European renewables giant sues Texas for the massive loss it ran up during February ice storms

News

May 18

BY CHRISTIAAN HETZNER May 17, 2021 8:43 AM CDT

A major European utility with operations in Texas is suing the state for intervening in power markets during the freak winter storm in February, costing the firm nearly $500 million.

Wind-park owner RWE of Germany said its unit RWE Renewables Americas has filed a lawsuit against the Public Utility Commission of Texas (PUC) as well as the Electric Reliability Council of Texas (ERCOT), a nonprofit that operates the state’s power grid.

It did not name the district court at which the motion was filed.

In February, a massive ice storm pounded the state, plunging millions into blackouts and crippling much of Texas’s energy grid. In response, the PUC issued an emergency order to hike the cost at which utilities buy wholesale electricity to the maximum level allowed under law to reflect the scarcity of power supply.

With 70% to 80% of its own 2.6 gigawatts in installed wind power capacity temporarily knocked out by the storm, RWE was forced to purchase electricity at exorbitant prices to fulfill its obligations to customers.

“The crucial point is actually that the regulator intervened to set the price at $9,000 per megawatt-hour. Interestingly enough, this didn’t even turn out to be economically sensible, since [the incentive] did not actually create any additional supply to the grid,” Michael Müller, finance chief of parent RWE, said last week.

“Since this is effectively a political process, no one should expect any concrete result in the near future. It’s more of a long-term issue,” he told reporters during a quarterly earnings briefing on Wednesday.

RWE declined to provide further details, while a spokeswoman for ERCOT said it was unable to comment at this time amid the ongoing legal proceedings.

A spokesman for the PUC told Fortune the commission was “unable to discuss matters that are the subject of pending litigation.”

For more:

https://fortune.com/2021/05/17/rwe-renewables-sues-texas-outages-ice-storm-february-2021-winter-uri/