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Opinion

Knee-jerk responses to the power outages won’t solve Texas’ reliability problem

Consumer protections, local utility upgrades and natural gas availability should be key considerations for lawmakers and regulators.

This op-ed is part of a series published by The Dallas Morning News Opinion section to explore ideas and policies for strengthening electric reliability. Find the full series here: Keeping the Lights On.

As Texas digs itself out of the five-layer electricity mess triggered by last month’s freezing weather, we must consider long-term ways to fix our electric grid.

While there are some immediate ways that we can begin to strengthen reliability, we are seeing knee-jerk responses that aren’t likely to be helpful and could waste the opportunity to make real improvements to our system.

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The debacle started when heavy ice caused tree branches to short into local utility distribution lines, triggering local outages. Then came bitterly cold weather that drove up electricity demand to record levels while also causing a record number of insufficiently winterized power plants to trip off-line.

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With a shortage of supply, the Texas grid operator, the Electric Reliability Council of Texas, had no choice but to force local utilities to cut power to their customers. Making the situation worse, the power affected water systems.

Extreme cold events rarely occur in our region, but Texans remember a similar disruption in 2011. Many are asking why the lessons from past failures were not codified into effective, mandatory winterization practices instead of only recommended actions. Colder regions elsewhere in the world ensure that their natural gas, coal, nuclear, wind and solar farms are resilient to stretches of extreme cold.

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The ERCOT independent market monitor should assess whether there was any withholding of generator output to maximize profits at the expense of suffering Texans. Pricing actions that affected the wholesale market should also be reviewed carefully.

Consumer protection, education and better retail rate transparency should be a focus of the Public Utility Commission. Retail electric provider Griddy has been dropped from the ERCOT wholesale market after the retailer faced the prospect of sending painfully high bills to customers who chose its variable rate plan. Unlike most electricity retailers, Griddy linked its retail price per kilowatt hour to the sometimes wildly volatile real-time wholesale energy price. The majority of time, this plan offered very low retail prices. However, when wholesale prices rose to the market cap of $9,000 per megawatt hour and stayed there for days, Griddy customers weren’t protected.

The PUC’s Power to Choose website should incorporate more capable tools that use a customer’s past energy usage to better estimate retail monthly bills and risks for various rate plans under normal conditions, peak summer or winter periods, or extreme weather conditions where the wholesale price can skyrocket.

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Further, the PUC and ERCOT should examine its pricing mechanism designed to incentivize more power generation. By adjusting the market to hit the $9,000/MWH cap at a time when many power plants couldn’t operate because of the freeze, regulators ended up boosting prices without boosting the supply of power. If bankruptcy filings are any indication, Texas could face a financial tsunami.

Local utilities need to engage with their communities to improve vegetation management to better trim trees that could short the power lines. This would also help in hot, dry summers to avoid the power lines possibly igniting wildfires. Improved distribution outage management software, distribution sectionalization, restoration procedures and communication can also be helpful to better inform consumers of the status of localized outages and more rapidly fix the lines. These upgrades could also help utilities rotate ERCOT outages more equitably.

Texas already has some modest-size asynchronous direct current (DC) transmission lines to the edge of the Eastern Interconnection, the grid that serves the eastern half of the country, and to Mexico. Texas is not entirely an electrical island. These DC transmission ties provide improved operational capabilities and a firewall to stop cascading failures, and they maintain the regulatory certainty that has contributed to electric power innovation in Texas. Increasing capacity to the other grids can have other benefits, but the seemingly simple solution of massively increasing these ties might not be the most cost-effective method to substantially increase grid reliability during extreme weather events.

Extreme events are likely to be on each side of the Texas border, impacting both grids. When the ERCOT grid was under so much stress, the existing eastern tie was shut down since neighboring states were also dealing with the same harsh weather.

Last summer, California was not able to lean on neighboring states for additional supply when a heat wave prompted rolling blackouts. California’s neighbors were also suffering from the same hot temperatures and needed the power themselves.

Together, regulators of both electricity and natural gas must look more closely at the interdependencies of their industries, improve coordination, regularly update lists of critical gas processing electrical loads, and improve the reliability of gas supply. Shortages of natural gas supply can contribute to grid blackouts, which in turn shut down the very natural gas compressors required to supply fuel to those power plants. Multiplying the pain, grid and natural gas failures can then impact other essential infrastructure systems such as water supplies or home heating.

Before the outages, the ERCOT market structure and operational performance were generally well respected. The structure has fostered dynamic competition that enabled the rapid deployment of new generation technologies and transmission infrastructure that maintained attractive electricity rates, supported economic development and reduced emissions.

There appears to be a general misperception that the ERCOT grid is entirely free of federal jurisdiction. Its wholesale market is state regulated, but the Texas grid is not independent from federal jurisdiction when it comes to reliability. The North American Electric Reliability Corporation, associated with the Federal Energy Regulatory Commission, has some oversight, and Congress has the power to enact regulations to improve reliability.

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At the state level, the Electric Reliability Council of Texas, the Texas Public Utility Commission and the Texas Legislature have the responsibility to ensure reliability. Texans deserve to understand the roles, failures and actions that will be taken by both federal and state authorities so that extreme weather events never again cause such pain.

David Tuttle is a research associate in the Energy Institute at the University of Texas at Austin. He wrote this column for The Dallas Morning News.

CORRECTION: An earlier version of this story incorrectly said that Griddy filed for bankruptcy. Regulators have blocked Griddy from the ERCOT market.

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