Power supplier Vistra expects to take a $1 billion hit from Texas’ epic winter storm
Gas and electric companies are beginning to sort out the toll from the freeze that left millions of Texans without power.
Companies are beginning to sort out the big hits and windfalls, and it appears the brutal Texas freeze was a zero sum game.
Radical swings up and down depend on whether a company was a fossil fuel supplier, a generator of electricity or a seller to Texas residents who are left with eye-popping bills. More than 80 deaths have been tied to the frigid snowstorm. More than 4 million customers lost power, some for days.
Vistra, the state’s biggest power supplier, said Friday that it expects a one-time financial impact of $900 million to $1.3 billion due to the Texas power crisis. Vistra said it won’t pass that cost on to consumers.
“As a retailer, we don’t want to increase the price to consumers in the middle of this type of an event, yet our suppliers are increasing prices at will,” Vistra CEO Curt Morgan said in a conference call on the company’s financial results. “We get squeezed in the middle. That is an untenable situation. That is not something that can last. And I believe I made some good points and people are beginning to realize that in this market.”
Dallas-based natural gas supplier Atmos Energy Corp. earlier this week said it racked up as much as $3.5 billion in extra gas costs. Atmos said it expects to be fully reimbursed for the additional costs, which also included service territories in Kansas and Colorado.
Across town, Jerry Jones’ Frisco-based Comstock Resources said last week “was like hitting the jackpot” as demand amid the cold forced prices above $1,000 per million British thermal units. Natural gas from Comstock’s Haynesville Shale wells in East Texas sold on the spot market for between $15 and $179 per thousand cubic feet. That compares with under $4 the week before the snowstorm.
Comstock CFO Roland Burns apologized to the Texas Legislature Friday night in testimony in Austin. He described his earnings call response to a Wall Street analyst’s question as “inappropriate” and “insensitive.”
“I’m not making excuses, but 2020 was a very hard year for the sector and there were very few moments when prices were good,” he said. “But I deeply regret the statement.”
The fallout from the freeze is expected to force some retail power providers to go out of business. While their customers will automatically be switched to new electricity providers, if that happens, those households will have to take the time to research and sign up for a new electric plan at possibly a higher price.
Irving-based Vistra said its final tab will depend on pricing and settlement information from ERCOT, potential corrective action by the state, and the outcome of litigation arising from the storm. Vistra is the parent company to retail providers TXU and Ambit.
As of Thursday, Vistra said it has almost $2 billion in cash and credit available.
Its biggest competitor in the state, Houston-based NRG Energy, parent company to Reliant and other retail electricity providers, delayed its year-end financial report to Monday because its CEO testified before the Texas Legislature on Thursday and Friday.
DeAnn Walker, chairman of the Public Utility Commission, testified in Austin on Feb. 25, 2021
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The hearings are uncovering details about last week including reliability. About $40 billion to $45 billion extracted from the system during the freeze from higher prices is enough to build 82 new power plants. ERCOT is still going through all these transactions to determine settlement charges.
The political fallout has left Austin busy finger pointing and short of solutions for sorting out a tangled, costly mess involving the state’s residents and its energy industry that is part of the Texas legend.
Texas has generally had a reliable electric grid, along with lower rates than the U.S. average. But a subzero winter storm knocked out almost half the state’s electric generation and left over 4 million Texans without power — some for days.
During the freezing temperatures, Vistra said, it was able to crank up production to 25% to 30% of power generated during the storm compared with its market share of 18%.
Critics contend Texas companies aren’t protecting power generation, pipelines and other critical infrastructure at levels that can handle prolonged freezing temperatures. Vistra said, in a normal year, it spends about $10 million a year winterizing its infrastructure.
“The challenges brought on by the global pandemic in 2020 and the historic winter storm in Texas last week have tested our business model,” Vistra CEO Curt Morgan said in a statement Friday. “We continue to believe that our integrated operations, prioritizing a strong balance sheet and conservative liquidity management, is the right model to remain resilient through these challenges while creating value for our stakeholders over the long-term.”
The company also reported year-end results on Friday that came in below 2019. Vistra posted a profit of $636 million on revenue of $11.4 billion vs. a profit of $928 million on revenue of $11.8 billion in 2019.