Oil & Gas News

‘Lights will stay on’ this winter in Texas, regulator says, but some miss deadline

Energy, Texas, Natural Gas, Energy

By: Garrett Hering – S&P Global Platts – Touting a series of unprecedented power grid reforms, additions of new generating facilities, and coordination with natural gas suppliers, Texas’ top electric utility regulator guaranteed the state would not experience a repeat of the catastrophic blackouts from February’s rare winter blast.

“The lights will stay on,” Peter Lake, chairman of the Public Utility Commission of Texas, said Dec. 8 during a media briefing. “No other power grid has made as remarkable of changes in such an incredibly short amount of time as we have. And we will continue to improve our grid and our market.”

Most important among the reforms, according to Lake, are new requirements for generators to weatherize their facilities. Nearly half of all generation connected to the state’s primary transmission grid, managed by the Electric Reliability Council of Texas Inc., dropped offline because of the extreme weather caused by the February storm.

Noncompliance penalties could cost generators up to $1 million per day for each incident, according to Lake.

“Those who have not been proactive will be penalized swiftly and heavily,” Lake said.

Reporting deadline missed

Also on Dec. 8, the PUC issued a news release that it had filed reports of violation against eight-generation companies for failure to file winter weather readiness reports by Dec. 1. The eight-generation companies have 13 separate resources, totaling 801 MW of capacity, on which the deadline was missed. As context, ERCOT has installed a nameplate generation capacity of 120 GW, the PUC said.

“Texans expect the power plants in our state to be better prepared for winter weather,” PUC Executive Director Thomas Gleeson said. “The governor and legislature provided us the tools to improve the stability of our grid and our commissioners have been abundantly clear that they expect generation entities to get ready for this winter. The PUCT cannot tolerate the failure of these companies to even file their readiness reports.”

Entities receiving violations have 20 days to respond and can request a hearing.

“We are recommending stiff administrative penalties against each of these entities,” Gleeson said. “The governor, legislature, and the commission have consistently told PUC staff that they expect compliance with our new rules and that we must be swift and meaningful with our enforcement action. Today’s actions demonstrate just how seriously this agency takes its job to improve the reliability of the grid.”

Initial generator inspections started Dec. 2 and are on track to be completed by Dec. 29, said Brad Jones, interim CEO of the grid operator, known as ERCOT. The inspections will cover over 300 generating units and 21 transmission providers. As of Dec. 8, ERCOT had inspected more than 55 generation units and two transmission service providers, Jones said.

Ultimately, Jones said, “Those inspections will comprise 85% of the lost megawatt-hours during the storm.”

Winter weather readiness reports from the CEOs of power generation companies were due to ERCOT on Dec. 1. The grid operator received 97% of the reports — anticipated to be more than 850 — on time, Jones added. ERCOT is discussing the remaining 3% will the PUC, he said.

Expanding renewables

Jones did not go as far as Lake in promising no blackouts this winter. A recent assessment of ERCOT’s resource adequacy forecast a winter reserve margin of 43.3%, with nearly 85 GW of expected resources and roughly 62 GW of forecast peak load.

The report explored some extreme winter scenarios under which reserves could run thin, and some independent industry experts criticized the report for not going far enough to match the risks exposed by February’s blast. Lake, however, reiterated his view that the Texas grid is now sufficiently prepared.

“When we look at all of the efforts we’ve made, the assets we have in ERCOT now … yes, we can say the lights are going to stay on,” the PUC chairman said.

Lake also highlighted measures taken to improve power conservation and keep prices in check during emergencies, including reducing maximum prices to $5,000/MWh from $9,000/MWh.

“Those extraordinarily high prices can never be charged again, Lake said.

Lake also noted ERCOT’s addition of a significant volume of new generating resources this year and the commission’s effort to expand electric transmission to address “stranded generating assets that can’t get their power top the rest of the state.”

ERCOT anticipates more than 16,000 MW of new wind, solar, and battery storage capacity in 2021, followed by another roughly 30,000 MW of the resources in 2022 and 2023.

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