Ft. Belknap tracks storm refund legislation
Fort Belknap CEO Kendall Montgomery is tracking state legislation designed to repay Texas electric cooperatives for inflated rates charged to the co-ops in the wake of Winter Storm Uri, which disrupted utility services in Olney for days in February of 2021.
“We just had a conference call earlier this week within our cooperative group to discuss the progress on this legislation. [House Bill]4590 appears to be the key to getting any assistance through legislation this session,” Mr. Montgomery said. “SB 1983 is the similar bill in the Senate, but we’re told HB 4590 needs to move forward in order for the legislation to get any traction in the Senate. We are working hard to get our legislators on board with HB 4590 and are hoping to get a committee hearing on the bill within the next week.”
HB 4590 has five authors including Olney’s state representative, David Spiller, R-Jacksboro.
The Brazos Electric Power Cooperative in Waco, which supplies Ft. Belknap and 15 other co-ops with electricity, filed for bankruptcy protection after receiving a bill for $2 billion from the Electric Reliability Council of Texas [ERCOT]. Brazos was forced to buy (ERCOT bought the) energy on the spot market to compensate for Brazos’ power shortfall resulting from the lack of natural gas availability and the loss of generation resources. Brazos filed for bankruptcy to shield itself and its member cooperatives, including Fort Belknap, from having to pay the huge bill. Many (Some) utilities, including co-ops, have since raised rates to pay off the higher power costs.
“FBEC did experience substantial costs as a result of winter storm Uri,” Mr. Montgomery said. “We were able to negotiate a reduction in these costs through the Brazos bankruptcy process. We analyzed various options to address these increased costs and determined that the most cost-effective, affordable option for our members was to finance these costs through a securitization process by the issuance of bonds. The bond issuance went very well and we were able to minimize the effect of these additional costs to our member’s bills.”
Senate Bill 1983, sponsored by Sens. Robert Nichols and Charles Schwertner, and co-sponsored by Sen. Drew Springer, R-Muenster (Olney), seeks to “reduce the rates or charges that retail electric service customers would otherwise experience because of the extraordinary costs and expenses that electric cooperatives incurred” during Uri, the bills read.
The legislation would give co-op customers a credit on their monthly bills and create a Storm Cost Offset Fund to cover those payments, according to the bill’s text.
“Any assistance we could get through HB 4590 or SB 1983 would go directly to our members in the form of bill credits through a process to be determined by the legislature,” Mr. Montgomery said. “We are hopeful that our legislators will recognize the need of utility ratepayers throughout the state to utilize a portion of the budget surplus in Texas to provide some relief from the costs of Winter Storm Uri.”
A survey conducted by the University of Houston (UH) Hobby School of Public Affairs in 2021 found that more than two out of three, or 69 percent, of Texans lost power at some point during Feb. 14-20, and almost half, or about 49 percent, had disruptions in water service. The storm contributed to at least 210 deaths, and sources cited by the Federal Reserve Bank of Dallas estimated the state’s storm-related financial losses would range from $80 billion to $130 billion.
More than 26 million Texas customers, or nearly 90 percent of the state’s population, depend on ERCOT for electricity services. ERCOT manages its own grid infrastructure and relies on power generation companies, electricity providers/utilities (i.e., investor-owned and municipally owned providers, electric cooperatives, and the river authorities), and transmission and distribution utilities that participate in the wholesale energy market.
The UT-Austin report found that Uri, although not the most severe Texas winter storm on record, caused the most loss of electricity. The report also stated that rolling blackouts were intended to take the stress off the power grid but turned into outages that — in some parts of the state — lasted several days. According to the report, multiple factors caused those extended blackouts, including that ERCOT underestimated peak demand by nearly 14 percent and weather forecasts misjudged the severity and timing of the storm.