TEXAS BLACKOUTS

'Heads will roll': Grid crisis sparks political firestorm

Lights are back on for most Texans, but the policy fights over astronomical power bills, unprepared generating plants and an isolated grid are just beginning.

That was evident over the weekend as Texas' electricity crisis grabbed attention on Sunday news shows and the White House said President Biden could soon visit the state.

Authorities are still sorting out the toll from last week's winter storm that left millions of Texas residents clustered in homes without heat, power or potable water for hours or days. Others kept power but may face bills in the hundreds or thousands of dollars, depending on their plans. Gov. Greg Abbott (R) held a meeting Saturday with Texas lawmakers to discuss potential solutions for spiking energy costs to consumers.

Fallout from the historic power failure will take center stage this week and beyond in Austin, Texas, as calls for reform echo across the country.

"Politically, a lot of heads will roll," said Alison Silverstein, a Texas-based energy consultant. "There will be a lot of finger-pointing. I don't know how much of this is going to be heat as opposed to light as opposed to smoke in terms of meaningful, substantive changes."

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Texas' competitive power market includes retail choice in some areas, such as Dallas and Houston. While many customers are on fixed-price plans that offer more protection from market swings, others signed up for rates tied to changes in the wholesale price of electricity. When numerous generators tripped offline early last week, prices surged, leaving some customers exposed to bills in excess of $5,000 or even $10,000.

Sen. Ted Cruz (R-Texas), who caused a firestorm last week by traveling to Mexico with his family during the Texas crisis, said on Twitter yesterday that "Texans shouldn't get hammered by ridiculous rate increases" for the energy debacle. He pointed to a news story about Griddy, whose customers see their rates fluctuate with wholesale prices.

Abbott said lawmakers, who are in session until May 31, intend to address both the surprise utility bills and the broader problem of weatherizing the state power system, although he said a decision hasn't been made on how to fund it.

"The issue about utility bills and the skyrocketing prices that so many homeowners and renters are facing is the top priority for the Texas Legislature right now," he said. "We will not end this session until the state of Texas and all its power generation capabilities is fully winterized so we never go through this again."

Meanwhile, Texas Attorney General Ken Paxton (R) has opened an investigation into the power crisis. The Electric Reliability Council of Texas, the state's main grid operator, has scheduled a board meeting for Wednesday. On Thursday, state lawmakers will hold hearings. Lawsuits also are being filed against parties involved in the recent outages.

ERCOT said it hadn't yet reviewed lawsuits in full and would respond once it has. The grid operator turned to controlled outages last week, but their size made some utility companies unable to rotate power cuts effectively. ERCOT's territory has only limited connections to other regions.

"Our thoughts are with all Texans who have and are suffering due to this past week," Leslie Sopko, an ERCOT spokeswoman, said in a statement.

But she said almost half of the generating capacity on the ERCOT grid was offline at the highest point during the storm, and "we are confident that our grid operators made the right choice to avoid a statewide blackout." ERCOT doesn't own generation itself.

More details from the crisis may emerge this week and next week when major Texas power companies Vistra Corp. and NRG Energy Inc. are scheduled to speak to analysts. Entergy Corp., which has electric operations in Texas outside of ERCOT's region, is expected to address Wall Street analysts this Wednesday.

Any overhaul of the state's utility system will have to account for climate change, which is leading to hotter summers, more intense storms and severe cold snaps, according to Adrian Shelley, director of the Texas office of Public Citizen. He said lawmakers shouldn't use the push to winterize to prop up the state's gas and coal industries at the expense of renewables.

"We prefer it's not taxpayer-funded," Shelley said. "If it is, we prefer the taxpayer funds are spent equitably across energy sources."

White House steps in

Biden could visit Texas "as soon as this week," White House press secretary Jen Psaki said yesterday on ABC's "This Week."

Biden announced a major disaster declaration for Texas on Saturday, giving 77 of the state's 254 counties access to federal money. That includes "grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster," the White House said.

Federal funding is "also available to state and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency protective measures and hazard mitigation measures statewide," the White House said.

Abbott had asked for a declaration for the entire state. He said Saturday that the "partial approval is an important first step," but that the state would "continue to work with our federal partners to ensure all eligible Texans have access to the relief they need."

The White House said additional disaster designations may be made later "if requested by the state and warranted by the results of further damage assessments."

Houston Mayor Sylvester Turner, a Democrat, said Biden would be welcome at any point.

"We certainly would welcome him, and he would not be a distraction, neither a burden," Turner told CBS's "Face the Nation."

The mayor recounted the woes in the city, noting that burst pipes were causing leaks and water damage, and said the city needs plumbers, plumbing materials and supplies, "like right now."

Fuel mix debate

While wind and solar capacity continue to grow, the ERCOT grid still relies heavily on traditional power plants. In 2020, energy provided on the ERCOT grid was about 46% from gas-fueled units, 18% from coal and 11% from nuclear. Wind was at 23%, and solar was at 2%.

House Democrats in Washington are making it clear that they plan to press Texas Republicans to explain why they singled out wind and solar as responsible for the outages when the collective loss of generation was greater from gas, coal and nuclear.

"We need to know why so many fossil fuel sources failed, why ERCOT wasn't better prepared and who participated in the conspiracy to falsely blame renewables," tweeted Rep. Ro Khanna (D-Calif.), chairman of the House Oversight and Reform Subcommittee on Environment, who said he would open an investigation into the grid failure.

The House Energy and Commerce Committee sent Abbott a letter Friday demanding answers, noting that the state had failed to address issues identified by a 2011 post-winter storm report (Energywire, Feb. 18).

It also asked for Abbott's evaluation of which energy sources failed to perform, contending that the governor made "troubling statements" blaming wind and solar for the outages, when ERCOT said much of the failure was in the natural gas system.

"These statements either suggest a lack of understanding of the Texas power grid's fundamental operations or were an attempt to shift blame away from the very real issues that have existed within the state's energy structure for years," committee Chairman Frank Pallone (D-N.J.) and four other members wrote.

Rep. Colin Allred (D-Texas) said on Twitter that there wasn't adequate preparation for the cold snap, citing a conversation with an executive at Vistra. The company warned ERCOT and others that the extreme weather would strain the grid, Allred wrote.

"By their account, no one seemed to react with the haste and urgency they believed necessary, and they emphasized that ERCOT's projections of the power supply were far below the demand they were seeing," Allred wrote.

In Allred's view, "While this weather, and perhaps rolling blackouts, was not preventable, the response by our state leaders did not meet the severity of the moment and lives were cut short because of it."

Meranda Cohn, a Vistra spokeswoman, said in a statement that the company raised concerns with the appropriate state entities.

"The warning signs were there, but the public was unaware of the gravity of the situation, which led to people being unable to respond and make the necessary adjustments for their families," she said.

Abbott has asked state lawmakers to investigate ERCOT and its decisions. But he also has backed away from his previous comments blaming the power outages on renewables, saying he wants the Legislature to take a broad look at the energy system.

"I'm asking them to put a specific focus on evaluating all sources of energy so we can ensure we have adequate energy power in the coldest of winters but also in the hottest of summers so that Texans struggling at home will never have to go through that challenge again," he said.

Microsoft Corp. co-founder Bill Gates, who leads a coalition of clean energy investors, on Fox News yesterday pushed back against Abbott's earlier remarks.

"Wind does come and go, but what was shut down, the vast majority, is thermal plants here," Gates said. "There is a reliability issue that we'll have to design the system, including more transmission. Texas, over time, will want to connect up, so that when it does get shortages, it's able to draw on other parts of the country."

Rep. Michael McCaul (R-Texas) acknowledged that power sharing would have been helpful but said that Texas' stand-alone grid was "set up that way to be independent of federal oversight and regulations." He noted that recommendations for energy companies and ERCOT to winterize operations emerged in 2011 after a bad freeze.

"That is what we're going to be taking a look at moving forward. These recommendations were made in 2011," McCaul said. "And how can we move forward to winterize these operations, so this never happens again?"

Texas fallout

The human toll of the Texas disaster is still mounting. As of midday yesterday, about 12.2 million people didn't have access to clean drinking water because of boil-water notices and other problems, according to state officials. Later in the day, Houston lifted a boil-water notice for its 2 million-plus residents.

Dozens of deaths have been reported around the state, including that of an 11-year-old boy, Cristian Pineda, who apparently died of hypothermia when his family's home lost power. His family has filed suit, alleging gross negligence, according to the Houston Chronicle. Entergy Texas was among the parties named in the suit.

"We are deeply saddened by the loss of life in our community," Entergy said in a statement to E&E News. "We are unable to comment due to pending litigation."

Meanwhile, two attorneys who specialize in mass litigation filed a lawsuit against ERCOT on behalf of a homeowner in Corpus Christi, Texas. One of the attorneys, Mikal Watts, is known for representing people affected by the 2010 Gulf of Mexico oil spill. The other, Bryan Fears, has been involved in litigation over opioids and the 2019 shooting rampage at a Walmart in El Paso, Texas, that left 23 dead.

Lawmakers in both parties say they're determined to act, unlike after previous grid failures.

State Rep. Rafael Anchía, a Dallas-area Democrat, said the governor bears some responsibility because he appoints members of the Public Utility Commission of Texas.

"These weren't rolling blackouts, this was an entire system failure," Anchía said on MSNBC. "The state government has to do better; the governor needs to do better; his hand-picked team needs to do better."

State Rep. Lyle Larson, a Republican from San Antonio, said on Twitter that the state should tap its reserves to assist ratepayers affected by spiking power bills.

"The state government of Texas has to intervene to protect Texans from utility rate hikes last week," Larson said. "It is our fault we did not weatherize our power generation capacity."

Other utility bills could rise, too. Dallas-based natural gas provider Atmos Energy said in a regulatory filing that it had racked up $2.5 billion to $3.5 billion in wholesale gas costs in Texas, Kansas and Colorado. Ratepayers in Texas may be asked to pay some of the expense, according to the filing.

'Foreseeable and preventable'

Electricity regulation in Texas is centered on the PUC, which has launched its own investigation into the outages. It has three members, all appointed by the governor. Two of its current commissioners — DeAnn Walker, who is the chair, and Arthur D'Andrea — used to work in Abbott's office. The other, Shelly Botkin, used to work at ERCOT.

The PUC is bracing for more scrutiny of its decisions in the wake of the crisis, and it moved to protect many Texas customers from disconnection for not paying their bills in light of the recent emergency.

There are questions for the Legislature and governor, who could act to change how the Texas electricity market is structured.

"The Governor's designation of a review of the grid event as an emergency item for the Texas Legislature is wholly merited and the PUC will remain fully engaged in the process of discovery until the root causes are identified and remediated," Andrew Barlow, a PUC spokesman, said in a statement.

The PUC approved an order to limit outage durations during controlled power cutoffs. But a meeting to decide that wasn't until last Wednesday, after many people had been in the dark for days. Regulators also moved last week to make changes to a program designed for customers who may be forced to switch providers in the wake of power price spikes.

Last year, the PUC accepted the resignation of Texas Reliability Entity Inc. as a reliability monitor. The PUC has indicated it lost confidence in the organization's work. But the regulator said its decision didn't cause the outages last week.

"The Public Utility Commission retained the services of the Texas RE to provide administrative advisory insights and, having accepted the organization's request to exit their contract, has moved those responsibilities in-house while seeking a more reliable vendor," Barlow said. "There is no connection between their departure and the ERCOT grid crisis."

Texas RE declined to comment on questions related to the PUC. But President and CEO Jim Albright said it was "actively monitoring the extreme cold weather conditions in Texas and its impact to the reliability of the electric grid in close coordination with ERCOT." Texas RE is responsible for monitoring compliance with reliability standards from the North American Electric Reliability Corp.

Silverstein, the Texas-based energy consultant, said ERCOT, the PUC and Texas RE have shared responsibility for the state's main power grid. She previously worked as an adviser at the PUC and the Federal Energy Regulatory Commission, and she said FERC and NERC have failed to mandate winterization.

"The people who have sat in the dark, freezing, without food or water or pipes or power," aren't happy with the results of Texas regulation right now, she said.

Among Silverstein's recommendations: issuing mandatory rules for weatherization of the power system for extreme cold, heat and drought; boosting contract performance obligations and winterization for natural gas; having ERCOT use "broader, scarier climate and extreme weather" assumptions; evaluating major transmission interconnections with the rest of the United States; having utilities use smaller, more strategic blocks for controlled outages by installing sectionalization devices; and pursuing massive energy efficiency efforts starting with low-income and multifamily housing.

In the meantime, Houston's mayor told CBS the state of Texas should pick up the tab for the electricity bills.

Turner said the failure was "foreseeable and preventable" and noted that in 2011, when he was a member of the Legislature, he filed a bill to require the PUC to ensure there was an adequate reserve to prevent blackouts. That didn't pass.

He said that the Texas grid is designed primarily for summer heat, not necessarily winter chill, and that with climate change, it needs to be weatherized.

Betsy Price, the mayor of Fort Worth, also appeared on CBS's "Face the Nation" yesterday and said she expects the state to pick up the bulk of the cost for upgrading the system.

The Republican said Texas 10 years ago "was coming out of an economic downturn, and they just didn't want to spend the money to do it." Price said the economy is stronger, even with the COVID-19 pandemic, "and we're going to have to do that."

Twitter: @edward_klumpEmail: eklump@eenews.net

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