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Opinion

Can the Texas Legislature restore confidence in the power grid?

The key to reliability is flexibility.

This editorial 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.

Texas electricity customers stand at a crossroads, as our lawmakers react to the February power outages with a raft of legislation. The key is to improve Texas’ reliability and response to an emergency, but much of the legislation could have consequences for keeping the lights on every day.

Texans need to be able to trust that the power industry will deliver, especially when we need heating or air conditioning the most. And Texans need the tools to take some control of their own usage, especially since the alternative might be a dayslong outage.

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We’d like to see lawmakers require power companies to ensure their electricity generators will be reliable in extreme weather. There are many paths to the top of this mountain; we prefer fixes that are simple and don’t interfere with the deregulated electricity market. Legislation that gives regulators the power to enforce weatherization rules looks promising. But the rule shouldn’t be so prescriptive that it cuts off innovative approaches to reliability. If a power generator can meet its reliability obligations by doing something other than weatherizing, such as installing batteries, that benefits all of us.

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As power generators face reliability obligations, so too should natural gas companies. During the freeze, a number of natural gas-fired power plants were operable but couldn’t get fuel, as some natural gas pipelines and other equipment froze. Enforcement power for reliability for the oil and gas regulator, the Texas Railroad Commission, would make sense.

But none of this works if the railroad commission and the Public Utility Commission are out of step. Legislation to create avenues for an emergency commission or some other way to ensure coordination are important. But most crucially, the ultimate responsibility for energy reliability must lie with one office. The finger-pointing after the power outages appeared to regular Texans that either no one was in charge of basic reliability or nobody knew who was in charge. The buck should stop with the governor’s office or some elected commission.

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The industry’s confusion about accountability was amplified by confusion about extreme wholesale power prices during the freeze. When so many power plants can’t make electricity, and consumers are cut off, the market breaks down, as well. High prices might not have enticed generator owners to make more electricity because their plants didn’t have fuel. If we are using incentives to drive outcomes, we need to make sure it’s possible to respond to market incentives.

We will leave the second-guessing of the PUC’s extreme emergency pricing to politicians, but we caution them on repricing the market after the fact, as it could undermine critical confidence in the wholesale markets. We urge regulators to consider a new approach for the future when the supply-demand forces in the market stop working. At that point, ERCOT regulates the grid much more closely, and it needs a market pricing protocol designed to preserve both the grid in the emergency and industry operators afterward.

We consumers also have responsibility for making sure a dayslong power outage never happens again. Many people who had electricity chose to reduce consumption, with the idea that collective demand reduction could allow other people to get their lights on a little faster. But technology exists to reduce demand in a more even, precise and predictable way. Consumers could give their electricity companies permission to cut off certain electrical functions in the house during an emergency, only preserving, for example, heating and cooling systems. The idea would be that fewer people would find themselves in the life-threatening situation of losing heating or cooling, and most people would just give up lights and appliances.

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Oncor, the regulated power line operator, installed smart meters and digital technology on its system years ago, and upgrades to that technology could allow this type of surgical demand reduction. Oncor Chief Executive Allen Nye told us that he is reviewing this technology, and he will report to the PUC on the requirements and costs.

Meanwhile, home efficiency upgrades allow customers to permanently cut their electricity usage. If the good citizens who carefully limited their usage during the storm could now add efficiency measures to limit usage all the time, Texas could slice a layer of demand off of the grid. And as the state’s population grows and electricity demand increases, those efficiencies will become more valuable.

One thing we need from the Legislature this session is to stand down on nixing variable rate retail pricing plans. These types of plans would fit well with the type of technology Oncor is looking at, and without the flexibility to set their own prices, retailers might not bother to develop plans that give customers that level of control over their consumption.

Batteries hold the promise of solving many of our reliability issues, once the capabilities improve and the cost comes down. The Texas deregulated system is a perfect fit for battery technology, if we keep the flexibility that has invited innovation to the grid.

Flexibility is key to reliability. Stiff regulations that boost reliability in specific ways might keep the lights on, but prevent the kind of innovation that can keep the lights on while also reducing costs or pollution or inconvenience.

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