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Opinion

Joe Barton: The 2011 blackouts were a wake-up call and Texas hit the snooze button

Texas has a strong electricity system, but it needs reforms to improve reliability.

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.

Everyone in Texas who lived through the 2021 Valentine’s Day blizzard can by now identify the problems that led to the blackouts and frozen pipes. Identifying solutions that are practical and affordable isn’t quite as easy, but it is necessary to prevent gridwide outages in the future.

The Texas Legislature and numerous private organizations are feverishly considering all levels of ideas. As Texas Sen. Kelly Hancock, chairman of the Business and Commerce committee, put it: “We must review all aspects of the issue and come up with a plan to establish stability and reliability in Texas energy markets, thus restoring the confidence of the Texas public.”

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Some of the most popular ideas don’t actually do much for reliability, while the basic work of better coordination and communication can go far. It’s important for lawmakers to think through the costs and potential benefits of policy changes.

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One popular idea is to interconnect the intrastate grid operated by the Electric Reliability Council of Texas with other national grids. This idea is expensive and offers only modest improvements to reliability.

Tom Kuhn, president of Edison Electric Institute, said, “Interconnecting Texas with the national grid would have helped, but exactly how much is hard to calculate.”

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Former Texas Gov. and U.S. Secretary of Energy Rick Perry said “it could be looked at” but is skeptical of its benefits.

I agree with Perry for two reasons. On the practical level, no adjacent grid has the surplus power reserves necessary to have covered the Texas electricity shortages that at their peak were over 24,000 megawatts. The large load centers outside of Texas are over 1,000 miles away, in Phoenix to the west, Atlanta to the east, and St. Louis and Kansas City to the north. Mexico has a much smaller grid.

Building the long distance, high-voltage transmission systems required to bring power from those centers to Texas would be extremely expensive and difficult, if not impossible, to permit. Keep in mind the need to import power over such lines would be very infrequent, possibly once or twice in a very hot summer and only once every five or 10 years in a freakishly cold winter.

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The practical reason the rest of the nation operates their electrical grids across state lines is that, with the exception of Hawaii and Alaska, they mostly have to. It’s not economical or in many cases even possible to generate power from energy sources in their own states. Texas is blessed to have large energy sources of both conventional and renewable types that are economically viable.

Politically, the idea makes no sense. Currently, decisions and changes in the law governing Texas electrical systems are made in Austin, by legislators elected by Texans. The laws are implemented by the Texas Public Utility Commission, appointed by the governor. If ERCOT were connected to the national grid, legislative changes would be made by the Congress, with two Texas senators out of 100, and 36 Texas representatives out of 435 House members. Federal law is executed by the Federal Energy Regulatory Commission.

It is unlikely that federal regulators and the majority of U.S. senators and House members would put as high a priority on what’s best for Texas as the Texas Legislature, Texas governor and Texas PUC do.

Another broad policy option is to go back to a regulated electricity system. Texas had such a system until the late 1990s and early 2000s, when the Legislature deregulated power generation and retail electricity sales. Only power lines remain regulated. Under a fully regulated system, all sectors would be managed by the PUC, which would set customer rates.

The advantage of such a system is that the costs of actions like winter weatherization, if mandated by Texas law and approved by the Texas PUC, can be capitalized and socialized among all customers. But in a deregulated market like Texas has, such costs can’t be passed through to customers directly, at least not easily.

Deregulated markets promote efficiency, lower costs and retail choice, sometimes at the expense of reliability. In states that still have regulated electricity markets, consumers may have more reliability in extreme weather conditions, but they have less or no choice in providers and retail costs tend to be higher.

The average retail price in Texas for electricity, according to the most recent Energy Information Agency price reports (2019) was 8.6 cents per kilowatt hour, 18% below the national average of 10.5 cents per kwh, and far below high-cost states like Massachusetts (18.4 cents per kwh), California (16.9 cents per kwh) and New York (14.4 cents per kwh).

There is some merit to re-regulation of the ERCOT system, but on balance my preference is to keep our deregulated system with reforms.

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One area that has received no consideration is the fuel mix for Texas electricity generation. No Texas law or ERCOT guideline outlines how much power should come from various conventional fuels and renewables. Consequently, the choice of fuel for new power plants in Texas has primarily been driven by the cost of the fuel.

Twenty years ago, Texas electricity was generated predominantly by coal, which represented half of the generation mix, then natural gas with approximately one-third, and nuclear with around one-sixth.

Last year, according to ERCOT, coal was down to 18%, natural gas was up to 46%, and nuclear at 11%. Wind represented 23% of generation, and solar claimed 2%.

There is nothing magic about the causes for the change in fuel source for Texas electricity generation. It comes down to costs. The Obama administration’s expensive environmental regulations raised the cost of coal. Concurrently, federal and state incentives for wind and solar, plus technology breakthroughs, lowered renewable costs. Natural gas costs also declined because technology improvements in hydraulic fracturing and horizontal drilling made huge volumes economically viable in Texas.

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In Texas’ deregulated free market system, the fuel sources with declining costs gained market share (gas, wind and solar), those with increased costs lost market share (coal), and those with constant costs(nuclear), maintained the same amount of generating capacity.

All well and good, except for one major fact. Not all fuel sources are equally reliable or available all the time. As Bud Albright, chief executive of the U.S. Nuclear Industry Council puts it, “intermittent fuels give you intermittent power.” It is imperative to evaluate the reliability of existing and new power plants and set some minimum reliability standard for renewable sources.

This won’t be easy. First, there has to be better coordination among the various state regulatory bodies. The Texas PUC regulates the electricity industry, while the Texas Railroad Commission regulates the oil and gas industry. These two agencies must form a formal, active joint working group that develops a comprehensive list of recommendations for improving the reliability of the power grid.

One area that must be addressed is ensuring that critical natural gas infrastructure has electricity to continue operating in an emergency, and thus delivering natural gas to fuel power generators. The critical infrastructure list that the transmission and distribution utilities maintain needs constant updating. Very few oil and gas wells, processing plants, and pipelines were on the critical infrastructure list before the storm. One senior executive at a major Permian Basin producer told me that nearly all of the company’s oil and gas wells, gathering systems and pipelines were cut off from electric power for four days.

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Some natural gas-fired power plants broke down because of weatherization issues, but some simply lacked fuel. One key piece of equipment is natural gas compressors that pump the natural gas through the pipelines. These once ran mostly on natural gas but now run on electricity to reduce emissions. Pipeline operators should consider new dual-fuel technology that would allow compressors to switch fuel in an emergency.

Many wind turbines froze during the storm, but wind generators are not always reliable in any weather, because the wind doesn’t always blow. Lawmakers should consider whether some portion of wind turbines should be required to have back-up generation with reliable fuel sources or ice melting equipment.

One reliable source worth exploring is nuclear power. The U.S. hasn’t built a new nuclear plant in decades, but the Nuclear Regulatory Commission last year licensed a new, modern modular reactor. The new reactor designs are smaller and less expensive to build and operate than traditional reactors. Nuclear is a reliable and emission-friendly fuel source, and Texas leaders should evaluate how to encourage construction of new units. Such evaluation must include input from the citizens of Texas.

Texas can be rightfully proud that it is on the forefront of the renewable revolution, but we must also take steps to ensure we lead the nation in reliability.

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It might make sense to require more onsite storage of conventional fuel in the event of a supply disruption. And longer term, more battery storage should be included in the electrical distribution system. Current battery technology doesn’t give extended storage capacity (about four hours now is max), but Perry said, “in the next five years the cost of battery storage is going to come down dramatically and the capacity to store electricity for much longer periods of time is going to go up significantly.”

The 1,000-pound gorilla in the room is the issue of weatherization. Easy to require, but difficult to decide how much is enough and who should pay for it in a deregulated market. Texas House Speaker Dade Phelan’s idea to use the Texas Rainy Day fund is innovative and should be considered. Another approach could be rebates from various ad valorem taxes, business taxes and severance taxes.

Not all the issues are that complex. ERCOT board members should be required to live in Texas. The public should be notified earlier about potential blackouts. Likewise, when retail electricity providers market super-low rates based on wholesale market prices, they should be required to emphatically warn potential customers of the risk of price spikes.

The 2011 winter storm that triggered rolling outages was a wake-up call, and Texas hit the snooze button. This time Texans are wide awake and want to get to work fixing our electrical generation and delivery systems. I have faith we will.

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Joe Barton, a former Republican member of Congress representing Arlington, is establishing a federal policy consulting business. He wrote this column for The Dallas Morning News.

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