receive up to $188 million in capacity payments from the New England ISO between 2018 and 2023, according to disclosures by regulators. Workers at Merrimack Station see their mission as a matter of life and death. They keep boilers warm and the plant in a constant state of readiness, said Tony Sapienza, business manager for Local 1837 of the International Brotherhood of Electrical workers.

“The capacity market is absolutely vital,” Sapienza said. “And without Merrimack Station, people might die in the winter or during really hot weather. It’s really that simple.”

The reserve coal plants create good jobs. Private-equity owned coal plants can pay their staff about $100,000 a year for keeping the facilities on standby and firing them up when needed, according to Shawn Steffee, business agent for the Boilermakers Local 154 union in Pennsylvania. He said coal plants in the state “ran like a freight train” during the recent cold snap.

In another profitable investment, private equity firm Riverstone Holdings LLC paid $1.8 billion in late 2016 to buy the remaining stake in electricity producer Talen Energy Corp. The take-private deal included stakes in several coal plants, including ones receiving PJM capacity payments, an “important component” of gross profits, according to an SEC disclosure. About a year later, Talen paid its owners, including Riverstone, a special $500 million dividend. Riverstone did not return messages seeking comment.

WITH REWARD COMES RISK

Private equity ventures into coal-fired power don’t always turn out well, with some deals getting caught up in the broader decline of the coal industry. A credit fund run by private equity firm KKR & Co Inc in 2015, for example, took a big stake in Longview Power LLC – whose major asset is a West Virginia coal plant plugged into the PJM electric grid – as part of a bankruptcy restructuring.

But in April 2020, Longview filed for bankruptcy protection again, wiping out some $350 million in debt, as coronavirus lockdowns cut electricity demand. KKR declined to comment.

Analysts and economists expect Biden’s administration to crack down on rules that prolong the lifespan of dirty coal plants as part of sweeping measures to fight climate change. Biden has named Richard Glick, a Democrat, as the new chairman of the Federal Energy Regulatory Commission. Under a Republican majority on the commission, Glick had been critical of FERC rules he contends unfairly favor coal over renewable energy sources in capacity power markets, saying they “would have made the Kremlin economists in the old Soviet Union blush.”

FERC did not respond to requests for comment, and the White House declined to comment.

“I’m confident, in the next couple of years, FERC will order changes,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School.

Policy changes could make it harder for highly-leveraged private equity owners of coal plants, like Lightstone, to refinance their debts, according to Richard Donner, a credit analyst at Moody’s Investors Service. About $1.7 billion in the company’s debt comes due in 2024.

Even so, Lightstone’s creditors are the ones with the greatest risk, according to Peskoe.

“Somehow the private equity guys always make out OK,” Peskoe said. “It’s everyone else who doesn’t.”

(Reporting by Tim McLaughlin; editing by Richard Valdmanis and Brian Thevenot)

Texas electricity firm files for bankruptcy citing $1.8 billion in claims from grid operator

By Gary McWilliams

HOUSTON (Reuters) – Texas’s largest and oldest electric power cooperative on Monday filed for bankruptcy protection in federal court in Houston, citing a disputed $1.8 billion bill from the state’s grid operator.

Brazos Electric Power Cooperative Inc, which supplies electricity to more than 660,000 consumers across the state, is one of dozens of providers facing enormous charges stemming from a severe cold snap last month. The fallout threatens utilities and power marketers, which collectively face billions of dollars in blackout-related charges, executives said.

Unusually frigid temperatures knocked out nearly half of the state’s power plants in mid-February, leaving 4.3 million people without heat or light for days and bursting water pipes that damaged homes and businesses. Brazos and others that committed to provide power to the grid – and could not – were required to buy replacement power at high rates and cover other firms’ unpaid fees.

The state’s grid operator, Electric Reliability Council of Texas (ERCOT), on Friday said $2.1 billion in initial bills went unpaid, underscoring the financial stress on utilities and power marketers. More providers likely will reject the bills in coming days, executives said.

“The municipal power sector is in a real crisis,” said Maulin Patani, a founder of Volt Electricity Provider LP, an independent power marketer that is not a member of the Brazos coop. ERCOT should suspend the service charges to halt further defaults, he said in an interview on Sunday.

An ERCOT spokeswoman did not have an immediate comment. The Public Utility Commission, the state’s regulator that oversees ERCOT, was unavailable for comment.

The city of Denton, in north Texas, last week sued ERCOT in a state court to prevent it from charging it for fees unpaid by other users of the grid. Denton Electric could face tens of millions of dollars for fees that were not collected from others, the suit claimed.

Debt analyst Fitch Ratings last week also warned of potential downgrades to all Texas municipal power firms that use the state’s grid. Costs from the storm “could exceed the liquidity immediately available to these issuers,” Fitch said.

Texas’s attorney general has launched an investigation into the blackout, calling for ERCOT and others to provide documents on the outages, pricing and emergency, saying they mismanaged the crisis.

ERCOT triggered the squeeze when it pushed up spot-market rates to $9,000 per megawatt hour (mwh) over more than four days and levied huge fees for services. The service fees were 500 times the usual rate, according to industry executives.

Brazos Electric coop executive Clifton Karnei, who sat on ERCOT’s board of directors until last week, signed the Brazos coop’s bankruptcy submissions.

An attorney for Brazos did not reply to a request for comment.

(Reporting by Gary McWilliams; Editing by Christopher Cushing, Stephen Coates and Louise Heavens)

Winners and losers in energy sector from Texas cold snap

(Reuters) – A winter storm that hit parts of the southern United States over the past week led several energy companies to report stronger-than-expected results after they were called on to provide more power at higher prices, while others faced millions of dollars in losses.

Here is a look at the winners and losers in the energy sector from the storm:

WINNERS:

Gas producers:

Comstock Resources said the last week was “like hitting the jackpot,” adding it was able to sell at “super-premium prices” a material amount of production at anywhere from $15 per million cubic feet of gas (mcf) to as much as around $179 per mcf.

EQT Corp said it also benefited from the high prices. The company mainly produces gas out of the Marcellus and Utica shale regions in Pennsylvania and Ohio.

Australia’s Macquarie Group, the second biggest gas marketer in North America after oil major BP, lifted its profit guidance on Monday due to the effects of the extreme winter weather. It expects 2021 profit to rise by 10%, after earlier anticipating earnings to drop.

Other natural gas-weighted production companies, including Cabot Oil & Gas, Southwestern Energy Co, Range Resources Corp and Antero Resources, may benefit from the freeze, Morgan Stanley analysts said in a note.

Refiners with limited exposure to Texas markets:

Shares of refiners such as HollyFrontier Corp and Valero Energy Corp rose after the freezing temperatures knocked a large swath of U.S. Gulf Coast refining offline, said Bob Yawger, director of energy futures at Mizuho. Eurozone refiners, including Shell and Total, are positioned to benefit as they ramp up their shipments of gasoline into New York Harbor, he said.

LOSERS

Utilities:

Just Energy on Monday raised doubt about its ability to continue as a going concern, after it forecast a $250 million loss from the winter storms.

Innergex Renewable Energy Inc forecast a financial impact of up to C$60 million ($47.48 million) on its Texas wind farms.

Algonquin Power & Utilities Corp said on Friday it expects the potential hit to adjusted core earnings for this year to be between $45 million and $55 million after the cold weather restricted production at its Renewable Energy Group’s Texas-based wind facilities.

Atmos Energy said on Friday it purchased natural gas for an extra $2.5 billion to $3.5 billion due to higher cost of the fuel, adding it was evaluating financing options to pay for the additional purchase cost.

Vistra Corp estimated a one-time adverse impact of between about $900 million and $1.3 billion, and said it was unable to reaffirm or adjust its 2021 guidance.

Oilfield Services:

Solaris said on Monday last week’s weather would have an impact on first quarter financials, but did not quantify the hit.

Shale oil producers:

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down. Some production may never return, analysts said.

Diamondback Energy said it expects the weather to wipe off up to five days of production in the current quarter.

Cimarex Energy Inc said it expects an up to 7% hit to production volume in the quarter.

Occidental Petroleum forecast first-quarter Permian production of 450,000 barrels of oil equivalent per day to 460,000 boepd, including a 25,000 boepd hit from downtime related to the winter storm.

Laredo Petroleum said its Permian Basin operations were affected for the last 12 days and estimated the combined impact of shut-in production and completions delays to reduce first-quarter total output by about 8,000 boepd and oil production by about 3,000 bpd.

Gulf refiners:

Refiners with oil processing facilities along the Gulf Coast, the main U.S. refining hub, such as Phillips 66 and Exxon Mobil, were forced to halt operations. By Thursday last week, the historic sub-zero temperatures in Texas and Louisiana shut at least 3.5 million barrels per day, or about 19%, of U.S. refining capacity.

($1 = 1.2636 Canadian dollars)

(Compiled by Arundhati Sarkar and Arathy S Nair in Bengaluru, Laila Kearney and Devika Krishnakumar in New York and Rod Nickel in Calgary; Editing by Sonya Hepinstall, Arun Koyyur and Sriraj Kalluvila)

Texas lawmakers look to lay blame for deadly power blackout

By Jennifer Hiller and Gary McWilliams

(Reuters) – Texas state lawmakers on Thursday started digging into the causes of deadly power blackouts that left millions shivering in the dark as frigid temperatures caught its grid operator and utilities ill-prepared for skyrocketing power demand.

Hearings are highlighting shortcomings by grid planners, electric utilities, natural gas suppliers and transmission operators that led to billions of dollars in damages and dozens of deaths. Consumer advocates have called for more stringent regulation of utilities and a review of retail marketing plans.

“Who’s at fault?” State Representative Todd Hunter demanded of utility executives. “I want to hear who’s at fault. I want the public to know who screwed up.”

“The entire energy sector failed Texas,” said NRG Energy Inc Chief Executive Mauricio Gutierrez, who testified at the hearing.

While executives said there were broad failures of leadership and preparation, the biggest was the state’s natural gas system, responsible for the largest share of Texas power generation, said Curtis Morgan, CEO of Vistra Corp. Texas is the country’s biggest producer of natural gas, but without better ties between gas producers, pipelines and power plants, the state will face future cold weather outages.

“We just couldn’t get the gas at the pressures we needed,” said Morgan, who instructed employees to buy gas at any price but could not acquire enough to run plants.

Up to 48% of the state’s power generation was offline at times last week and at least 32 people died, including an 11-year-old boy of hypothermia in an unheated mobile home.

“We owe it to them and every Texan to make sure this never happens again,” said State Representative Ana Hernandez, noting that hospitals still have supply chain problems and burst pipes, and some people cannot access food and water. “The impact of this disaster was not only financial.”

Utilities were ordered to cut power to prevent a larger catastrophe, Bill Magness, CEO of the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, said on Wednesday.

Six of ERCOT’s 15 directors resigned this week and a nominee withdrew before taking a seat.

ERCOT did not warn residents that the state’s power generation would not keep up with demand, even under perfect conditions, despite warnings the week prior from utilities, Morgan said.

“We did not give people a fighting chance,” Morgan said.

Governor Greg Abbott on Wednesday said public anger was justified and pledged proposals to increase power supplies and to protect those residents hit with enormous power bills. He blamed ERCOT, saying it should have acted faster to prevent generators from falling offline.

But Abbott “hand picks” members of the Public Utilities Commission that oversees ERCOT, Representative Rafael Anchia said.

RETAIL DEFAULTS AHEAD

Of the about 100 retail electric providers in Texas, a quarter are at risk of default on multimillion-dollar service charges levied by ERCOT. Some may sell customers to larger firms to cover costs, stifling retail competition, said Mark Foster, an attorney and former special counsel to the state’s Public Utility Commission.

“They call it the blood week,” Foster said. One of his clients, electricity marketer Young Energy LLC, faces a $19 million bill for services that cost $37,000 the prior month, he said. “There will be a significant decrease in competition for the consumer,” he said.

Texas state Senator John Whitmire asked whether ERCOT explored claims that natural gas producers intentionally cut supplies to electric generators to drive up the fuel’s price.

ERCOT CEO Bill Magness replied he had no first-hand knowledge.

The “big missing money” is not sitting with utilities, who paid historically high prices for natural gas, said Morgan.

“The gas business made a lot of money,” he said.

(Reporting by Jennifer Hiller and Gary McWilliams; Editing by Jonathan Oatis and Lisa Shumaker)

More than 1.3 million Texans still grappling with water supply disruptions

By Kanishka Singh

(Reuters) – More than 1.3 million people across over 200 counties in Texas still had issues with their water supply by Wednesday, but that was down sharply from recent days, a spokesman for the Texas Commission on Environmental Quality (TCEQ) said.

That figure compared with Tuesday’s 3.4 million, Monday’s 8 million and Sunday’s 9 million, or about a third of the state’s population.

A deadly winter storm caused widespread blackouts last week across Texas, a state unaccustomed to extreme cold, killing at least two dozen people and knocking out power to more than 4 million at its peak.

As of Wednesday evening, “33 Public Water Systems are non-operational, affecting 20,689 Texans,” the spokesman told Reuters in an emailed statement, adding that 204 counties were reporting issues with their public water systems (PWS).

He said around 853 PWSs were on a boil water notice, meaning people were being advised to boil water before consuming it, affecting 1,333,134 Texans. Some 1,176 previously issued boil water notices had been rescinded, he added.

Once the current crisis is over, TCEQ plans to examine the ongoing experience to prevent such a disruption from taking place in the future, TCEQ Executive Director Toby Baker told Reuters on Wednesday.

Texas Governor Greg Abbott pledged on Wednesday to overhaul the state’s electric grid operator after a massive blackout left residents without heat, power or water for days.

The Electric Reliability Council of Texas (ERCOT), which manages the flow of power to about 90% of state residents, has faced sharp criticism over its failure to prepare for severe cold. Outages caused billions of dollars of damages to homes and businesses.

Six ERCOT directors have resigned and a board nominee declined a seat in the wake of sharp criticism of the group’s performance.

(Reporting by Kanishka Singh in Bengaluru; Editing by Tom Hogue and Ana Nicolaci da Costa)