Erin Douglas

Texas grid operator ERCOT urges energy conservation as temperatures rise

June 14, 2021

"Texas grid operator urges electricity conservation as many power generators are unexpectedly offline and temperatures rise" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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Texas' main power grid struggled to keep up with the demand for electricity Monday, prompting the operator to ask Texans to conserve power until Friday.

The Electric Reliability Council of Texas said in a statement Monday that a significant number of unexpected power plant outages, combined with expected record use of electricity due to hot weather, has resulted in tight grid conditions. Approximately 12,000 megawatts of generation were offline Monday, or enough to power 2.4 million homes on a hot summer day.

ERCOT officials said the power plant outages were unexpected — and could not provide details as to what could be causing them.

“I don't have any potential reasons [for the plant outages] that I can share at this time," said Warren Lasher, ERCOT senior director of systems planning, during a Monday call with media. “It is not consistent with fleet performance that we have seen over the last few summers."

The number of plants that were forced offline today is “very concerning" Lasher said.

“We operate the grid with the resources that we have available," he said. “It's the responsibility of the generators to make sure their plants are available when demand is high."

The conservation request comes at a time of heightened anxiety around electricity after the state's catastrophic February power outages left millions without power for days. Those outages, which were prompted by a severe winter storm, may have killed as many as 700 people, according to an analysis of mortality data by BuzzFeed News.

Of the plants offline, about 9,600 megawatts of power, or nearly 80% of the outages, are from thermal power sources, which in Texas are largely natural-gas-fired power plants. That's several times what ERCOT usually sees offline for thermal generation maintenance during a summer day. Typically, only about 3,600 megawatts of thermal generation are offline this time of year.

“This is unusual for this early in the summer season," said Woody Rickerson, ERCOT vice president of grid planning and operations, in a statement. He said the grid operator would conduct an analysis to determine why so many units are offline.

At this time, it “appears unlikely" that the ERCOT grid would need to implement outages, like it did in February, to reduce strain on the grid, Lasher said.

In April, ERCOT asked residents to cut back power use because of a high number of plants offline for maintenance, some due to repairs necessary from damage during the February winter storm.

Lasher said that ERCOT has completed 20 plant visits ahead of the summer peak season, and 11 more are scheduled for the next two weeks. Four of the plants that were inspected are currently on outage, Lasher said.

The grid operator estimates demand for electricity could exceed 73,000 megawatts on Monday. The previous record for June was 69,100 megawatts in 2018.

“[Electricity demand] is really driven by temperatures, and right now it is 99 degrees in Dallas, 97 degrees in Austin and 97 degrees in Houston," said Joshua Rhodes, research associate at the Webber Energy Group at the University of Texas at Austin. He said at those high temperatures, people tend to crank up their air conditioning, which strains the grid. At the same time, he said, power plants have already had a rough year given the damage during the February outages, which may be causing new complications.

Texans can reduce electricity use by setting the thermostat to 78 degrees or higher; turning off lights and pool pumps; avoiding use of large appliances such as ovens, washing machines and dryers; and turning off or unplugging unused electric appliances.

Power grids must keep supply and demand in balance at all times. When Texas' grid falls below its safety margin of excess supply, the grid operator starts taking additional precautions to avoid blackouts. The first precaution is to ask the public to cut back electricity usage.

Following criticism that the grid operator did not consider severe enough scenarios in its planning, ERCOT outlined the most extreme calculations for this summer that it has ever considered. ERCOT warned in its summer assessment of power resources that a severe heat wave or drought, combined with high demand for power, could put the grid in jeopardy. (Texas is expected to have a hotter and drier summer than normal this year, according to an April climate outlook from the National Oceanic and Atmospheric Administration).

During the recent legislative session, Texas lawmakers passed energy grid legislation that aimed to prevent electricity blackouts in response to the February crisis. Senate Bills 2 and 3 included a few key changes to the state's power grid that experts said will begin to address some issues, such as requiring power companies to upgrade plants to withstand more extreme weather and creating a statewide emergency alert system. However, it will likely take years before those changes are fully implemented.

The legislation also changes ERCOT's governing board to replace what lawmakers called “industry insiders" with appointees selected by a committee comprising selections by Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dade Phelan.

The state likely won't require companies to make weatherization upgrades until 2022 at the earliest.

Disclosure: The University of Texas at Austin has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/06/14/texas-power-grid-conserve-ercot/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Texans lawmakers overlook everyday constituents in response to power outages during winter storm

June 3, 2021

"Everyday Texans overlooked in state lawmakers' response to power outages during winter storm" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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The first day, Melissa Hutchins and her husband burned furniture to keep warm. Friends of theirs burned their children's toys. A neighbor's roof caved in.

When the Hutchins lost water because the pipes froze, they went to a hotel.

Three nights and four maxed out credit cards later, they returned to their Arlington condominium when power was restored to Texans after one of the deadliest and costliest disasters in state history.

“Texas is not prepared for weather like that," Hutchins said. “We're not equipped for that at all down here."

State lawmakers responded to February's deadly power outages during a winter storm with a few key changes to the state's power grid that experts said will begin to address some issues exposed by the storm — such as requiring power companies to upgrade plants to withstand more extreme weather and creating a statewide emergency alert system.

But they did not provide direct relief for everyday Texans, many of whom lost jobs or loved ones during the pandemic and then went through yet another emotionally and financially taxing crisis.

The storm caused the deaths of as many as 700 people, according to a Buzzfeed analysis. Insurance costs for property damage alone are about $18 billion, Reuters reported, citing Karen Clark & Co., a Boston consulting firm. The total economic damage to the state may be $86 billion to $129 billion, according to The Perryman Group, a Texas economic firm.

Lawmakers approved a bill that will likely increase most Texans' electricity bills by at least a few dollars each month for possibly the next two decades to bail out the state's utility and electricity companies. Patricia Zavala, senior policy analyst at Jolt, a Latino progressive advocacy group in Texas, said even a small increase in living costs can put Texans who are “teetering on the edge" into financial jeopardy.

And Doug Lewin, an Austin-based energy and climate consultant, said that while the Legislature took positive steps in requiring power companies to prepare for future storms, nothing was done to provide direct assistance to people harmed by the power crisis or to help Texans reduce electricity use to take pressure off the grid during extreme weather.

He and others said the changes this session were not the sort of sweeping reforms necessary to completely avoid another power grid catastrophe.

“There was really no focus at all to address ... the millions of Texans struggling to pay their electric bills," Lewin said during a Friday press conference with Texas environmental advocates. “There's two sides of the equation: supply and demand. The Legislature has stayed almost entirely focused on supply, and almost completely neglected the demand side."

Lawmakers made the case in the final minutes of the legislative session that overhauling the board that oversees the power grid will provide the structural change necessary to prevent another grid-related disaster.

“I always get questions, 'What have y'all done to fix the disaster that we saw in February?'" state Sen. Lois Kolkhorst, R-Brenham, said before the Senate passed Senate Bill 2, which changes the makeup of the Electric Reliability Council of Texas' board of directors. “It starts with leadership, and it starts with the structure [of people who] make the hard calls."

Still, both Republican and Democratic lawmakers acknowledged that they did not do enough this session to aid the people — like the Hutchins and their neighbors — who struggled financially after the winter storm caused medical emergencies, damaged property, spoiled food and sent many Texans' utility bills soaring.

Melissa Hutchins, 37, estimates that the hotel, food, repairs to their condo and lost work cost them $5,000. Her husband, a manager at a food and beverage manufacturer, made an early withdrawal on his retirement account so they could repair broken plumbing to restore their water and fix their dishwasher. All of this, she said, after a year in which her husband was sick with COVID-19 and missed a month of work.

“It was just crazy," Hutchins said. “It's one thing after another. Like water, we can't live without water. We have to have electricity."

Lawmakers said the measure they passed to give utilities and electricity companies access to billions of dollars in bonds and loans will prevent a larger financial crisis in the state in the aftermath of the storm. Lt. Gov. Dan Patrick has called for additional legislation that would provide direct financial relief to consumers.

“The next time, for this Lieutenant Governor, that we're going to spend billions of dollars concerning the storm, it's going to be to help the people of Texas and the ratepayers, or I won't call that bill up," Patrick said. “We have to help the people of Texas and their electric bills."

Gov. Greg Abbott is expected to call lawmakers back for a special session later this year to revive certain bills that died during the regular session; in an interview with The Texas Tribune on Tuesday, Abbott said he would likely support a proposal to aid consumers, but he hasn't announced whether he would add the issue to lawmakers' plates in a special session.

“Put me on the side of consumers who suffered through this storm," Abbott said.

Little relief for everyday Texans

Senate Bills 2 and 3, the two major power grid bills that lawmakers passed on Sunday and sent to Abbott, focus on ERCOT's board and weatherizing the power plants that serve the electrical grid.

Senate Bill 2 reduces the number of ERCOT board members from 16 to 11 and requires that instead of what lawmakers called “industry insiders" appointing the board, Abbott, Patrick and House Speaker Dade Phelan will appoint a committee to make ERCOT board selections.

Senate Bill 3 requires power companies and some natural gas companies to make upgrades so their facilities can withstand extreme weather and requires regulators to create an emergency alert system, similar to an Amber alert, for power outages and inclement weather.

The Senate did not approve a $2 billion plan, approved by the House, to help companies pay for weatherization. So companies alone will pay the costs to retroactively equip their power plants to withstand extreme weather.

The state likely won't require companies to make weatherization upgrades until 2022 at the earliest.

Another package of bills sent to the governor would increase rates on Texans' power bills for likely the next two decades to cover at least $7 billion of gas utilities', electric cooperatives' and electric companies' debt from the storm.

Many companies, particularly rural electric cooperatives, were financially wrecked after the winter storm due to state electricity regulators' decision to set power prices at the maximum rate of $9,000 per megawatt-hour and keep them there for an additional 32 hours after power began to return. Natural gas fuel prices also spiked during the storm; some gas utility companies said their customers' bills would increase several times the normal amount if the companies had to finance their storm-related debt without state help.

If Abbott signs the bills into law, the legislation will prevent customers from having to pay huge bills from the storm by allowing companies to seek billions of dollars in state-approved bonds backed by the new charges on customers' bills. The state's plan will help the companies get cheaper, longer-term loans.

Some electric companies also owe massive debts to ERCOT; under House Bill 4492, ERCOT will receive $800 million from the state's Economic Stabilization Fund, known as the rainy day fund, to pay off those debts — an effort to prevent most retail electric providers from passing huge bills on to their customers and to also reimburse power generation companies.

Still, some are concerned that the state's solution will add yet another cost to already-struggling consumers. Aaron Gonzales, 27, a graduate student at the University of Texas and a volunteer for Jolt Action, said the rising cost of living has delayed his plans to purchase a home. Even a small increase on his utility bill chips away at that dream, he said.

“It's a straw that gets put on the camel's back, and we have to ask ourselves, how many before it breaks?" he said. “A lot of people in my family were laid off this year or on reduced wages. At a time when we don't have jobs or money, you're asking us to pay even more."

The Texas Senate added an amendment in the final week of the session to House Bill 4492 that would have allowed the state comptroller to provide one-time bill payment assistance grants of $350 to residential customers. That measure was stripped from the bill in the House, and Patrick and some senators called for the proposal to be brought back up during a special session.

“It is only fair and right," said Sen. Roland Gutierrez, D-San Antonio. “People froze in their homes. A $350 credit is the least we can do."

The Senate stripped away House proposals to help electric customers, too. An amendment to Senate Bill 3 by Rep. Erin Zwiener, D-Driftwood, would have created a grant program for projects that add backup power generation to water treatment plants, local electric utilities, hospitals, nursing homes and dialysis centers. The amendment was taken out during the two chambers' negotiations.

“I don't know if we got any good consumer wins, which is disappointing to think about," Zwiener said of the session.

What the Legislature didn't do

Although lawmakers required electricity generators to weatherize against extreme weather, they took a more limited approach to requiring gas fuel facilities to weatherize — Senate Bill 3 requires only gas facilities that are deemed "critical" by regulators to make changes.

Dozens of natural gas companies failed to do the paperwork that would keep their facilities powered during an emergency, so utilities — under orders from ERCOT to shut down parts of the grid as demand surged — cut their electricity at the very moment that power plants most needed fuel during the storm. Some power plants were unable to operate during the storm due to natural gas fuel shortages.

Lawmakers did not set deadlines for gas companies to weatherize their equipment, which critics argue will allow companies to delay the upgrades.

Lawmakers also stopped short of ordering an energy market overhaul; some proposals would have fundamentally changed the state's deregulated market structure, which relies on supply and demand to set power prices, but lawmakers didn't bite.

And they rejected a pitch by billionaire Warren Buffett's company, Berkshire Hathaway, to spend $8.3 billion for 10 new natural gas power plants across the state for emergency use only, paid for by electricity customers. Many Texas companies did not support the plan, and lawmakers didn't even support studying the idea.

Lawmakers also didn't pass legislation that would help Texans pay to better insulate their homes and reduce their electricity usage, which could both lower power bills and reduce demand on the grid.

“[Texas] has been kind of reluctant to do it," said Pat Wood III, former Public Utility Commission of Texas chair, of weatherizing homes. “And I don't know why."

Those ideas didn't gain traction in the Republican-dominated Legislature, but Zwiener said she's optimistic that such proposals could later be funded by a federal infrastructure package, which President Joe Biden has pushed hard during his first months in office.

“I'm hopeful that when we return in the fall we will be able to leverage some of that for homeowners to weatherize," Zwiener said. “It's energy efficiency, but it's also about survivability. If you live in a house with decent insulation, your house is going to stay warmer or cooler for a much longer period of time."

What's next for the power grid

The upgrades to the grid that lawmakers approved last month won't eliminate the chance of blackouts in Texas. If the state experiences a severe heat wave or drought combined with high demand for power, outages are a possibility, according to recent ERCOT assessments.

ERCOT included three extreme scenarios in a forecast of the state's power resources for the summer — the most extreme calculations ERCOT has ever considered for its regular seasonal assessment. Each scenario would leave the grid short a significant amount of power, which would trigger power outages.

The grid operator had previously avoided warning the public about such extreme possibilities because of their low likelihood of happening. But after February's storm, ERCOT is changing tactics.

ERCOT interim President Brad Jones will also have to build working relationships with an entirely new board of directors, picked by a committee appointed by the state's top politicians.

Meanwhile, ERCOT has to convince the public that its new regime can be trusted to keep the grid from collapsing again.

“[They are] starting over because there's all these people who got introduced to the grid in February — and not in a good way," said Caitlin Smith, an Austin energy policy adviser. “So, we're starting their relationship with ERCOT from a really traumatic event and going from there."

Patrick Svitek contributed to this report.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/06/03/texas-electricity-bills-winter-storm-legislature/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Texas House gives early approval to bill that would punish Wall Street for fossil fuel disinvestments

"Texas House gives early approval to bill that would punish Wall Street for fossil fuel disinvestments" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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The Texas House on Monday gave preliminary approval to a bill that would direct state investment funds to divest from companies that cut ties with fossil fuel companies.

Senate Bill 13 was approved on second reading in the House, and needs only a third reading before it is sent to Gov. Greg Abbott's desk.

The legislation would require state entities — including state pension funds and Texas' massive K-12 school endowment — to divest from companies that refuse to invest in or do business with fossil fuel-based energy companies.

It's a response to the sentiment on Wall Street that oil and gas companies are contributing to climate change — and may not be a good investment in the midst of an energy transition. The bill seeks to divest the state's massive investment funds from firms that “boycott" fossil fuel companies.

“Oil and gas is the lifeblood of the Texas economy," state Rep. Phil King, R-Weatherford, said on the House floor before the bill was approved in a 92-51 vote. “In the world of capital, there's a movement to deny funds to businesses that will not sign on to extreme anti-fossil fuel policy."

Pressure is increasing on Wall Street for companies and investment funds to reduce financial support for oil and gas companies due to the outsized impact the industry has on carbon emissions that contribute to climate change. Last year, Larry Fink, founder and chief executive of BlackRock, one of the world's largest investment companies, wrote to shareholders that the firm would make climate change “a defining factor" in its investment strategy.

King said he spoke to an engineer in the energy industry who said the “virtue signaling" by BlackRock has changed capital availability to oil companies.

Democrats who voted no on the legislation called the bill anti-free speech, and argued that Texas should pursue legislation that rewards industries important to Texas, rather than punishing others.

“We say we want to protect people's ability to speak their mind, but once again, we have another bill that does the opposite," said state Rep. Gene Wu, D-Houston. “We punish companies for their thoughts and internal policies, whether they carry them out or not. We punish thought. We punish speech."

Texas state funds identified in the bill include the $46 billion Texas Permanent School Fund, the largest such K-12 fund in the U.S; the Teacher Retirement System of Texas, which manages nearly $165 billion in investments; and the Employees Retirement System of Texas and Texas Municipal Retirement System of Texas, which each manage $31 billion.

An amendment added to the bill on the House floor clarified that the state can do what is in the best interest of the fiduciary duty of the government.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/05/03/texas-house-fossil-fuel-oil-divest/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Severe weather this summer could cause another Texas power crisis

"Severe weather this summer could cause another Texas power crisis" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

Electricity outages in Texas could occur again this summer — just a few months after the devastating winter storm that left millions of Texans without power for days — if the state experiences a severe heat wave or drought combined with high demand for power, according to recent assessments by the state's grid operator.

Experts and company executives are warning that the power grid that covers most of the state is at risk of another crisis this summer, when demand for electricity typically peaks as homes and businesses crank up air conditioning to ride out the Texas heat. Texas is likely to see a hotter and drier summer than normal this year, according to an April climate outlook from the National Oceanic and Atmospheric Administration, and 2021 is very likely to rank among the 10 warmest years on record globally.

“This summer, I am as worried right now [about the grid] as I was coming into this winter," said Curt Morgan, CEO of Vistra Corp., an Irving-based power company. “Sounds like I'm the boy that cries wolf, but I'm not. I've seen this stuff repeat itself. We can have the same event happen if we don't fix this."

As state lawmakers continue debating how to improve the grid after February's storm nearly caused its collapse, on Tuesday Texans were asked to conserve electricity because the supply of power could barely keep up with demand. A significant chunk of the grid's power plants were offline due to maintenance this week, some a result of damage from the winter storm.

The warning triggered a torrent of outrage from residents and political leaders across the state who questioned why the Electric Reliability Council of Texas, which manages the grid, allowed it to come so close to emergency conditions on a relatively mild spring day. “I appreciate the increased effort toward transparency, but wow this is nervewracking to see in April," state Rep. Erin Zwiener, D-Driftwood, tweeted Tuesday.

Heading into the summer, ERCOT included three extreme scenarios in a preliminary assessment of the state's power resources for the summer — the most extreme calculations ERCOT has ever considered for the seasonal assessment. Each scenario would leave the grid short a significant amount of power, which would trigger outages to residents:

  • In the first scenario, a drought similar to what the state saw in 2011, combined with low winds, several natural gas plants offline and an increase in economic activity as the pandemic eases, would leave the power grid short 3,600 megawatts, or enough to power 720,000 homes.
  • Add low solar power generation to the first projection (say it's a cloudy day), and the grid would be short 7,500 megawatts, or enough to power 1.5 million homes.
  • In the most extreme scenario ERCOT considered, a severe heat wave across the entire state combined with outages for every major power source would leave the grid short 14,000 megawatts, or enough to power 2.8 million homes.

Power grids must keep supply and demand in balance at all times. When Texas' grid falls below its safety margin of 2,300 megawatts in excess supply, the grid operator starts taking additional precautions, like what happened on Tuesday, to avoid blackouts.

Pete Warnken, ERCOT's manager of resource adequacy, told reporters near the end of March that the grid operator included the extreme scenarios to “broaden the debate on how to make the grid more resilient." Still, he said ERCOT expects sufficient power reserves, “assuming normal conditions" this summer.

While the extreme scenarios have a very low chance of actually occurring, an unlikely and severe event happened in February, when extreme cold knocked out several different sources of power at once just as the cold triggered surging demand for power and natural gas fuel shortages. More than 4.8 million customers lost power and at least 111 people died during the storm.

A final summer assessment will be published May 6.

“A catastrophic event like the winter storm could not be predicted several months in advance," Warnken said, adding that the preliminary report isn't intended to forecast unprecedented events.

Rather, Warnken said the scenarios should help inform state leaders and the public of what's possible — “the idea is the planners and stakeholders are aware that there's a possibility something like that could happen," he said. “These have a much lower probability of occurring than the traditional grid scenarios."

Hot, dry summer

John Nielsen-Gammon, the Texas State Climatologist and director of the Texas Center for Climate Studies, said that this summer in Texas is shaping up to be hot and dry. While it's still early, he said temperatures this summer will depend on how much rain the state gets between now and June. Parts of the state — South Texas to far West Texas — have been in drought conditions for more than a year, he said.

“Temperatures during the summer depend a lot on how much rain there has been over the preceding several months," he said. “It's been fairly dry this past fall and winter and spring so far."

When heat waves hit large swaths of the state, that puts stress on the grid.

“In 2011, for example, most of the summer was a heat wave," Nielsen-Gammon said. That was the driest year on record in Texas, and what ERCOT based its extreme scenarios on this year. That summer, ERCOT took emergency precautions, but widespread outages did not occur.

“We were in an extreme drought with little moisture available [in 2011]," Nielsen-Gammon said. “Usually, if you have a heat wave, it's going to affect at least half the state if not most of it."

ERCOT is “carefully looking at" the potential for big heat waves and drought this year, Warnken said.

TKTKTK

A large area of Texas, and much of the Western U.S., will likely have above average temperatures this summer, according to an April analysis by the National Oceanic and Atmospheric Administration.

Credit: National Oceanic and Atmospheric Administration

Climate change has made summer droughts hotter and longer than they used to be in the southwest, according to a 2019 study authored by National Oceanic and Atmospheric Administration scientists. The study found that droughts occurring in today's warmer climate cause hotter temperatures than the same drought decades ago — the low soil moisture combined with higher temperatures produce stronger heat waves.

A large area of Texas will likely have above average temperatures this summer, according to an April 15 NOAA analysis.

Daniel Cohan, an associate professor of civil and environmental engineering at Rice University, is concerned about the power grid's performance this summer.

“If ERCOT is struggling to keep the lights on this week, that doesn't bode well for summer," Cohan said. “Certainly with climate change, it's possible we'll hit new records for heat waves."

And despite state lawmakers' advances on legislation aimed to address February's outages, Cohan said there is little the Legislature can do to better prepare the state's energy infrastructure for this summer. “It's too late to do a whole lot for this summer," he said.

Texas' susceptibility to blackouts has long been a concern for the North American Electric Reliability Corp., which has some authority to regulate power plants and oversee grid operators in the U.S.

“From my perspective, [Texas] doesn't have as much cushion as even ERCOT's math says that they should," said James Robb, its CEO and president.

Still, Michelle Michot Foss, a fellow in energy at Rice University's Baker Institute, said Texas' grid is better prepared for summer heat than extreme cold, and it's not unusual for the grid to creep close to its capacity in the hottest months.

“We deal with [heat] more often," she said. During the summer, she said, “the energy systems are better prepared."

Disclosure: Rice University has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/04/15/texas-ercot-blackouts-summer-climate/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Texas oil and gas regulators rushed to defend the industry’s image when the power went out

When the power went out for Marsha Hendler on Feb. 15, she rushed to her downtown San Antonio office to ride out the winter storm. Thankful to find the electricity and heat still on, she typed out an email to the elected officials who regulate her small, independent oil and gas company.

“I strongly urge you to make public statements, to develop a PR program around our current energy conditions," Hendler wrote at 2 p.m. that day to the three members of the Texas Railroad Commission, according to an email obtained by The Texas Tribune and ProPublica. “Assure citizens that blending oil and gas production with green [energy] will keep Texas energy strong."

It's a sentiment that many in the oil and gas industry echoed during a crisis that forced millions to endure freezing weather for days without electricity and eventually led to the deaths of more than 100 people. And even as Hendler typed, Railroad Commissioners Christi Craddick, Wayne Christian and Jim Wright, all Republicans, had already begun to do what she had requested.

Emails, tweets and public statements from the state commissioners during the Texas power crisis show that the elected regulators expressed immediate worry about the storm's impact on the image of the agency and the industry it regulates — the industry that funds much of their political campaigns. At times, commissioners retweeted or emphasized the same talking points published by the Texas Oil and Gas Association, one of the state's largest trade associations. They testified at public hearings and made public statements pushing back against criticisms of the natural gas industry's role in the February power outages. And in some cases, they attempted to redirect blame from the fossil fuel industry to wind power — a narrative that quickly gained traction among Texas Republicans on social media.

All sources of energy struggled to produce power during the storm, and the Texas power grid is particularly vulnerable to winter outages if natural gas-fired power plants don't produce enough. But suddenly, fossil fuel-powered electricity had been labeled “reliables" by Texas politicians.

“Many including myself have warned for years about the dangers of relying too heavily on unreliable, intermittent forms of electric generation like wind and solar to meet the energy needs for 30 million Texans," Christian wrote in his newsletter to supporters Feb. 17. “The issue isn't the existence of renewable energy, but that it has displaced reliable generation."

Defending natural gas

Energy experts during and after the power outages have pointed to how the state's reliance on natural gas-powered electric generation created a perfect storm: Natural gas and other “thermal" sources of power, like nuclear energy and coal, make up more than 80% of the state's projected power generation during the winter months, according to the Electric Reliability Council of Texas's seasonal assessment of power resources.

While the raw amount of power generated by natural gas increased during the storm as plants tried to match the rising demand, it was nowhere close to the amount of generation that should have been possible had the plants not experienced freezing components or natural gas fuel shortages.

Power plants initially tripped offline due to freezing conditions that plants were not built to withstand. Then some began to face fuel shortages. In many cases, there wasn't enough natural gas flowing through the pipes during the storm to power plants, even if they could run. A decadeslong trend of electrifying natural gas fuel facilities meant that when ERCOT implemented power outages to prevent the complete collapse of the grid, the outages inadvertently choked off fuel for plants that could have returned power to homes.

The scramble to restore the fuel supply was one of the major problems during the February crisis, and it caused some energy experts to call for reforms. James Robb, president and CEO of the North American Electric Reliability Corp., which has some authority to regulate power generators in the U.S., warned lawmakers in March that the natural gas system “was not built or operated with electric reliability first in mind."

But in their defense of natural gas, many Texas politicians cast blame elsewhere. Their most common target: wind-generated power, which also suffered serious failures due to frozen turbines but made up a significantly smaller share of the projected power for winter. Christian was among the loudest pushing that narrative: During a meeting Feb. 17, while the lights were still off across large parts of the state, he said that the storm showed the “dangers of subsidizing intermittent, unreliable energy" — an apparent reference to renewable energy like wind power.

After one Texan emailed each commissioner Feb. 17 asking what regulations the agency implemented leading up to the storm to ensure natural gas supply was reliable, Christian responded by again blaming renewable sources of energy. The storm would not have been so devastating had it not been for “decades of poor policy decisions prioritizing unreliable renewable energy sources at the expense of reliable electricity — something Texans now know is essential to our everyday lives," he wrote, according to the email provided to the Tribune.

Connie Koval, the retiree who asked the question, said in an interview with the Tribune that the response made her upset. “It made me angry that they are continuing to spread false narratives," Koval said. “He seemed to blame wind and solar."

But it's clear the commissioners saw a potential public relations crisis looming. After receiving the same inquiring email from Koval, Wright, who was elected to the Railroad Commission in November, forwarded the email to agency staff, saying the concerns would be “the greatest issue we will face from this event."

“We need to be ready to respond with a good plan of action," Wright wrote the morning of Feb. 18, the fourth day Texans were experiencing the power crisis. “I will provide the hurdles that are beyond our control in these regards when I am in the office next week as there are many."

Kate Zaykowski, who received that email from Wright and works for him as his director of public affairs, said in an interview with the Tribune that Wright was referring to his concern about the public image of the agency. But she said he was also worried that the public would not understand what requiring the industry to prepare for extreme weather would entail, and was worried about the industry's image as well.

“He believes, personally, that the oil and gas industry is important to Texas, and he wants the general public to understand why," Zaykowski said. “He also believes that it's important to regulate the industry."

There are signs that the campaign to blame wind power might not have worked: A poll of registered voters in Texas conducted by the University of Texas at Austin's Texas Politics Project and its Energy Institute, published Thursday, found that they cite the lack of winterization of power plants and the unprecedented nature of the storm as the top two factors in the power crisis. Only 35% of Texans surveyed pointed to an over-reliance on renewable energy as a major factor, compared with 64% of those surveyed who listed a lack of winterization of gas facilities.

Only 12% of those surveyed said they approved of the Railroad Commission's response to the storm.

Hendler, the independent oil operator in San Antonio, acknowledged that using wind and solar energy is necessary to slow and mitigate the effects of climate change. But she said she believes the economy still depends on burning oil, gas and its derivatives for transportation, energy and other products, such as plastic. She said she's concerned about an aggressive shift toward renewable energy that jeopardizes her industry and the larger state economy.

“Part of the job of the commission is a PR job, and I don't think they do that well," Hendler said. “I think that's one of the reasons that the [oil] industry takes the hits that it does."

Industry influence

The commissioners made their case far beyond emails and social media. In the days and weeks after the February power crisis, Christian published an opinion article in The Wall Street Journal defending the use of fossil fuels and created a website dedicated to the talking points that he emailed to Koval and others. The site, Reliable Grid Now, says it seeks to “educate the general public and lawmakers about the importance of reliable energy" and urges the public to send letters against renewable energy subsidies to lawmakers signed, “Make Texas energy reliable again!"

In a statement, Christian told the Tribune that Reliable Grid Now is a project paid for by his campaign and is unrelated to his duties as a state regulator. He said when he ran for office, he made a promise to govern conservatively, support free markets and stand up for consumers.

“I don't see myself as a spokesman for oil and gas, but I do have a responsibility to ensure our state's natural resources are produced responsibly for the economic benefit of the citizens I represent," Christian said.

Little more than a week after power was restored to most Texans, Craddick went to testify at the state Capitol, where she assured lawmakers that oil and gas did not need to be further regulated and pointed to power outages for natural gas shortages during the storm. And testifying before a U.S. House Committee on Energy and Commerce in late March, she said the oil and gas industry helped Texas during the winter storm.

“I sit before you today to state that these operators were not the problem," Craddick said. “The oil and gas industry was the solution."

The industry was simultaneously making the same case. In a tweet Feb. 24, The Texas Oil and Gas Association wrote that natural gas was “essential and indispensable" in heating and powering homes during the winter storm. The Texas Alliance of Energy Producers wrote in an opinion article for World Oil that natural gas did the “heavy lifting" during the February storm, because it was needed to both heat homes and generate electricity. The group also blamed wind generation: “It wasn't enough to meet the huge upward spike in demand, largely because electric power from wind generation was nowhere to be found."

Craddick also retweeted and posted images by the Texas Oil and Gas Association.

“Natural gas stepped up to power the vast majority of electricity generation in Texas," Craddick wrote in one tweet on Feb. 28, alongside a photo of a graph from the Texas Oil and Gas Association that showed power generation from natural gas increased during the February storm, without a comparison to the shortage of power the grid experienced.

In a statement to the Tribune, Craddick said she consumes information from a variety of sources, including TXOGA, and shares relevant and accurate information regardless of the source. She also wrote that the oil and gas industry is the most influential industry in Texas, and much of the state relies on its vitality.

“I support the industry's continued success not only because of my role as a public servant at the Railroad Commission, but also as a Texan who appreciated the overwhelming economic vibrancy of our state," Craddick said in a statement.

The industry supports Craddick and the other commissioners, too. Records show the commissioners' campaigns received hundreds of thousands of dollars in 2020 from industry groups and people who work in oil and gas. Craddick alone received more than $200,000 from people specifically identified in campaign finance reports as involved in natural gas or oil and gas work.

Craddick and her father, state Rep. Tom Craddick, R-Midland, have long been financially tied to the industry in Texas, a relationship recently highlighted by The Washington Post, which reported that the two own and manage land across the state that generated more than $100,000 from Texas' largest natural gas producers in 2019, according to state Ethics Commission records. In a statement, Christi Craddick said the Texas Ethics Commission laws ensure transparency of public officials and that she takes those laws seriously.

Virginia Palacios, executive director of Commission Shift, a newly formed nonprofit organization in Texas focused on environmental and consumer issues at the Railroad Commission, said the outsized influence of industry on the commission is hurting its ability to regulate, causing it instead to want to deflect blame for the power crisis.

“This is resulting in these industries buying the elections of the agencies that regulate them," Palacios said. “It would have been nice if we had a regulator who looked at the data, looked at the recommendations and made sound management decisions based on that analysis. But what we have are [commissioners] who are elected trying to look good so that they can get reelected."

Governor changes tune

The message has resonated with other state leaders and lawmakers. Gov. Greg Abbott, early in the storm, appeared to attempt to tamp down the narrative that renewable energy was solely to blame for the crisis.

In a tweet describing the situation Feb. 15, Abbott wrote that “the ability of some companies that generate the power has been frozen. This includes the natural gas & coal generators."

But he changed his tune by the time he appeared on Sean Hannity's Fox News show two days later. By then, a tweet by an energy author who promotes the use of fossil fuels had garnered significant attention by claiming the “root cause" of the Texas power crisis was national and state policies that prioritize wind and solar energy over other sources. Alex Epstein, the author, had emailed those same talking points to Abbott's office, email records first reported by NBC News show.

“Our wind and solar got shut down," Abbott said on the show. “And that thrust Texas into a situation where it was lacking power on a statewide basis. … As a result, it shows fossil fuels are necessary for the state of Texas as well as other states."

Weeks later, an Abbott spokesperson told the Tribune that the governor is treating all power sources equally as he pushes for reform of the electricity grid that covers much of the state.

Some bills identified by lawmakers as high priorities seek to place new costs on renewable power or take preventive strikes at climate action plans by cities.

At the annual Energy Day at the Capitol on March 24, state leaders and regulators touted the state's oil and gas production and largely ignored the February power outages. They also criticized renewable energy. Christian again reiterated his concern about the country's investments in renewable energy, which he called “undependable."

“We're putting most of our tax dollars into the 'undependables' at the cost and risk to lives and to the 'dependables' — oil, gas and coal," Christian told Todd Staples, president of the Texas Oil and Gas Association, during a discussion moderated and hosted by the industry group.

Abbott promoted a bill that would stop cities from banning natural gas as a fuel source for heating homes and other buildings. Staples claimed that the oil and gas industry would lead the U.S. to a “cleaner" future. Both Christian and Abbott hammered Democrats and the Biden administration during the event.

“With regard to the energy sector in Texas, and across the United States, it's changed because of the new administration that's seeking to impose these Green New Deal policies, Green New Deal policies that threaten fossil fuel production in the state of Texas like what we are accustomed to," Abbott said.

“But something else that we are accustomed to is fighting back, and protecting the fossil fuel industry in Texas," he said.

Lexi Churchill, a research reporter for the Texas Tribune/ProPublica investigative unit, contributed reporting.

Disclosure: The Texas Oil and Gas Association, Texas Alliance of Energy Producers and University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/04/05/texas-regulators-winter-storm/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Warren Buffett group lobbying Texas lawmakers to build $8 billion worth of power plants for emergency use

As the Texas Legislature debated how to respond to last month's winter storm-driven power crisis, executives at billionaire Warren Buffett's Berkshire Hathaway Energy were pitching lawmakers an idea: The group would spend over $8 billion to build 10 new natural gas power plants in the state. Lawmakers would agree to create a revenue stream to provide Berkshire a return on its investment through an additional charge on Texans' power bills.

Representatives for Berkshire Hathaway Energy have been in Austin meeting with lawmakers and state leaders for the past week and a half, according to a person working closely on the issue.

The proposed company, which would likely be known as the Texas Emergency Power Reserve, would build and maintain plants that sit idle during normal times, according to a slide deck obtained by The Texas Tribune. Whenever demand for power in the state threatened to surpass supply, these new plants would kick in to make up the difference, if ordered to do so by the state's grid operator.

“When you flip that switch and say, look, demand has exceeded supply, it has to come on in 10 minutes," Chris Brown, CEO of Berkshire Hathaway Energy, said in an interview Thursday with the Tribune. “That's the Texas Emergency Power Reserve promise — that's the promise that we're making to the citizens of Texas."

In the presentation, the representatives estimated the cost of that new charge to consumers as $1.42 per month for residential customers, $9.61 for commercial customers and $58.94 for industrial customers. The pitch to state leaders also included a poll conducted by Republican pollster Mike Baselice suggesting that Texans would be broadly supportive of paying a little more on their power bills to increase reliability. The poll was conducted from March 17-21 among 800 likely voters in Texas, according to top lines of the poll obtained by the Tribune.

Over the past week, Berkshire Hathaway Energy, part of Buffett's multinational conglomerate company Berkshire Hathaway, has hired eight lobbyists in Austin at a cost of more than $300,000, according to records filed with the Texas Ethics Commission. One of those lobbyists is Allen Blakemore, a Houston political consultant who serves as a top strategist to Lt. Gov. Dan Patrick. Blakemore did not respond to a request for comment.

Executives also met privately with key legislative leaders, including the lieutenant governor, who presides over the Senate, and new House Speaker Dade Phelan, R-Beaumont.

A senior adviser for Patrick confirmed the lieutenant governor met with Berkshire Hathaway executives earlier this month. And a spokesperson for Phelan said the speaker met with the executives recently. A spokesperson for Gov. Greg Abbott, who has so far pushed for the weatherization of power generators as a legislative solution, did not immediately respond to a request for comment.

If approved, the deal would signal a move away from decades of a competitive electricity market in Texas in which all power generators in Texas are paid for the energy they produce and sell, rather than the power they could potentially generate. Berkshire Hathaway Energy executives say their plan would not create a “capacity" market, but instead serve as highly regulated backup electricity generation.

The company says that building extra power generation in Texas would help ease fears of a repeat of the February power outages, during which more than 100 people died.

“We're not in favor at all of getting rid of [the deregulated market]," Brown said. “We think competition is to Texas' benefit. We're not dipping into the market at all."

Power grids must keep energy demand and supply in balance at every moment or risk uncontrolled blackouts. The February outages were ordered by the grid operator, the Electric Reliability Council of Texas, in a move to prevent a bigger catastrophe that could have left most of the state without power for weeks.

Under Berkshire Hathaway's plan, ERCOT would control when the new power plants are activated to avoid the threat of such widespread power outages, and customers would pay a fixed fee only to cover the project's costs, while the price for energy supplied to the market would go to the state, not the company. It's a similar model to how transmission and distribution utility companies are regulated.

Brown said that while the company is not against the state's procurement process, it believes it's “uniquely suited" to carry out the idea because of its $8.3 billion investment and a commitment to have those 10 plants, totaling 10 gigawatts of additional generation capacity, operational by November 2023. Under its proposal, the company would also owe the state $4 billion if it did not have the plants online by then, Brown said.

“Certainly there's other entities out there that could potentially do it," he said. “That list is pretty short."

Texas deregulated its electricity market decades ago, theorizing that the price of electricity in the market — based on demand — would attract a sufficient amount of power supply. When demand for power is high, the price for power increases, and companies that can supply electricity to the grid make more money. The more cheaply a power plant can generate electricity, the higher the profit margin when it sells it in the wholesale market. Conversely, a plant that has been expensively weatherized to be able to operate in the extreme cold, or a plant that only operates on the few hottest days of the year, represents a big upfront investment for what may be little return in Texas.

Other regions of the country, including New England, tackle this potential mismatch by using government funds to subsidize the cost of plants that sit dormant for much of the year but turn on when demand is high. That's the type of plant Berkshire Hathaway Energy wants to build in Texas — but instead, grid operators would decide when the plants ramp up.

Since a deadline to file legislation at the Legislature has already passed, the proposal would likely get tacked onto existing legislation. It was unclear Thursday which bill the pitch could be added to if lawmakers decided to act on it, though the company said it was talking with lawmakers about multiple pieces of legislation and working toward getting a committee hearing on the proposal sometime next week.

Texas' competitive and deregulated market structure has come under criticism in the aftermath of the February power crisis. Power companies did not prepare plants to withstand severe winter weather, in part because companies build plants as cheaply as possible to maximize their profit margins. When the plants tripped offline during the winter storm, unprepared for the extreme cold, there wasn't enough power generation available to the grid. Power prices spiked, and the Public Utility Commission of Texas ordered ERCOT to set prices at the artificial cap — $9,000 per megawatt-hour — to signal to power companies that any and all power was desperately needed.

But energy experts have expressed doubt that merely having more power plants would have prevented the crisis. Electric generation tripped offline due to freezing temperatures and a shortage of natural gas, which fuels many plants in the state.

“We didn't have a shortage of power plants, we had a shortage of power plants that could work in the cold, and the gas to run them," said Dan Cohan, an associate professor of civil and environmental engineering at Rice University. “Texas has an enormous amount of natural gas plants already. It's not at all clear that there's a need to have more power plants built."

Berkshire Hathaway's presentation argues that adding power generation capacity would be more cost effective for the state than upgrading existing plants to withstand extreme weather. Brown, the CEO, said that the natural gas plants would be winterized and maintain seven days of natural gas storage on site to ensure they could operate during an emergency.

Lawmakers in recent weeks have quickly moved on legislation to address the February power crisis. Last week, the Texas House State Affairs Committee moved forward a bill that would mandate the weatherization of power plants, or mandate that power plants can function under extreme weather conditions. On Thursday, the Texas Senate Jurisprudence Committee advanced Senate Bill 3, a wide-ranging winter storm bill that also mandates winterization for power plants and the natural gas supply chain.

Another bill and a joint resolution filed in the House by Rep. Dan Huberty, R-Houston, would aid power companies in funding those upgrades. But that legislation, as filed, includes language that would allow the low-cost loan program outlined in the bill to be used for building new power plants as well. It would direct the funds to prioritize projects that prepare facilities for cold weather, but it would also prioritize projects that provide excess power to the grid for periods of high demand — in other words, new power plants.

J.P. Urban, senior vice president and acting CEO of the Association of Electric Companies of Texas, a trade association of electric companies in the state, warned lawmakers earlier this week against subsidizing new power plants in their response to last month's outages.

“We believe the program should only focus on bolstering resiliency and existing facilities to avoid disruption in the competitive market," Urban said during a committee meeting Tuesday.

But lawmakers responded that they want more power generation on Texas' grid, not just for future storms, but generally for the growing state population.

“We're going to be a little bit more open to the types of investments that need to be made," said Rep. Richard Peña Raymond, D-Laredo, responding to Urban. “We're going to need more power in Texas, period. Freeze or no freeze." The committee left the legislation pending on Tuesday, but witnesses and lawmakers indicated they would support the Huberty bill.

Even with the support of the Legislature's top leaders, the Berkshire Hathaway deal will need to win the approval of the rank-and-file members — a lesson Buffett learned in a past session. In 2017, after the billionaire met with Abbott and Patrick at the Capitol, the Senate used emergency powers to quickly craft legislation that became known as the “Buffett Bill," a special-interest carve-out allowing Buffett to be exempt from a state law that was barring people from owning both a vehicle manufacturing company and auto dealerships. The bill was effectively killed after Tea Party activists blasted it — and the attempt to fast-track it — as special treatment for a rich and powerful business owner.

Other lawmakers and officials have expressed doubts about letting Buffett and his companies play too big of a role in Texas.

Speaking at Texas Energy Day at the Capitol on Wednesday morning, Texas Railroad Commissioner Wayne Christian, one of the state's oil and gas regulators, criticized President Joe Biden over his energy policies and, in doing so, swiped at “Warren Buffett's company." Christian said canceling oil and natural gas pipelines would put more trains on railroad tracks, and “Warren Buffett's company makes a lot of money from it."

Mitchell Ferman and Shawn Mulcahy contributed to this report.

Disclosure: Allen Blakemore, the Association of Electric Companies of Texas and Rice University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/03/25/warren-buffett-texas-power-plants/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Paperwork failures worsened Texas blackouts — sparking mid-storm scramble to restore critical fuel supply

On Valentine's Day, the major utility that supplies electricity to West Texas readied for a severe winter storm. Hired contractors prepared to fix power lines, managers started up the storm emergency center, and operators reviewed the list of facilities that should — no matter what — keep power during an emergency: 35 of them on Oncor's list were natural gas facilities that deliver fuel to power plants.

As Sunday turned to Monday, Allen Nye, the CEO of Oncor, one of the state's largest transmission and delivery utilities, thought his team was ready.

But the situation rapidly deteriorated as the storm bore down on Texas. At 1:20 a.m., the Electric Reliability Council of Texas, which manages the state's power grid, ordered the first cut of power to bring demand down to match an extremely low power supply as the frigid temperatures caused power plants to rapidly trip offline.

Oncor's team, along with other utilities, began a plan to roll outages at 15- and 30-minute intervals. But just before 2 a.m., ERCOT ordered them to take even more power offline — then kept ordering more reductions. By late Monday morning, ERCOT had ordered 20,000 megawatts of power offline; Oncor's share was 8,000 megawatts, or enough to power 1.6 million homes.

Rolling the outages “quickly became impossible," Nye said. “We sat there praying that electrons showed up."

With millions of Texans without power, Nye got an urgent request from DeAnn Walker, then chair of the Public Utility Commission: She needed Oncor to flip the switch back on to certain natural gas facilities that couldn't deliver fuel to power plants without electricity. A PUC spokesperson said Walker was “ceaselessly" on the phone, calling Nye about dozens of natural gas facilities that weren't on Oncor's “critical" list.

That meant that Oncor, which delivers power to the Permian Basin — the state's most productive oil and natural gas basin — had unwittingly shut off some of the state's power supply when it followed orders to begin the outages.

The desperate scramble to power up natural gas facilities again exposed a major structural flaw in Texas' electric grid: Oncor and other utilities didn't have good lists of what they should consider critical infrastructure, including natural gas facilities — simply because natural gas companies failed to fill out a form or didn't know the form existed, company executives, regulators and experts said.

It's the electricity customer's responsibility to fill out the form, which is provided by electric utilities, usually online (ERCOT provides a second avenue with its own form). Retail electricity providers inform residents and businesses of their right to apply, according to a PUC rule.

At one point during February's winter storm, more than half of the state's natural gas supply was shut down due to power outages, frozen equipment and weather conditions, analysts estimate. More than 9,000 megawatts of power outages were caused by power plants not getting enough gas, enough to power 1.8 million Texas homes and accounting for at least 20% of the total outages during the week of the storm, according to ERCOT's estimate.

As natural gas stopped flowing from the oil patch to power plants, big natural gas pipelines and production companies including Kinder Morgan, Targa Resources Corp. and Diamondback Energy Inc., kept Nye's phone ringing off the hook during the storm, requesting that power be restored to their facilities, he would later tell state legislators at hearings the week after the storm.

“I don't know where [power plants] are buying their gas, and I don't know how that gas is getting to them," Nye said during his testimony. “They've gotta tell me, or, whoever's delivering that gas [does]. Take your pick."

Woody Rickerson, vice president of grid planning and operations at ERCOT, said in an interview with The Texas Tribune that getting gas facilities back online in the middle of a power crisis further complicated a delicate situation. Each time a utility called to inform ERCOT they were going to cut power somewhere else so they could restore power to a critical natural gas fuel facility, grid operators worried that supply and demand would see-saw in the wrong direction. Any power they brought back online had to be equal to what they cut.

“I was surprised at the amount of [critical] infrastructure that hadn't been identified," said Rickerson, who was part of an essential ERCOT team that stayed in or near the control room the entire week. “There were phone calls every day."

By Wednesday, Feb. 17, natural gas supply in the state hit its lowest point during the storm, experts said. Nye told legislators during his testimony that they were so concerned about the supply of natural gas that his chief operating officer called him and said: “I'm just going to turn on the Permian and see what happens."

“And we just turned it on," he said.

By the end of the week, Oncor had added 168 new natural gas facilities to its “critical" list — a nearly five-fold increase from just a few days prior.

A month after the storm, lawmakers are investigating multiple failures that led to 4.9 million customers losing power, some of them for days during subfreezing temperatures in a storm that caused at least 57 deaths statewide.

“In my opinion, if we had kept the supply [of natural gas] on, we would've had minor disruptions," James Cisarik, chairman of the Texas Energy Reliability Council, told legislators. “[Texas] has all the assets, we just have to make sure we evaluate every link in that chain to keep it going."

The failures were years in the making: There is no requirement for natural gas and other companies that operate crucial parts of the grid to register as “critical." And a trend toward electrifying key components of the state's natural gas infrastructure in recent decades, plus the lack of a single agency to oversee all parts of the electric delivery system, created what Kenneth Medlock, a fellow in energy and resource economics at the Rice University's Baker Institute, called a “single point of failure" — one that state regulators were blind to.

“That's a failure of regulation," said Medlock, who is also the senior director of the Center for Energy Studies at Rice. “That's all it is. It's relatively simple."

Power cut to fuel source

A few days before Winter Storm Uri barreled into Texas, more than 100 natural gas production and transportation executives, power generation executives, regulators and ERCOT engineers, tuned in to a conference call. The goal: Make sure the natural gas system remained functional during the storm.

The Texas Energy Reliability Council — a voluntary body with no regulatory authority — usually meets twice a year. Rickerson, the ERCOT vice president, said the primary conversation before the storm hit was about residential heating, which is the top priority for delivering natural gas during times of short supply. Power generation is much lower on the list, and TERC advised the Texas Railroad Commission, which regulates the oil and natural gas industry, including pipelines, to move it up to No. 2.

But that move wouldn't prevent the coming disaster. When the storm hit that weekend, the group's participants began to report “big supply cuts" of natural gas. Production had plummeted at the wellheads — crews couldn't go out on icy roads and the water that comes up from the ground with oil and gas during production froze and created a mess for operators if trucks couldn't get to the wellheads to move it.

The power cuts to wellheads, processing plants and compressors dramatically exacerbated the shortage. The daily conference calls became dire.

It quickly became clear to TERC members that some new natural gas facilities hadn't yet filled out the form to be added to their utility's critical infrastructure list. Some had interpreted “critical" narrowly and assumed they didn't qualify. Still others that were not considered critical before the storm suddenly became critical when other facilities froze.

So, in the middle of one of the worst winter storms in Texas history, Cisarik, Rickerson and others advised companies of what their emergency response should be: Fill out the form.

“Ideally, every critical [facility] would've been registered before the storm," Rickerson said. “That didn't happen. The only way to get [utilities] aware is to fill out the form."

During the legislative hearings after the storm, major natural gas companies said they didn't know there was a form to ensure that their power wasn't turned off.

“It was the first time that we had learned about a form, as well, to my knowledge," said Grant Ruckel, vice president of government affairs for Energy Transfer, one of the largest natural gas pipeline companies in the U.S., during testimony to the Senate Committee on Business and Commerce.

The committee's chair, Sen. Kelly Hancock, R-North Richland Hills, stopped him.

“Really? It's not like you just came into existence — the business has been around a while," Hancock said. “And yet, you just learned about a form from ERCOT that you needed to identify those key locations."

State Rep. Charlie Geren, R-Fort Worth, asked industry representatives during a House hearing the week after the storm to do what he said the state has not: “Since the state hasn't done a very good job of telling people you need to sign up as critical infrastructure, will you get the word out to your members that they need to and they need to now?" Geren asked Todd Staples, president of the Texas Oil and Gas Association, the largest oil and gas industry group in Texas.

Staples assured him he would.

“A vicious downward spiral"

When Texas deregulated its electricity market in the early 2000s, making supply and demand the primary forces for the price of power and increasing competition, wholesale power prices fell. That made it cheaper to electrify natural gas compressor stations and other equipment rather than the traditional method of using the natural gas produced in the field to run the compressor's turbines or engines, energy experts said.

Reliance on electricity, however, made the state's electric power system a loop rather than a chain: Electricity relied on natural gas production, and natural gas production relied on electricity.

If anything goes wrong with any part of the loop, it creates what Medlock, the Rice University expert, calls “a vicious downward spiral." Deliveries of gas are slowed and supply dwindles. Power plants can't generate as much electricity, making the problem worse. “If anything in that circle breaks, the whole circle breaks," he said.

“We cannot just harden power generation if we do not harden the natural gas system," Mauricio Gutierrez, the CEO of NRG Energy Inc., a large Houston-based power generation company, told legislators. “We have a system-wide problem."

Some regulators and experts believe that Texas' power outages would have been minimal, or at least shortened, if the natural gas supply system had not lost power.

Christi Craddick, chair of the Railroad Commission, told lawmakers during testimony the week after the storm that outages “caused a domino effect," adding that “any issues of frozen [natural gas] equipment could have been avoided had the production facilities not been shut down by power outages."

Supply shortages caused U.S. natural gas prices to spike more than 700% during the storm.

But no matter the price, the system couldn't deliver enough of it to power plants. Cisarik, the TERC chairman, explained to legislators that, particularly in major metro areas, natural gas pipelines are contractually obligated to prioritize residential customers; power plants typically don't have similar contracts guaranteeing their fuel supply. So when demand for natural gas spiked during the frigid weather, homes got natural gas and some power plants didn't, he said.

Still, as Medlock, the Rice University expert, put it: “There's no getting around the fact that there just wasn't enough gas on the system."

Calls for a new agency

The chaos in the natural gas system during the storm has sparked calls for a new regulatory agency, or giving additional powers to the Public Utility Commission, to ensure regulators can identify gaps and weak points between the natural gas industry and the electric power industry.

“Could [a single agency] make it better? Just think about everything that has happened here," Kenneth Mercado, executive vice president of the company's electric utility business at CenterPoint Energy, told the Senate Committee on Business and Commerce on Feb. 26. “Gas not talking to electric, electric not talking to gas."

James Robb, the president and CEO of the North American Electric Reliability Corp., which has some authority to regulate power generators in the U.S., said during a U.S. Senate Committee on Energy and Natural Resources hearing on March 11 that he believed the regulation of natural gas supply for the purpose of electric generation, “needs to be rethought."

“The natural gas system was not built or operated with electric reliability first in mind," Robb told the committee. “Policy action will be needed to ensure reliable fuel supply for electric generation."

In an interview with the Tribune, Robb said regulators don't have enough oversight of the natural gas supply system in the U.S., given how much its role has grown in the electric power system — a result of the increasing replacement of coal-fired and nuclear power plants with natural gas, wind and solar generation.

America's fracking boom has led to an explosion of natural gas production — and that gas fueled 40% of all power generation in 2020, more than coal and nuclear, the next two largest sources, combined, according to the U.S. Energy Information Administration. But the industry isn't set up to make delivering fuel for reliable electricity a priority.

“Our gas system, quite frankly, is designed for industrial [use], and space heating. It's not designed to serve large power plants," Robb said. “We don't think of gas as the same criticality as we do power. That makes sense, except when you realize a power system without reliable gas supply is not that useful."

Pat Wood, former chair of the Federal Energy Regulatory Commission who previously served on Texas' PUC, told the Tribune that the critical “interplay" between the gas supply system and the electric power system was pointed out a decade ago in a Federal Energy Regulatory Commission report, and since then, their reliance upon one another has only grown.

He said having a single regulatory body that could oversee both gas suppliers and electric generation in Texas is “long overdue," but added that in Texas, pushing for additional oversight of the politically powerful oil and gas industry is a “pipe dream."

“Getting that all under one purview seems to make a lot of sense," said Wood, who has worked in the energy industry for decades in Houston. “I know the politics are very intense, but if we were thinking of the good government thing to do, I think a lot of people would agree with me on that one."

Disclosure: CenterPoint Energy, NRG Energy, Oncor and Rice University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/03/18/texas-winter-storm-blackouts-paperwork/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

CEO of Texas power grid operator terminated in aftermath of winter storm

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The board overseeing the Electric Reliability Council of Texas, the independent nonprofit entity that operates and manages the electricity grid that covers much of Texas, fired ERCOT CEO Bill Magness Wednesday night.

The move by the board to vote in favor of a "60-day termination notice" came after they convened in a private executive session for more than three hours. The board barely discussed its decision once returning to the public session.

The decision is the latest of several recently announced departures from the ERCOT board, which also included Magness. Seven board members resigned after public criticism that many board members did not reside in Texas.

Magness' absence will leave the 16-person ERCOT board with a mix of vacancies and temporary members. Both ERCOT and the Public Utilities Commission of Texas, the regulatory body that oversees it, have been lambasted in recent weeks for failures in preparing for and responding to the winter storm that left millions of people in the dark for days and claimed the lives of dozens.

On Monday, Lt. Gov. Dan Patrick had called for both Magness and the chair of the PUC, to resign. DeAnn Walker, the former chairwoman for the PUC, resigned that same day. She had come under sharp criticism by lawmakers after largely pointing blame for Texas' power outages to ERCOT. Gov. Greg Abbott on Wednesday named Walker's replacement.

Magness, who endured more than five hours of questioning by state senators Thursday, was criticized for the organization's preparations for a winter storm. ERCOT underestimated the maximum amount of power that would be demanded by homes, businesses and industry during a severe winter storm in its fall projections, and it overestimated the amount of power generation that would be available to the grid during such a storm.

When massive amounts of power began to trip offline in the early hours of Feb. 15, well beyond what was expected, ERCOT grid operators were forced to order utility companies to start controlled outages to prevent the entire system from collapsing. Legislators complained that the grid manager didn't do enough to alert state leaders or the public to the coming disaster.

In his testimony last week, Magness defended ERCOT's handling of the outages, telling lawmakers that if ERCOT operators had not acted as they did, “the suffering we saw last week would be compounded" and Texans would likely be without power for weeks. Magness also defended ERCOT as an entity that carries out what state lawmakers and the PUC direct.

“The commission approves the policy, we implement it," Magness said.

Magness told lawmakers he earns $803,000 annually, which he said comes from Texans paying their electric bills.

Magness did not speak about the board's decision, only that he abstained from the vote because it involved himself. Magness also said he was not present for any relevant discussion in the private executive session.

Walker, who testified after Magness during the hearings with lawmakers, said she disagreed with his characterization of how much oversight the PUC had of ERCOT, and said the commission has “not been given legal authority by the Legislature to require winter weatherization," a primary concern after the power crisis was precipitated by power plants tripping offline. Many power generators are not built to withstand extreme cold weather temperatures in Texas.

Magness worked at ERCOT for more than a decade and became its CEO and president in 2016 after working as its general counsel. He previously held executive management positions in the public and private utility sectors. A lawyer, he also previously worked as lead counsel in state and federal regulatory matters.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/03/02/ercot-texas-bill-magness/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

ERCOT board members living outside of Texas now resigning amid winter storm aftermath

Five board members of the Electric Reliability Council of Texas — the entity that manages and operates the electricity grid that covers much of Texas — will resign on Wednesday, according to a notice to the Public Utility Commission. A sixth has withdrawn his application to the board.

All six live outside of Texas.

Sally Talberg, board chair; Peter Cramton, vice chair; Terry Bulger, finance and audit chair; and Raymond Hepper, human resources and governance committee chair, occupy the "unaffiliated" director positions on the board, which mean they must remain independent of any business ERCOT oversees. Their resignations will be effective at the end of the board's Wednesday meeting.

In addition, Vanessa Anesetti-Parra, the market segment director for the independent retail electric provider market segment, will also resign her position as a board member. Craig Ivey, who was slated to fill a vacant unaffiliated director position, withdrew his application.

ERCOT board members had come under fire last week when it was reported that some did not reside in the state. ERCOT officials, during a press conference last week, said it had temporarily removed personal information about the directors from its website because they were experiencing harassment.

The board has been criticized for last week's mass power outage during a winter storm that has claimed the lives of dozens of Texans. More than 4.5 million customers were without power at one point last week.

Gov. Greg Abbott had called on ERCOT board members to resign in the aftermath of the crisis and said in a statement Tuesday that he welcomes their resignations, promising to investigate the grid operator."I welcome the resignations," Abbott said.

"The lack of preparedness and transparency at ERCOT is unacceptable. We will ensure that the disastrous events of last week are never repeated."

ERCOT, a nonprofit, is governed by a board of directors, but overseen by the Public Utility Commission. Fifteen members serve on the ERCOT board, including the five unaffiliated director positions. The vacancies will not immediately be filled.

In order for ERCOT to maintain its certification as an independent organization, the board, which should consist of 16 members, must include five directors who are completely unaffiliated with "any market segment." Ivey would have been the fifth unaffiliated member.

"The board chairman, board vice chairman and both committee chairman leadership roles will be vacant," according to the notice submitted by attorneys representing ERCOT.

Lawsuits have already been filed against ERCOT in response to last week's crisis. It's unclear whether ERCOT, which falls under the PUC's jurisdiction, can be held liable by such suits: The Texas Supreme Court is expected to decide this year whether ERCOT is entitled to sovereign immunity, a legal principle that protects government agencies from lawsuits, after hearing another case that raised the question last year.

The board members were not all immediately available for comment or referred reporters to their resignation letters. In a joint letter to the rest of the board, the four unaffiliated directors cited the public concern that board members did not live in the state as the reason for their resignation. Ivey also cited not wanting to become a "distraction" from the more important response to the crisis in his letter.

"To allow state leaders a free hand with future direction and to eliminate distractions, we are resigning from the board," Talberg, Cramton, Bulger and Hepper wrote in the resignation letter.

The board directors wrote that before they resign, they will launch the review of the power crisis.

"Our hearts go out to all Texans who have had to go without electricity, heat, and water during the frigid temperatures and continue to face the tragic consequences of this emergency," they wrote. "We want what is best for ERCOT and for Texas."

Talberg, a former state utility regulator who served on the Michigan Public Utility Commission from 2013 to 2020, lives in Michigan. Talberg has sat on various state, regional and national boards and committees involving electricity, natural gas, oil, infrastructure and telecommunications issues. Cramton, a professor of economics at the University of Cologne and the University of Maryland, lives in Germany. Cramton has focused his research on electricity and financial markets. He has advised numerous governments and has been on the ERCOT board since 2015.

Bulger worked in the banking sector for 35 years, including various positions with ABN AMRO Bank in Canada, Europe and the U.S., and lives in Wheaton, Illinois. Hepper, a former litigator for the U.S. Department of Justice, retired in 2018 from working for the grid operator that manages the six-state New England electric system and wholesale markets.

Ivey, whose appointment was approved by ERCOT's members but was pending final approval from the PUC, is retired from more than three decades of experience in the utilities industry. He resides in Florida, according to an ERCOT announcement about his candidacy to the board. Most recently, he was the president of Consolidated Edison Co. of New York Inc., a subsidiary of Consolidated Edison Inc.

Anesetti-Parra oversees Just Energy's North American residential and commercial regulatory affairs and compliance division and has two decades of experience in the retail energy sector.

ERCOT representatives did not return calls seeking comment, but in a statement it said: "We look forward to working with the Texas Legislature, and we thank the outgoing Board Members for their service."

Texas was 'seconds and minutes' away from catastrophic months-long blackouts: officials

"Texas was "seconds and minutes" away from catastrophic monthslong blackouts, officials say" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

Texas' power grid was “seconds and minutes" away from a catastrophic failure that could have left Texans in the dark for months, officials with the entity that operates the grid said Thursday.

As millions of customers throughout the state begin to have power restored after days of massive blackouts, officials with the Electric Reliability Council of Texas, or ERCOT, which operates the power grid that covers most of the state, said Texas was dangerously close to a worst-case scenario: uncontrolled blackouts across the state.

The quick decision that grid operators made in the early hours of Monday morning to begin what was intended to be rolling blackouts — but lasted days for millions of Texans — occurred because operators were seeing warning signs that massive amounts of energy supply was dropping off the grid.

As natural gas fired plants, utility scale wind power and coal plants tripped offline due to the extreme cold brought by the winter storm, the amount of power supplied to the grid to be distributed across the state fell rapidly. At the same time, demand was increasing as consumers and businesses turned up the heat and stayed inside to avoid the weather.

“It needed to be addressed immediately," said Bill Magness, president of ERCOT. “It was seconds and minutes [from possible failure] given the amount of generation that was coming off the system."

Grid operators had to act quickly to cut the amount of power distributed, Magness said, because if they had waited, “then what happens in that next minute might be that three more [power generation] units come offline, and then you're sunk."

Magness said on Wednesday that if operators had not acted in that moment, the state could have suffered blackouts that “could have occurred for months," and left Texas in an “indeterminately long" crisis.

The worst case scenario: Demand for power overwhelms the supply of power generation available on the grid, causing equipment to catch fire, substations to blow and power lines to go down.

If the grid had gone totally offline, the physical damage to power infrastructure from overwhelming the grid can take months to repair, said Bernadette Johnson, senior vice president of power and renewables at Enverus, an oil and gas software and information company headquartered in Austin.

“As chaotic as it was, the whole grid could've been in blackout," she said. “ERCOT is getting a lot of heat, but the fact that it wasn't worse is because of those grid operators."

If that had occurred, even as power generators recovered from the cold, ERCOT would have been unable to quickly reconnect them back to the grid, Johnson said.

Grid operators would have needed to slowly and carefully bring generators and customers back online, all the while taking care to not to cause more damage to the grid. It's a delicate process, Johnson explained, because each part of the puzzle — the generators producing power, the transmission lines that move the power and the customers that use it — must be carefully managed.

“It has to balance constantly," she said. “Once a grid goes down, it's hard to bring it back online. If you bring on too many customers, then you have another outage."

ERCOT officials have repeatedly said that the winter storm that swept the state caught power generators off guard. The storm far exceeded what ERCOT projected in the fall to prepare for winter.

“The operators who took those actions to prevent a catastrophic blackout and much worse damage to our system, that was, I would say, the most difficult decision that had to be made throughout this whole event," Magness said.

Nine grid operators are working at any given time who make these sorts of decisions, said Leslie Sopko, a spokesperson for ERCOT.

“At the end of the day, our operators are highly trained and have the authority to make decisions that protect the reliability of the electric system," she said in a statement.

ERCOT made “significant progress" overnight Wednesday to restore customer power to many Texans, and remaining power outages are likely due to ice storm damage to the distribution system. Some areas that were taken offline will also need to be restored manually, according to ERCOT.

ERCOT warned that emergency conditions remain, and that “some level of rotating outages" may be necessary over the coming days to keep the grid stable.

By Erin Douglas, The Texas Tribune Feb. 18, 2021

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/02/18/texas-power-outages-ercot/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

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