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Texas lawmakers grill officials, regulators over winter storm 'train wreck'

SNL Image

An ice-covered Entergy natural gas plant in Texas during the Arctic storm that left millions of customers in the dark for days.
Source: Entergy Texas

Demanding answers on one of the most traumatic weeks in state history, Texas senators on Feb. 25 grilled Bill Magness, Electric Reliability Council Of Texas Inc. president and CEO, about the massive rolling blackouts that occurred during the winter storm that started Feb. 14, described by one senator as a "train wreck."

During the state Senate Committee on Business and Commerce hearing, Magness described the timeline leading up to and through that week, when 48.6% of its generation capacity went offline, causing ERCOT to direct transmission and distribution utilities to shed as much as 20 GW of load — more than a quarter of what peak load would have otherwise been, for about three days.

Senators learned that ERCOT market participants have no enforceable weatherization standards and that, while ERCOT did try to warn the public and leading officials about the potentially serious weather event, they did not have sufficient backup for communicating to a public that was literally in the dark about how long they could be facing a lack of electricity.

Senators suggested that ERCOT suspend its wholesale market invoicing for the week of Feb. 14 to afford market participants and ERCOT itself time to resolve the potentially devastating financial results, but Magness said this was not allowed under market rules and could have worse consequences for other financial markets linked to ERCOT’s market results, such as the Intercontinental Exchange.

In earlier testimony during a joint meeting of the state House committees on Energy Resources and State Affairs, Rep. Ana Hernandez, a Houston Democrat, said, "At least 32 Texans died in the event, from exposure, carbon monoxide poisoning and other causes."

In his opening remarks, Magness acknowledged that "Texans suffered last week in ways that they should not have to suffer."

$45 billion for no heat

During Magness' testimony, Sen. Nathan Johnson, a Dallas Democrat, said he had examined the financial results of the week before and during the winter storm, and found that wholesale costs totaled about $4.2 billion in the earlier week but $50.6 billion for the period of the winter storm.

"When the weather got really bad, the cost to all of us was $45 billion more — not to heat our houses," Johnson said.

But Magness defended the grid operator's performance, emphasizing that ERCOT was successful in avoiding a complete blackout of the Texas grid, from which recovery could take "weeks, if not months."

"If we had not acted by calling for controlled outages, Texas was headed for a blackout," Magness said. "That doesn't mean the grid is unstable. That doesn't mean the grid is unsafe. But the grid always has to operate by these physical rules."

But even staunch conservatives, with support from Republican Gov. Greg Abbott, called for more regulation of Texas' freewheeling energy-only electricity market, which for two decades has been a mark of pride for the state. Sen. Brandon Creighton, a Beaumont Republican, demanded more answers.

"This is the largest train wreck in the history of deregulated electricity," Creighton said. "Should we change the market? Should we have a market for capacity? What is your direct advice? ... What changes should we make to safeguard against what we all just experienced?"

Magness said everything should be on the table in terms of reform, but he urged continued study and analysis of the events that led up to the generation outages and how the system failed.

"I think things have to change," Magness said. "What all those things are, respectfully, I don't think I know."

'Where does the buck stop?'

Going into the Valentine's Day weekend, ERCOT had warned market participants and the Public Utility Commission that the next week would be tight, possibly involving rolling blackouts, because a polar vortex was expected to send an Arctic blast into the heart of Texas, but ERCOT was taken off-guard the night of Feb. 14-15 by massive generation outages, which jumped from less than 28 GW on Feb. 14 to more than 50 GW the morning of Feb. 15, according to Magness' written presentation.

State Sen. John Whitmire, a Houston Democrat, said the week's outcome — about 3 million power customers offline was not acceptable.

"I don't hear anything you would have done different," Whitmire said. "What action could have been taken? … I'm looking for where does the buck stop. Is it you? Is it the [Public Utility Commission]? Is it the Legislature? It’s your responsibility to prevent us from ever getting into the catastrophe that we’re coming out of."

The ERCOT presentation showed the generation outages by type as follows:

Natural gas: about 27 GW, or about 52% of capacity

Wind: about 18 GW, or about 57% of capacity

Coal: about 6 GW, or about 44% of capacity

Solar: about 750 MW, or about 12% of capacity

Nuclear: about 700 MW, or about 13% of capacity

Preliminary data regarding the causes of the outages, Magness said, indicated equipment damage due to cold weather, 40%; equipment failure not due to cold weather, 8%; inadequate fuel supply, 6%; and planned maintenance outage, 6%. Another 20% was undetermined, and 18% was potentially weather-related, pending further investigation, Magness said.

ERCOT has issued requests for information regarding the cause of outages from all resources, but the responses have not yet arrived.

DeAnn Walker, chair of the Texas Public Utilities Commission, faced a barrage of questions in the Senate committee hearing about the PUC's lack of enforcement of weatherization standards. The legislature has given the PUC no such enforcement authority, Walker said, but the PUC can level $25,000 daily fines to generators for certain violations.

Republican Sen. Charles Schwertner said, "Y'all need some dentures or something to get a bite into your regulatory enforcement; $25,000 is a drop in the bucket to large public utility companies."

'Extreme weather in a different light'

In a concurrent committee hearing in the House, utility executives expressed remorse but said they were left unprepared for the drop in frequency on the grid in the early morning hours of Feb. 15.

Thad Hill, president and CEO of Calpine Corp., the largest operator of gas-fired power plants in the country, told lawmakers, "I thought that when I went to bed Sunday night that we were going to be in good shape." But by 2 a.m., a "stunning" 10,000 MW came off the grid, the CEO recalled.

"It all happened at once in a dramatic fashion," Hill said.

SNL Image

Two of Calpine's natural gas plants the 1,188-MW Deer Park Energy Center in Harris County and the 1,029.2-MW Freestone Energy Center — tripped offline at that time. Hill believes it could have been because of the grid disturbance, with the voltage and frequency getting "out of whack," though an investigation is ongoing.

But grid frequency levels were not the only cause of Calpine's plant failures, the CEO said. Gas supply shortages left facilities without fuel, and two plants were lost because of freezing conditions.

Hill said the "winterization protocols that we thought were rock solid failed in two of our power plants."

Curt Morgan, CEO of Vistra Corp., told lawmakers the story was "the failure of the gas system to perform" through the entire supply chain as wellheads and pipes froze up.

"We don't put structures around our equipment down here," Morgan said of natural gas plants. "Why? Because in the summer, when it's 105 degrees, you'd bake inside there, and the equipment would fail."

Democratic Rep. Eddie Lucio III said, "The men and women of Texas sat in their homes minute by minute hoping at any moment" the power would come back on because they believed rolling blackouts meant they would be temporary.

"The general public was not afforded the ability to seek safety," he said.

In response, Morgan, of Vistra Corp., said he did not put out more warnings to customers because he was "worried about creating panic."

"We did notify our customers before," Mauricio Gutierrez, president and CEO of NRG Energy Inc. said. "But perhaps we could have done more."

Gutierrez said, "I think we're all seeing the impacts of climate change, whether it is extreme weather conditions with Hurricane Harvey or the winter storm we have just experienced. So I think it is important that we look at extreme weather in a different light."