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While Texans suffered rolling blackouts yesterday, some power generators were enjoying windfall profits. Starting around 5 a.m., prices in the wholesale market surged to the market cap, $3,000 per megawatt-hour, and stayed there, off and on, until around noon. Prices are typically below $100/megawatt-hour, acknowledged ERCOT CEO H.P. “Trip” Doggett today in a press conference.

There are still more questions than answers but this much is clear: At best, some power generators around the state raked in oodles of money thanks to the way ERCOT has structured the energy market. At worst, some may have manipulated the market to drive up prices.

In the end, the price surge yesterday could cost consumers tens of millions of dollars, said David Power, deputy director of Public Citizen-Texas. Although residential consumers are typically insulated from temporary wholesale price spikes, “Somebody ends up paying for it,” said Power.

Take a look at what happened yesterday. (Note: This is based on data from ERCOT’s website. It is an average of each zone in the Texas grid. This chart is not 100 percent accurate for technical reasons I’d rather not bore you with. But it’s close.)

GRAF

Consumer advocates are worried that some power generators may have taken advantage of the crisis situation to drive prices up.

There is no evidence that power generators engaged in market manipulation by, for example, withholding power to artifically depress supply and bid up prices. But it’s certainly a possibility.

“The potential [for manipulation] is there,” said Power. “In the past, the few times they’ve issued fines they’ve been smaller than the economic reward. There’s no incentive not to duplicate it.”

In 2006, a consultant hired by the Public Utility Commission accused big utility company TXU (now Luminant) of manipulating the market. The PUC staff recommended fines of $210 million, though that was later reduced to a paltry $15 million and TXU never had to admit wrongdoing.

ERCOT is touting the fact that it was able to avoid a statewide blackout by shutting down portions of the electric grid in succession. There was a “high probability that the security of the grid could be compromised if we didn’t react to reduce load,” said Doggett today.

However, to do so ERCOT may have allowed prices to reach the cap in order to maximize the amount of power during the crisis yesterday. In other words, ERCOT was willing to pay whatever it took to secure the system. Power compares it to flinging hundred dollar bills at a taxi driver who’s already got the pedal to the floor.

“You just keep throwing money at the front seat,” he said. “You’re not going to get any more out of him; you’re just going to have a really happy driver.”

And in a peculiar twist of timing, ERCOT had raised the market cap on Tuesday from $2,250 to $3,000. The $2,250 itself had only been in place for about a week. Before that the cap was at $50 per megawatt-hour.

“Would this have happened on January 28th when the cap was $50 bucks?,” asks Power. “To me it’s odd. … Two days ago they took the price cap off and then on [February 1st, Tuesday] they raised the cap to $3000 a megawatt-hour and then on [February 2nd, Wednesday] we’ve got price spikes like nobody’s seen ever.”

Sorting all of this out will be no easy task – if it ever happens. Detailed information on market activities is proprietary and ERCOT’s new nodal system (I’m not even going to pretend to know anything about how it works) is one of the most complicated electric control systems in the world. The Public Utility Commission does employ an independent market monitor. However, there’s no indication – yet – that the PUC has asked for an investigation.

Update: In an interview with the Texas Tribune’s Kate Galbraith, Trip Doggett, ERCOT’s CEO, had this to say about the profit-taking yesterday.