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.
The power outages in February reminded Texans that electricity is a matter of life and death. And by extension, the fuel used to make electricity is a matter of life and death, natural gas.
Texas, we need to have a serious discussion about whether we can trust the natural gas fuel supply in an emergency.
During the February storm, a massive amount of power generation of all kinds froze up. Around 4.5 million people lost power, and some died. One key problem was that natural gas power generators couldn’t get the natural gas needed to operate.
We single out natural gas fuel reliability not because it was the only problem or even the biggest problem in February. We single it out because, while electricity regulators are taking steps to make sure power plants don’t break down in the winter, natural gas regulators are not.
On Tuesday, the Federal Energy Regulatory Commission issued its report on what caused the February blackouts and recommendations on preventing it from happening again. The top-line recommendations largely involve weatherizing power plants and holding electricity companies accountable for correcting the problems that arose early this year. The Electric Reliability Council of Texas has already adopted those recommendations and work is underway.
But some of FERC’s recommendations are not underway. Most of the fuel supply problems were due to natural gas production declining because of freezing temperatures. The commission suggests requiring natural gas suppliers to implement cold weather plans. That is not happening.
What is happening, and it addresses another of FERC’s concerns, is natural gas suppliers are identifying pieces of infrastructure that are critical to supply power plants with fuel, and ensuring that equipment doesn’t get cut off in rolling power outages. It sounds silly that power plants couldn’t get fuel to stop the outages because their fuel suppliers lose power, but it happened in February. It also happened 10 years ago, and still, the natural gas folks haven’t gotten their paperwork straight with the electric utilities.
This change is meaningful only if a company chooses to register as a critical natural gas supplier that is prepared to operate in a weather emergency. For $150, a supplier can claim it will not be ready for winter and file for an exception with the Texas Railroad Commission, which regulates oil and gas.
So while ERCOT is holding power generators to regulatory standards, the Railroad Commission is asking fuel suppliers to volunteer.
Reliability costs money, and there are many roads to the top of the mountain. Regulators can require companies to spend the money to meet better reliability standards, as ERCOT is doing with weatherization rules for electricity companies. Or, regulators can pay for reliability through fees or a market mechanism.
We would like to see both for those who supply natural gas fuel to power plants. Regulators should set reliability standards for power plants, and let companies figure out what technology or fuel will meet those standards. If a power plant’s natural gas supplier cannot guarantee fuel in an emergency, that plant might buy a tank of diesel as a back-up fuel, invest in a natural gas storage facility, or install batteries that kick in if the plant shuts down.
Electricity regulators are noodling on ways to incentivize this investment, perhaps by buying reliability services outright or adjusting power market rules to favor backup power generation capacity. The trick is to find the most efficient method so that Texans are spending just enough to ward off catastrophe, without boosting electricity costs so high that customers feel the pain and companies don’t want to move here anymore.
As our federal energy policies point the way toward more electric vehicles, this fuel supply reliability issue becomes even more critical. Because Texans know what happens when the lights go out, and, after devastating hurricanes, we also know what happens when gasoline runs out and cars don’t go. Imagine both happening at the same time.
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