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Texas power plants are ready for the cold as long as the gas keeps flowing

Last year’s winter storm caused over 4,000 power outages, leading to 246 deaths and $24 billion in damages.

Is Texas ready for bad weather this time?

Last winter’s big freeze brought down much of the electric grid, leaving over 4.5 million Texans without power, some for up to four days. The state confirmed 246 deaths related to the storm and outages, and almost two-thirds died from hypothermia.

The disaster prompted investigations, reforms and legislative action, and those efforts appear to be paying off, even as some vulnerabilities remain.

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A big push since the storm has been to harden the power supply so generators can withstand winter weather. All but three of 324 generation units and transmission facilities have passed on-site inspections for winterization, according to ERCOT, which manages the grid for about 90% of the Texas electric load.

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Generators installed temporary outdoor walls to provide wind breaks. They added heat tracing on water lines and blanket insulation around equipment and more. Regulators required top executives to attest to their readiness.

“The Texas electric grid is more prepared for winter operations than ever before,” ERCOT Interim CEO Brad Jones said Tuesday.

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But the next day, a warning flare went up. Irving-based Vistra Corp., which provided over a quarter of the grid’s power during the worst of last year’s outages, said it could lose plants generating 2,000 megawatts of electricity — enough to power about 400,000 homes.

The problem wasn’t cold weather. In a complaint filed with the Texas Railroad Commission on Wednesday, Vistra said its natural gas supplier, Energy Transfer of Dallas, had threatened to cut off the gas over an unpaid bill.

The amount in dispute is relatively small — $21.6 million in penalties stemming from last year’s storm, a time when Vistra said it paid Energy Transfer over $600 million.

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Energy Transfer responded within hours. It “has and will continue to provide daily sales” to the Vistra units under the same terms and conditions in place since December, the company wrote in a filing. The next day, both companies agreed to maintain the status quo through at least March 31.

Contract disputes are not unusual, but this one was a reminder of the Texas-size problem that remains: How to ensure a reliable supply of natural gas, which fuels almost half the generation on ERCOT?

“It’s great if we have power plants that are winterized and able to withstand cold temperatures, but if our gas system can’t withstand it, then we just have a bunch of power plants with no fuel,” said Joshua Rhodes, a researcher and energy expert at the University of Texas at Austin. “We haven’t had the time or the push to really fix the fuel side of things.”

Last year’s winter storm and cold wave, which hit in mid-February, caused $24 billion in damages, according to estimates from the National Oceanic and Atmospheric Administration. That covers total direct costs, both insured and uninsured. It includes physical damages to buildings, roads, bridges and vehicles, along with losses from business interruption and agricultural assets, such as crops and livestock.

The storm affected multiple states, with Texas accounting for most of the losses: “This is now the costliest U.S. winter storm event on record, more than doubling the inflation-adjusted cost of the ‘Storm of the Century’ that occurred in March 1993,” the agency said.

Hurricanes, including Harvey, Ike and Rita, caused more damage. Several droughts also took a larger financial toll. But last winter’s storm killed more people than the hurricanes, a reflection of the widespread, long-lasting impact from an event that touched every corner of the state.

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The storm caused insured losses of $10.3 billion, and about 90% of claims had been resolved by July 31, according to data from the Texas Department of Insurance. Combined claims in five North Texas counties topped $3 billion, led by Dallas, Tarrant and Collin.

Just over 500,000 claims were filed statewide, and the average loss for a residential property was $15,815, and for a commercial property, nearly $127,000. Business interruption losses topped $635 million, and more than a quarter of those cases remained open at the end of July.

To harden the grid against a future freeze, lawmakers and regulators focused on protecting power generators. Generating units were unprepared for cold weather and failed in large numbers, according to a report by the Federal Energy Regulatory Commission and others. Then natural gas production declined sharply, along with gas pipeline problems, and many plants didn’t have fuel to keep running.

During the storm, 1,045 generating units had over 4,100 outages, reductions or failures to start, the federal report said. Freezing issues accounted for 44% of the outages, and low natural gas supply accounted for 27%.

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Last spring, Texas lawmakers increased the maximum penalties for violating weatherization rules to $1 million a day. In December, the Public Utility Commission recommended over $7.5 million in fines for eight generation companies that didn’t file their winter readiness reports by the deadline.

“Commissioners have been abundantly clear that they expect generation entities to get ready for this winter,” PUC executive director Thomas Gleeson said in a statement.

Alison Silverstein, an energy consultant who formerly worked with the Federal Energy Regulatory Commission and Texas PUC, said she felt much better about the readiness of Texas generators to perform in cold weather. They were forced to winterize their units, and regulators stepped up inspections and levied healthy fines.

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“That was absolutely the right thing to do — and the right way to do it on a tight time frame,” she said.

Last summer, Silverstein and five former PUC commissioners wrote a report on how to prevent another major electricity failure. Their first recommendation was to require natural gas production and pipelines to also be hardened for winter.

That has not happened: “A lot of those gas generators could be all dressed up with nothing to run on,” Silverstein said. “We still have vulnerabilities and the biggest vulnerability is gas supply.”

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