Texas Begins To See Financial Fallout Of Winter Storm
NOEL KING, HOST:
The financial fallout from last month's power crisis in Texas is just starting. And the costs will go way beyond this month's power bills. Here's NPR's Camila Domonoske.
CAMILA DOMONOSKE, BYLINE: Maybe you heard that some Texans got really high utility bills, like really high bills.
DEANDRE UPSHAW: For seven days in February, I'm in the negative for $6,700.
DOMONOSKE: Deandre Upshaw (ph) lives in Dallas. A normal monthly bill for his apartment is 80 or $90. A bad bill is 300. Nearly 7,000 bucks...
UPSHAW: That's unfathomable.
DOMONOSKE: Bills like this are possible because of Texas' free market approach to energy. In that market, power prices soar when there's a shortage. That's by design. It's meant to motivate companies to make more power. And last week, prices went sky high. Most customers are insulated from those market prices. But people can choose a plan where they pay whatever the market rate is. That's what created Upshaw's $7,000 bill.
UPSHAW: Do I anticipate having to pay the full amount? The answer to that is no. I feel like there is enough outrage amongst the people of Texas. I mean, because $7,000 is bad. But there are people with $12,000.
DOMONOSKE: But even if those customers get a bailout, this is just a small slice of the bill that Texans have to foot. According to BloombergNEF, the state spent $50 billion on its power last week. That's a U.S. record. Some companies that make electricity made money. But some companies that buy and sell power racked up huge expenses. And just because customers don't see that cost all at once doesn't mean they won't pay it eventually. In San Antonio, CPS Energy CEO Paula Gold-Williams says her utility is still adding up what it spent on power and fuel.
PAULA GOLD-WILLIAMS: We are going to have a tsunami across the state associated with customer affordability.
DOMONOSKE: She's asking for government assistance but also warns rates could go up for years to come to pay down those expenses.
GOLD-WILLIAMS: And then we spread those costs across our entire system.
DOMONOSKE: So ratepayers or taxpayers are being asked to cover this bill. This has not gone over well. A lot of people are pointing at Texas' freewheeling market design as the problem. Here's Bexar County Commissioner Tommy Calvert on Tuesday.
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TOMMY CALVERT: This type of pricing, it's just obscene. And it doesn't make economic sense. It makes no damn sense. So we need to fix it and not just let the oil barons get away with all the money.
DOMONOSKE: Even state Republicans who usually defend deregulation are sounding more skeptical in the face of these price spikes. But take a step back from the skyrocketing prices and there's a much bigger set of costs for the state. The blackouts cost lives. They caused damage to homes like frozen pipes. They shut down businesses. Long power outages like this have ripple effects that can cost tens of billions of dollars. These costs could have been prevented if power plants had prepared for this kind of storm. But utilities often don't. And that's true for both free market and highly regulated systems.
PETER LARSEN: The costs can be staggering. Winterizing, you know, natural gas, fired power plants, these are very expensive undertakings.
DOMONOSKE: Peter Larsen is with Lawrence Berkeley National Laboratory. He says utilities in general know how much it will cost to make those investments. But they struggle with calculating the benefits of all the businesses that get to stay open, the pipes that don't freeze. Utilities often underestimate that value and don't invest. Houston Mayor Sylvester Turner says preparing would have been pricey for Texas. But look at the costs that the state is bearing now.
SYLVESTER TURNER: So when you add that up, I can assure you the cost would've been far less on all Texans than what the cost will be for having not acted in 2021.
DOMONOSKE: As climate change makes extreme weather events more frequent and damaging, Turner says these investments only get more important.
Camila Domonoske, NPR News.
(SOUNDBITE OF CAVES OF STEEL'S "LISA NOWAK LOVE STORY") Transcript provided by NPR, Copyright NPR.