Industry experts continue to argue over whether the electricity market in Texas needs to change to make the grid more reliable in winter and summer.
After saying there was an “unacceptable” risk of a power grid emergency during a strong winter storm, the Texas grid operator's plan to prepare the state better for extreme winter weather failed to take off this fall.
In early October, officials at the Electric Reliability Council of Texas, which oversees the state’s main power grid, announced that they wanted more power plants available to run this winter. They explained that demand for electricity had grown overall, and past extreme winter storms showed how high demand could spike during frigid temperatures.
ERCOT’s plan to entice companies to make more power available involved asking if they were willing to bring some shuttered gas- and coal-fired power plants back online — and, if so, what it would cost ERCOT.
As it happened, not a single company thought reviving an old power plant made sense, and the Nov. 6 deadline passed without a single proposal to revive a power source for the winter.
ERCOT also offered to pay companies willing to lower their power use for up to six hours when needed, a concept industry observers generally say could help. That attracted three offers, but the showing was so poor that ERCOT scrapped the whole idea.
ERCOT President and CEO Pablo Vegas in a statement said they had just been looking for “an extra layer of precaution” and would consider the experience a learning opportunity.
But the attempted plan threw the state’s Public Utility Commission, which oversees ERCOT, for a loop.
In a scathing memo, Public Utility Commissioner Will McAdams argued that moving ahead with the idea — which had no public spending limit attached — could throw off a carefully maintained sense of regulatory stability in the market. Companies need to “know the rules of the road,” he wrote, and ERCOT’s plan would have changed the rules.
“I believe the market was rightfully shocked, and our level of uncertainty (about the regulations that govern the market) rose dramatically,” McAdams wrote of ERCOT’s announcement. “This was an extraordinary action taken by the market administrator.”
Energy consultant Doug Lewin, who advocates for more programs to lower the demand for power on the grid, called ERCOT’s move “audacious and bizarre” in his much-read Texas Energy and Power newsletter.
Katie Coleman, energy counsel for the Texas Association of Manufacturers, which represents large industrial companies that use a lot of power, said the request for companies to be ready to lower their power use quickly was too rushed.
“It’s a novel thing,” Coleman said. “The way it was rolled out, it didn’t give people enough time to respond.”
The episode became another example of how fraught grid issues have become after the horrific 2021 winter storm. That disaster killed hundreds when both conventional power plants and renewable energy generators failed during days of freezing temperatures, causing ERCOT to order that electricity be cut to millions of Texans to protect the grid from complete collapse.
Some changes have since been made: Legislators in 2021 required power plants, some of which failed during the storm because equipment faltered in the severe cold, to winterize their equipment better.
At a public meeting in October about winter readiness, ERCOT Senior Program Management Analyst Brandon Manley said they’d completed 1,648 inspections of power plants and utilities to ensure they met the new standard. Utilities such as CenterPoint Energy, Oncor and AEP Texas, which distribute elec- tricity, assured officials they were prepared.
“This will be our third winter inspection, and we’ve learned some lessons, we worked together with the inspectors and we've identified areas that we need to improve,” said Alex Machoka, senior director of transmission operations at ONCOR.
Natural gas supply also dropped during the 2021 storm because of equipment failures and power outages. In a November statement, the Texas Oil and Gas Association said oil and gas operators now “have extensive resources in place to monitor and prepare for inclement weather.”
But in October, ERCOT’s leaders were still clearly worried about the grid’s ability to hold up during extreme winter weather. The grid faces what ERCOT called an “unacceptable” 20% chance of going into emergency operations if a winter storm like the one that struck last December hits again, according to ERCOT calculations. In a worst-case scenario, emergency operations allow ERCOT to call for rolling blackouts.
Some energy industry experts raised their eyebrows at that characterization, pointing out that the chances of such a storm happening again remain small — ERCOT itself puts the likelihood at 10%.
Pete Warnken, ERCOT’s manager of resource adequacy, said ERCOT expects the riskiest time for the grid this winter to be 8 a.m. each day, when overnight cold lingers, wind energy may be dying down and the state’s solar energy generation is not at full force. Warnken estimated the chance for entering emergency conditions at that time on any given day in December was 5%, and the chance for rolling power outages was 4%.
ERCOT has to manage that risk as it heads into winter without the additional power generation. Vegas, the ERCOT president and CEO, said in a statement that ERCOT expects to have enough resources to meet demand and pointed to the changes made since 2021. More solar power and batteries that can store and quickly deploy electricity are also online now compared to two years ago.
But the episode again dredged up debate over the grid’s reliability.
Early this year, Public Utility Commission Chair Peter Lake pushed through a market change proposal designed to create an additional way for gas-fueled power plant generators to make money, hoping to spur construction of more power plants. Gas-fueled plants can run at any time, unlike wind and solar power, but produce power that’s more costly and release emissions that are worsening climate change.
State lawmakers put a $1 billion cap on how much money could be spent through Lake’s proposal, which supporters said significantly limits its effectiveness. Lake resigned in June.
Lawmakers created several other funding streams to encourage the building of more gas-fueled plants. In last month’s election, voters approved one that will provide an initial $5 billion for programs such as low-interest loans to companies that build new gas-fired plants. But any new plants that result from that plan likely won’t come online for years.
People such as University of Houston lecturer and energy market expert Ed Hirs remain skeptical that the grid is any better off.
The state’s coal- and gas-fueled power plants are two years older now, and demand this summer reached new record highs, Hirs pointed out. He doesn’t believe anyone should accept the probability of emergency grid conditions that ERCOT has cited this winter.
“We should not be accepting this,” Hirs said. “This is not what we pay them for.”
