Texas Electricity System Unprepared for Cold, Senators Told

16 02 2011

As a follow-up to my blog entry yesterday, below please find today’s article from Laylan Copelin, Austin American-Statesman.  This article was last updated at 7:21 am, Wednesday, February 16, 2011.  The article reviews what took place at yesterday’s hearing  where lawmakers questioned electricity industry leaders about the rolling blackouts which occurred in Texas earlier this month.

State regulators tried to assure Texas senators Tuesday that they have the necessary authority to fix the problems that led to the Feb. 2 rolling blackouts, but some lawmakers remained skeptical.  Sen. Kirk Watson, D-Austin, said he wouldn’t want to rush to judgment after one hearing, but he said rolling blackouts are not acceptable.

“We had failures that in some instances were avoidable,” Watson said at a state Senate hearing. “It is unacceptable to have a system that is unprepared.”

By all accounts, the Texas electricity industry was not fully prepared for the severity of the Feb. 2 winter storm that crippled 82 of the state’s 550 generating units.

The daylong hearing in front of two Senate committees was the first time that all the players in the outages — regulators, power company executives, utility representatives and natural gas operators — were in the same room to tell the public what happened and why.

The picture that emerged was that the 82 plants —including some of the newest units run by the biggest power companies — could not handle the cold weather. The situation was worsened by an ineffective communications system among the Electric Reliability Council of Texas, regulators and utilities, leaving thousands of Texans steaming as rolling blackouts hit their neighborhoods with little or no notice.

Trip Doggett, CEO of ERCOT, testified that the operators of the state’s electric grid “averted what could have been a major disaster” by following their emergency plans, including ordering rolling outages.  He blamed inadequate winterization of equipment and poor communication between officials and the public.

Barry Smitherman, chairman of the Public Utility Commission, said his agency has a rule requiring power generators to submit weatherization plans but said it is reviewing the need to update the plans.

Sen. Glenn Hegar, R-Katy, asked Smitherman how the public and lawmakers would know that weatherization measures would improve, given that the plans are confidential because of competitive and national security reasons.

“I want confidence that you are making every effort,” he said. “Who’s going to be sure everything is being done?”

As rising demand outstripped falling power availability, the wholesale price of electricity skyrocketed from about $50 a megawatt-hour to $3,000 on the open market.  Smitherman said he saw no signs of market manipulation of the situation. But he stressed that the PUC has ordered a full investigation by the state’s independent energy market monitor to confirm that initial assessment.

Sen. Leticia Van de Putte, D-San Antonio, said she wanted data to show that market manipulation didn’t occur: “We need to be sure someone wasn’t withholding power.”

As for communication, the rolling blackouts that started before 6 a.m. Feb. 2 caught officials off-guard.  Smitherman first got word of the situation in a 3:21 a.m. e-mail he received on his phone that he did not read at the time. Doggett said he got the first phone call at 6 a.m., while he was in the shower.  In the hour before Doggett was alerted, ERCOT operators had deployed reserve generation, issued an energy watch and begun asking utilities to cut their power demand. But the grid quickly lost more than 8,000 megawatts of generation as demand climbed.

Doggett said ERCOT already has automated its alert system to speed the flow of information. An alert from an ERCOT shift supervisor now will automatically go to the Department of Public Safety’s State Operations Center, which will contact police, firefighters and other first responders.  The alert also will go to local electric transmission operators as well as to Doggett and Smitherman.

With prodding from Watson, ERCOT released a partial list of the plants that went down. It included 22 units run by Calpine and 11 by Luminant — two of the state’s biggest power companies.  Sen. Mike Jackson, R-La Porte, asked why the cold weather affected some of Luminant’s new generators.

“I would be ready to file a lawsuit against whoever engineered a plant that goes down the first time it’s 20 degrees,” Jackson said.

Luminant CEO David Campbell said operators learn about a plant’s special needs by going through a storm.

“We thought we had taken the steps to make it through the night.” Campbell said. “We’ll learn from this.”

Several Central Texas plants went down, at least briefly, or did not start because of the weather or unrelated mechanical reasons. The list included units at Austin Energy’s Decker Creek Power Station and units run by the Lower Colorado River Authority.

NRG Energy, which provides power to its retail outlets, Reliant Energy and Green Mountain Energy Co., had few problems with its plants. “We just spent a lot of time to be sure they are ready for winter,” said John Ragan, the company’s regional president.

Sen. Troy Fraser, R-Horseshoe Bay, noted that NRG also started up more generators than it thought it would need, in case of an emergency.

“We potentially could have lost money,” Ragan said. “It was worth it so we could cover our obligations.”

“You basically gambled some of the company’s money to be sure people didn’t run out of power,” Fraser said. “We salute you.”

Doggett said there were isolated examples of utilities not having enough natural gas to generate electricity, but he said that was a minor factor.

He said the bigger problem was that in some instances, electricity generators cut off power to gas production operations because they didn’t know where the operations were located. Doggett said ERCOT and the utilities should locate production facilities so they can be exempt from future blackouts.

The hearing — a joint effort by Fraser’s Natural Resource Committee and the Business and Commerce Committee — ended without agreement on whether lawmakers should do anything to ensure that fixes to the system are made.  With both the PUC and ERCOT under Sunset review, which requires the Legislature to authorize their continued existence, lawmakers will have ample opportunity to address the issues.

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Texas Senate Begins Hearing on Rolling Blackouts Today

15 02 2011

In early February, some portions of Texas faced “whiteout” conditions during the major winter storm event that affected nearly the entire State.  In some places, the winter weather was very bad— snow, sleet, wind.  In other places, not so bad—- very cold weather and some ice.  Nearly all places experienced cold temperatures that are not normally felt in the southern reaches of Texas; and something else—– “blackout” conditions.

For some period of time, citizens of the State of Texas had to cope with loss of power— not only to residences and businesses, but to police stations, courthouses, and even Emergency Operations Centers.  Emergency management officials needed to work diligently to ensure that critical infrastructure was powered up— sometimes with barely any notice at all.  In the case of Fort Bend County, I learned that the County EOC had lost connection to the electrical grid at the exact same time I received an email on my Blackberry from our local electrical utility indicating that “rolling blackouts” were possible. 

The County did not experience any serious problems (the EOC’s emergency generator kicked in perfectly).  The main problem we faced was trying to get the word out as quickly as possible to let others in our County know that power loss was probable at different times during the day.  However, it appears that the problems may have caused other concerns across the State.  In the article below, written by Austin American-Statesman writers Laylan Copelin, Eric Dexheimer, and Marty Toohey, officials from the power industry and state agencies will be testifying today in Austin on exactly what caused the “blackout” conditions.  As printed in the Austin-American Statesman on Monday, February 14th:

Nearly two weeks after electric blackouts rolled across Texas, the power industry and state agencies are being called on the carpet at the Capitol today to explain what happened and why.  The Federal Energy Regulatory Commission is also looking for explanations; it announced Monday that it is launching an inquiry into the Feb. 2 outages that left hundreds of thousands of Texans without electricity.

Texas’ electric grid is separate from the rest of the country and is ordinarily not subject to federal regulation. But the commission can ensure compliance with federal standards for reliable electric delivery.  At the Capitol today, a joint Senate committee hearing on the outages will begin at 8:30 a.m. and could take most of the day.

First up: witnesses from the Public Utility Commission ; the Railroad Commission, which regulates natural gas; the Texas Commission on Environmental Quality ; the Office of Public Utility Counsel ; and the Electric Reliability Council of Texas . ERCOT operates the grid that serves 22 million customers over 75 percent of Texas, including Austin.

ERCOT ordered the rolling blackouts to keep the grid from crashing during a winter storm. The nonprofit organization was already on the Legislature’s radar because of a critical review of spending on improvements to its wholesale market system.

At a Monday meeting titled “Lessons Learned” at ERCOT’s administrative offices in Southeast Austin, electric transmission and distribution representatives aired their concerns in the wake of the outages. Many said their main complaint was simply poor communication.

“If we could get a little bit earlier warning,” said David Wood , Austin Energy’s vice president for electrical service delivery. Like other utilities, Austin Energy got a half-hour notice of the rolling blackouts. “I’ve been beat up about, ‘Why couldn’t you tell us this was coming?’\u2009”

Wood said an earlier alert would have permitted the utility company to better adjust its staffing levels and to implement a program in which Austin Energy contacts a list of local businesses that have agreed to reduce their electricity usage in power emergencies.  About four dozen Austin-area businesses agreed to reduced their electrical usage on Feb. 2, from turning off lights and lowering thermostats to shutting down operations completely and sending employees home, said Austin Energy spokesman Ed Clark .

Dottie Roark , a spokeswoman for ERCOT, said Lessons Learned meetings are standard after any major event affecting the power grid. Recommendations from the meeting are considered for changes in rules governing electric distribution.  The storm knocked more than 80 of the state 550 generators offline, according to early explanations, primarily because of frozen or broken equipment, including safety instruments that shut down some of the state’s largest, newest coal-fired plants.

An unknown number of gas-fired generators didn’t have fuel to generate electricity because in some instances the companies had contracts that allowed their gas service to be interrupted in exchange for cheaper prices.  Also today, senators will hear from utility representatives, including Austin Energy and Luminant , the generating arm of Dallas-based Energy Future Holdings .

Luminant has reported that the blackouts cost the company $30 million when several of its generating plants broke down, forcing it to buy electricity on the open market, where prices rose from $50 per megawatt-hour to $3,000 .  No one, except possibly ERCOT and those with oversight of the organization, knows how much money other power companies made or lost on Feb. 2. ERCOT says it cannot release most of the information until 60 days after the outages because of state laws intended to guard competitive information.

But that hasn’t stopped speculation about the possible winners and losers.  Public Citizen , a consumer advocacy and environmental watchdog group, estimates that the utility companies collectively netted anywhere from $46 million to $149 million, depending on how many ran short of power.  The cost will ultimately be passed on to consumers, said Tom “Smitty” Smith , head of Public Citizen’s Texas branch.

“Before deregulation, when bad weather was coming, regulated utilities were expected to start up plants in advance and were fined if there were market shortages,” said Smith, who is planning to call for reforms at the Legislature. “In today’s deregulated market, we reward market shortfalls and allow participants to make millions.”

Others said too little information has been released to make such assessments. Among them is Ross Baldick , a University of Texas professor with expertise in the “nodal” grid management system that ERCOT started using late last year.  For instance, Baldick said, some companies agree a day in advance to sell a specific amount of power on the ERCOT grid for a specific price, in what’s known as the “day-ahead market.”

If those companies could not provide that power on Feb. 2 and instead had to buy it back on the open market during the outages, the losses could be absorbed by the companies (and their shareholders), not individual consumers.  Whether companies profited from the power shortage “depends not only on the real-time market but also the day-ahead market” and other factors that are not yet known, Baldick said.