The city of College Station is determining whether more than $48 million dollars of additional costs charged by the ERCOT electric grid to provide power during last month’s winter storms will be passed on to customers.
Finance director Mary Ellen Leonard tells WTAW News that “the PUC (public utility commission) and the legislature are looking at several items that could effect the ultimate cost of the event.”
According to a city news release, ERCOT charged College Station Utilities (CSU) $34.5 million dollars. That’s for something called ancillary services…something the city says is an expense for maintaining reserve power above market demand requirements to ensure the stability of the electric grid. That’s 2,300 times the average $15,000 dollars a month CSU paid ERCOT during 2020.
The city says CSU was forced to pay $13.6 million for power at what the city described was ERCOT’s inflated market based prices.
The news release also states this does not include what ERCOT might charge to recover debt from other electric providers that have declared bankruptcy or chose not to pay their bills.
News release from the city of College Station:
College Station Utilities now has a clearer picture of the additional costs incurred for providing electricity to customers during Winter Storm Uri. The estimated total is expected to be more than $48 million.
Like other Texas electric utilities, College Station was forced to purchase several days of replacement power at inflated Electric Reliability Council of Texas (ERCOT) market-based prices. The replacement power costs were $13.6 million.
Next, ERCOT requires cities to be responsible for ancillary services, which is the cost for maintaining reserve power above the market demand requirements to ensure the stability of the electric grid. The estimate for those ERCOT charges over a 10-day period is $34.5 million. By comparison, CSU’s average monthly ancillary cost in 2020 was $15,000. The winter storm did not span 10 days, but ERCOT applied its ancillary charges to utilities even after the mandate for rolling outages was lifted.
Further, utilities such as College Station may also be billed by ERCOT for the unrecoverable debt from retail electric providers and other utilities that either have chosen to not pay their bills or declared bankruptcy. College Station’s portion of other parties’ debt is not yet known but could be in the millions of dollars.
NEXT STEPS
The City of College Station continues to monitor actions that ERCOT, the Public Utility Commission of Texas, and the state legislature may take to reduce the costs incurred during this storm. We also support recent efforts by the governor and members of the legislature to address these costs. Meanwhile, the city will use its electric fund reserves and short-term financing tools to meet our power supply obligations, then begin to rebuild our electric fund reserves. As a municipally owned utility, we will continue to provide information to our customers and rate payers. Consideration of electric rates will be discussed with the College Station City Council in the spring and summer as part of the annual budget process.
College Station has a reliable electric utility system that performed well during the winter storm. Our strong financial position gives us options to address the considerable costs we may face.