Texas cuts $9,000 power price cap after February freeze

Dec 3 (Reuters) - The Public Utility Commission (PUC) of Texas adopted a proposal to cut the wholesale electricity price cap from $9,000 per megawatt hour (MWh) to $5,000 to help avoid price spikes like those seen during last winter's February freeze.

The ruling on Thursday was the latest in a series of measures designed to prevent a repeat of the energy emergency caused by February's Winter Storm Uri, which killed more than 100 people and left around 4.5 million homes and businesses in Texas without power and heat - in many cases for days.

"After the extreme weather events of February 2021, the price cap of $9,000 per MWh has proven to be a liability on market participants," the PUC said in its commission-sponsored proposal.

The PUC said the lower price cap will "help ensure prices remain affordable during the upcoming winter season and lessen the financial risk to customers during scarcity events."

With power prices at the $9,000 per MWh price cap, the Electric Reliability Council of Texas (ERCOT), which operates most of the state's power grid, ordered rolling blackouts to prevent the grid from collapsing as extreme cold shut power plants and froze gas pipelines.

That caused power and gas prices to soar to record highs in parts of Texas and in other U.S. Central states during the storm, costing utilities and their consumers billions of dollars that will have to be paid back over several years.

Earlier in the week the PUC adopted rules in a joint effort with the Railroad Commission of Texas, which oversees the state's oil and gas industries, related to critical gas facilities that supply fuel to electric generators.

The rule requires electric utilities to prioritize power services to critical gas facilities during energy emergencies.

(Reporting by Scott DiSavino; editing by Diane Craft)