Backup Plan Part 4: Laws and sausage

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Texas Capitol February 15, 2021, the first day of the blackout. (Photo by Jno.skinner, Wikimedia Commons)

Did the Legislature fix the Texas electric grid?

Editor’s note: The massive Texas power outages that took place in February 2021 left many people feeling insecure about reliable utility service. This is the fourth in a series of five articles about the rapidly increasing number of backup power systems being installed in Austin area residences.

Bill Aleshire

Bill Aleshire, a well-known Austin-area attorney and former Travis County judge (Democrat), has installed a propane-powered stand-by generator. His motivation was Winter Storm Uri, which caused him to lose electricity and water for about four days (most of it simultaneously), and Internet service for a week.

He survived the storm in his mostly all-electric home with a wood fireplace but had exhausted the wood supply by the time the outage ended. Though he survived, it was profoundly uncomfortable. To work on his computer during the outage, he quickly bought a used portable generator from a friend, driving two miles in the inclement weather to fetch it.

Aleshire said that he and his wife, Raetta Aleshire, are both over 70 and they did not want to go through anything resembling the Uri-outage again. And he does not trust utility reliability. “ERCOT, the (Austin) water utility, and Spectrum shocked that trust. I am (economically) privileged to be able to do this (install a generator), but I wish all of us could trust the system to be more reliable than what it was this year.”

(Disclosure: Bill Aleshire is a supporter of the Austin Environmental Directory that I publish. In addition, Aleshire represented The Austin Bulldog in two public information lawsuits in 2011 and currently serves as volunteer attorney for the Bulldog’s public information requests.)

On Tuesday, June 2, Governor Greg Abbott, a Republican, signed two laws intended to fortify the Texas power system. At a press event, he brandished a sound-bite, proclaiming “Everything that needed to be done was done to fix the power grid in Texas.”

On what planet?

In the land of laws and sausage (two things you never want to see made) the 2021 regular session of the Texas Legislature was tasked with fixing the state’s electric system. It did not wholly succeed.

What went wrong?

Price gouging—The Electric Reliability Council of Texas (ERCOT) relies on an “energy only” bidding market that does not give credit for reliable capacity, which is critical during times of excessive peak demand. Policy makers determined that this practice was discouraging investment in new and expensive peak capacity that allows the grid to function during extreme temperatures. So a high market cap was established that would allow peak prices to soar as high as $9 per kilowatt hour (kWh), contrasting to the average non-emergency price of only 2 or 3 cents per kWh.

This market cap was, unfortunately, not decoupled from emergency situations, and the Texas Legislature did nothing to correct it. If a weather emergency occurs next year, the same kind of price gouging could occur.

The record-breaking cold spell last February was surpassed only by the record-breaking price gouging that occurred in the energy markets.

Estimates of this pillage varied widely. The most conservative, $16 billion, stems from 32 hours that the ERCOT market monitor identified as unjustified because they came after the power shortage had ended. In the regular 2021 session of the Texas Legislature, the Senate voted 27 to 3 to refund this to ratepayers but the House did nothing.

The high estimate rests on the premise that the entire crisis should not have justified increased costs. An analysis from BloombergNEF (New Energy Finance) compared the cost of $4.2 billion in ERCOT costs the week before the crisis to $50.6 billion the week of the crisis, a net increase of 1200 percent.

Excessive natural gas costs (as much as 132 times average prices on the spot market) also drove energy prices. BloombergNEF estimated $8.1 billion of this was foisted on ERCOT’s electric utilities. Authorization for another $3.6 billion in debt financing has been requested from the Texas Railroad Commission for unexpected fuel costs incurred by the state’s gas utilities.

Power-plant weatherization—The largest reason for grid failure was that many power plants were not properly weatherized to function in spite of extended severe low temperatures.

The extremely cold conditions during Winter Storm Uri rarely occur in Texas. In numerous areas of the state, these conditions had never occurred in recorded history. Many power plant owners ignored the need for weatherization. After all, why spend extra money preparing for an unexpected winter-weather event when you have to compete day-to-day at tight margins?

Senate Bill 3, passed during the regular 2021 legislative session, now requires weatherization but does not specify a date when weatherization is required. Implementation rules may not even be finalized until November. Even after the rules are finalized, it will take time and money to complete the weatherization, by one estimate $430 million.

Nothing requires power plant owners to wait until rules are enacted but Texas Competitive Power Advocates, a trade association that represents power generators and wholesale power marketers, is currently haggling with the Public Utility Commission over who will pay for weatherization (consumers or power plant owners). Some utilities are even threatening that some power plants may not stay online unless they receive consumer funding. So the necessary work may be delayed for much of the unweatherized fleet.

The only upside to the situation is that it is unlikely that a winter storm of the magnitude that occurred last February will reoccur next year. But if it does, there is no assurance that Texas will be ready.

Gas-supply weatherization—Some gas-fired power plants were kept offline during the storm because of a shortage of natural gas caused by gas wells and other infrastructure that were not weatherized. Unprotected wellheads can experience shut-offs when low temperatures cause water and other liquids to form ice, which can fill entire cross-sections of pipes to prevent gas flow.

The wellhead weatherization required under Senate Bill 3 depends on rule-making action by the Texas Railroad Commission, which oversees oil and gas development, coal and uranium mining, and gas utility service in Texas.

Virginia Palacios

Virginia Palacios is the director of Commission Shift, a nonprofit watchdog organization that seeks to improve the Texas Railroad Commission’s function, transparency, and accountability. She said the time-consuming process to develop and implement rules may delay implementation until at least 2023.

Even when rules are finally implemented, the bill does not specify which wells and other infrastructure must meet the requirements. That’s also left to the discretion of the Texas Railroad Commission, which may levy fines if the new requirements are not met.

Palacios is worried that most fines could be so minimal that some oil and gas companies will accept them instead of paying the presumably higher cost of weatherization.

Building efficiency shortcomings—Another thing that Texas sorely needs to reform is its laggard programs for energy efficiency. A friend of mine survived the winter storm in a newly-built, energy-efficient home without a fireplace. Despite three days without heat, the temperature never went below 47 degrees. While uncomfortable, it was survivable, at least compared to Texans who literally had icicles on their ceilings.

A 2017 benchmark study by the Electric Power Research Institute estimated that by 2020, Texans would have only achieved 11 percent of total potential savings from energy efficiency, while 38 states and Washington, D.C. would have had higher rates of achievement.

Sadly, building efficiency has become a partisan issue since it is advocated by people who want to lower carbon emissions. But I am having a hard time accepting that freezing to death is part of the Republican platform.

Few connections to national grid—ERCOT’s service area, which encompasses about 90 percent of the Texas population, was created to have limited interconnections with the other parts of the mainland United States and Mexico. This was done intentionally to assure the state’s independence from regulation by the U.S. Federal Energy Regulatory Commission.

When the ERCOT grid failed in mid-February, there was no way to import substantial amounts of power from places outside ERCOT’s borders. While no study I am aware of has been conducted to determine exactly how much surplus power would have been available during the crisis, the Western United States had substantial unused capacity during the storm. This was partially because the frigid temperatures afflicting the Central United States were not present in much of the Western States.

As much as 6,000 MW of power was imported by the Midwest from the western United States during Winter Storm Uri. Yet more than 90,000 MW of dispatchable power from the western United States could have been available to Texas during the outage had the Texas grid been equipped to import it.

During the regular 2021 Texas Legislative session, virtually no discussion of reinforcing grid ties between ERCOT and the rest of the United States occurred. Nor has there been any discussion of including it in the Federal infrastructure bill that was debated in the Senate in August.

Workers are installing a Kohler backup generator for this house, something more and more homeowners in Texas are having done after extended outages during Winter Storm Uri. (Photo courtesy of Ben Franklin Plumbing)

The lack of political will to fully and quickly repair the Texas electric system has motivated some of the state’s consumers to purchase their own generators.

This is the fourth in a five-part series on how and why Austinites are buying backup power systems. I hope you will be interested in Part 5: Electric grid-changing ramifications: Aggregated residential backup generators could help prevent brownouts.

Trust indicators: Paul Robbins is an environmental activist and consumer advocate who has lived in Austin for almost five decades. He is editor of the Austin Environmental Directory, a sourcebook of environmental issues, products, services, and organizations in Central Texas. The publication has been offered free to the public since 1995, and can be accessed free online.

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