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More information needed to learn from ERCOT February energy crisis: consultant

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Houston — Much more information is needed on what happened before and during the Electric Reliability Council of Texas' winter-storm related energy emergency in February that resulted in more than 4 million customers without power and in 57 deaths, according to energy consultant Alison Silverstein.

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"It's always dangerous to hypothesize without critical data," Silverstein said during a March 25 webcast organized by Columbia University's Center on Global Energy Policy.

Silverstein, who earlier served in various capacities at the Federal Energy Regulatory Commission, Public Utility Commission of Texas, Pacific Gas & Electric and the US Department of Interior, asserted that more information is needed on:

  • How the grid's frequency varied before 1:23 am CT on Feb. 15, as ERCOT began the Energy Emergency Alert process that would lead to load shedding
  • How "qualified scheduling entities" – organizations that communicate with ERCOT on behalf of generators, utilities, retail electric providers and large energy consumers – allocated supplies, costs and prices within their own organizations
  • How many electricity customers who had lost power during the immediately preceding storm, on Feb. 11, were still offline as ERCOT entered the emergency Feb. 15

The ongoing investigations by the North American Electric Reliability Corp. and FERC will likely yield some useful information, Silverstein said, but "I'm not as optimistic about the [Texas Public Utility] Commission or the Railroad Commission."

The Railroad Commission of Texas regulates the states oil and gas industry, including intrastate pipelines. A lack of natural gas was a big factor in so many gas-fired generators tripping offline during the February winter storm.

'A tall pair of boots'

The hollowing out of the Texas power system that followed immediately after the crisis was not particularly helpful, according to Silverstein.

A third of ERCOT's board of directors, including all of the unaffiliated members, resigned under fire for residing outside of Texas, and ERCOT's board fired President and CEO Bill Magness effective May 2.

"Good board members don't grow on trees," Silverstein said, and a number of well-informed people who know how to handle cold weather reside outside Texas.

All of the Public Utility Commission of Texas has resigned, but Chairman Arthur D'Andrea remains on-board until Governor Greg Abbott appoints his replacement.

"There's finger-pointing even among the Texas legislators, the governor, the lieutenant governor and the attorney general," Silverstein said. "It would take a pretty tall pair of boots to wade into that nest of snakes," she added in reference to possible replacements.

California Governor Gray Davis was basically recalled from office over the 2001 energy crisis, Silverstein said, adding that, "there are a lot of editorial writers who are saying it's Greg Abbott's turn,"referring to the Texas governor, who initially blamed the power shortfall on renewable energy and the proposed Green New Deal.

The Texas Legislature is advancing bills that would require generation facilities to meet certain weatherization standards, both for winter and summer extremes.

But regarding upstream supplies – gas, for example – Silverstein said it may be more politically feasible to require generators to maintain firm supply contracts – "pay for performance" – than to mandate new rules for gas companies.

Asked if establishing a capacity market in ERCOT might be an effective way to improve generator performance, Silverstein said she didn't think it would make a difference.

Furthermore, Texans have remained resistant to the idea of paying generators to sit idle, ready to serve, after already having been forced to pay $9,000/MWh for wholesale power for more than three days during the Feb. 14 winter storm.

That expense – totaling about $45 billion – has been described by politicians such as Lieutenant Governor Dan Patrick as a "massive transfer of wealth."

Future generation mix

Asked how Texas' generation fleet and development is likely to progress in light of the February storm, Silverstein said Texas has consistently opted for the least expensive, most profitable power.

"The cheapest resources are going to be some combination of wind, solar and storage," Silverstein said. "Gas is going to be needed for a long time, but it's going to be harder to keep it profitable. Coal is pricing itself out of the market. ... It will be good for decarbonization. I don't know if it will keep the lights on."

A less expensive and ultimately more effective way to prevent or reduce the likelihood of another such crisis would be to significantly increase spending on energy efficiency, especially in low-income neighborhoods, Silverstein said.

"If I were queen, I would be mandating a 20-fold or 50-fold increase in federal money in massive energy efficiency retrofits," Silverstein said.

Interested parties may be working on issues that arose in the storm for a long time, she said.

"I suspect that NERC and the industry will work on what do we do about natural gas," Silverstein said. "[That discussion] is going to have a long tail and a lot of attention... On market design, people are going to be holding webinars on it for the next five years on who is right and who is wrong... The lawyers in the courts and the bankruptcy courts [about] price gouging are going to go on for 10 years."

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