AUSTIN (Nexstar) — Texas power generators have less than a month to weatherize their equipment. It’s part of several mandates lawmakers passed during the 87th Regular Session in the spring, in response to the February freeze.
The Public Utilities Commission, which oversees ERCOT, is in charge of making sure these changes are implemented. Nexstar’s Maggie Glynn sat down with PUC Chairman Peter Lake to see if our power grid is ready for winter.
Q: Can you walk us through exactly what went wrong back in February?
A: I think the bottom line is everything possibly could have gone wrong, went wrong. And that’s what we’ve been working to fix. Since then, we’ve been working both on the operational side and the physical infrastructure side, to make sure we mitigate as many of these challenges as possible before we get to this winner.
Q: What specifically has the PUC done since February to ensure the integrity of the grid and make sure it’s more stable heading into the winter months?
A: First and foremost, we’ve implemented winterization requirements for the first time ever. By Dec. 1, all generators in ERCOT must be up to the federal winterization standards. And in addition to that, they must be able to prove that they have mitigated anything that went wrong last winter. So we know going into this winter, our physical infrastructure will be more resilient than it was last winter. In addition to that, we’ve made drastic changes in the way our code operates. We’ve built in an additional margin of safety by buying more power reserves. And we’ve started operating with an abundance of caution so that, unlike in the past when ERCOT waited until the very last minute to use their authority to force generators online, now, if ERCOT has even a hint of trouble on the horizon, they exercise that authority to put generators online sooner rather than later. Both of these are big changes that are going to make a big difference this winter.
Q: Do generators have to implement those plans by Dec. 1, or do their plans just need to be submitted by then?
A: That’s implementation, we’re getting away from recommendations and plans and promises and we’re requiring real changes. ERCOT is hiring up a brand new inspection team as we speak. These folks are going to be out in the field, inspecting generators to make sure that the plans are more than just promises and making sure that there’s real structural changes on these units on the ground in time for this winter. They have to be winterized by Dec. 1 or they’ll face a penalty of up to $1 million per day, per incident.
Q: Is transparency something that is important to ERCOT going forward should we experience another emergency like what we saw in February?
A: Improved communication is absolutely something the public should continue to count on. As you know, that’s been a substantial change from past practices and extends beyond even just the website. Of course, we don’t like having to issue conservation notices. And we’re working hard to make sure that we’ve run the grid in a reliable enough manner that we don’t need to issue conservation notices.
Q: What were the main pieces of legislation that are aiming to help fix the grid?
A: The legislature deserves a tremendous amount of credit for passing Senate Bill 3. It is a once in a generation landmark reform to our power grid. That can’t be understated – how remarkable it was that they passed that legislation in such a short amount of time. And that’s one of the real benefits of Texans having its own independent autonomy over its grid. When something goes wrong, the legislature can take action to fix the problem. In addition, Senate Bill 2 was a complete overhaul of the governance of ERCOT. They now have an independent board for the first time, which is going to make a big difference in how that organization operates on a day-to-day basis. So both of those are landmark changes that we’ve already seen tremendous benefits from and big increases in reliability.
Q: What’s your response to people who say ‘Why does Texas need its own grid?’
A: Well, they’re pros and cons to all these scenarios. Most importantly, I’d note that during the winter event last February, our neighbors had the same problems that we had. They had rolling blackouts, not to the extent that ERCOT had, but there was not an abundance of power next door that was not being consumed. So there wasn’t necessarily a lot of available power at that time that we could have tapped into. But most importantly, by having its own independent grid, Texas can correct course when something goes wrong. And we’ve seen that in the quick action the legislature took to pass that landmark reform and enable us to make the operational changes that we’ve made. It’s hard to imagine that our partners in Washington, who we appreciate working with, and the US Congress could move as quickly or as decisively as the Texas Legislature and our governor did. By being independent, we’re able to address problems quicker and more efficiently. And the problems we’re dealing with are not unique. These problems are affecting power grids across the world. These challenges are not unique to us, but we’re able to tackle them quicker and in more substantial ways.
Q: Speaking of the legislation that was passed, there was a loophole that came to light earlier this fall about the $150 that companies could pay to opt-out of weatherization. How is that being addressed?
A: Well, to be clear, the $150 opt-out is for natural gas facilities, not generators. The winterization requirements that we passed that are required to be in place by Dec. 1 do not have any opt-out at all. There’s no choice for our generators. The opt-out regarding the natural gas facilities is what was put in the legislation and I’ll leave it to my colleagues at the Railroad Commission to address the intricacies of the natural gas system.
Q: Is the PUC working with the Texas Railroad Commission to ensure similar prevention steps are being taken on their side by the state’s natural gas producers? And if not, are you aware of any steps being taken by the Commission independently?
A: We’re working closely with the Railroad Commission not only in conjunction on the mapping committee but also at the staff level in a variety of issues in the State Operations Center. Our emergency operations folks are working together to ensure they’re better prepared in the event we have another crisis like that. And most importantly, I meet with my counterparts at the Railroad Commission at least weekly. We’ve seen people from across the natural gas industry raise their hand and identify themselves as critical infrastructure, which is the thing that’s going to make the most difference this winter. For example, one of our transmission companies, who were the folks that handle the actual rolling blackouts, had 11 natural gas facilities before the storm raise their hand and say, ‘hey, I’m critical, please don’t cut my power, if you have to do blackouts.’ After the storm, they had over 700 natural gas facilities that raised their hand and said, ‘hey, I’m critical, please don’t cut my power.’
Q: That being said, could having too many facilities that are identifying themselves as critical be a concern for future conservation needs?
A: Absolutely. That’s a challenge. If everything’s critical, nothing’s critical. So that’s why we’re going through the process to map exactly what of those 700 are critical. And those 700 are from just one of our transmission companies. There are many more across the state. That’s why the legislature established the critical infrastructure mapping committee. That committee meets at least monthly, with staff from both the Railroad Commission and the PUC. So while it’s a problem that we’re addressing and working through, I’d much rather have too much of our natural gas supply chain online, than not enough. If we’ve got to err, I’d rather be overcautious.
Q: Can you talk about how the new members of ERCOT’s board are going to ensure stability for Texans?
A: For the first time ever, this is an independent board. In the past, the circuit board was made up of market participants who, to be fair, provide a lot of valuable insight into the intricate and complex workings of the market marketplace. But they’re also market participants who have companies and financial interests at stake. And so what we’ve seen is that it’s hard to get a truly independent perspective when you’ve got those conflicting interests, which is why the legislature passed SB 2 to give us an independent board. And so now we will have a range of leaders from the business world, the technology world and the financial world to provide an outside perspective with robust backgrounds from a variety of industries.
Q: Is there anything more you would want lawmakers to consider going forward?
A: We’ve made drastic changes in the operations of ERCOT. We’ve implemented new winterization regulations to ensure that our physical infrastructure is much more resilient this winter than last winter and a variety of other changes to ensure that we continue to have a reliable grid for Texas. We’ve made tremendous strides. And we’ll continue to work to make sure we get it right. But we’ve got the tools that we need and we’re going to continue working to make sure that we make full use of those legislative tools.
Q: If you had one message for the average Texan, how would you reassure them that we will make it through this winter without another February 2021 Winter crisis?
A: Well, we all know there are no guarantees in Texas weather. You should know that we have taken drastic steps to ensure we have a more resilient infrastructure. We’ve got more reliable operations, and we’re doing everything possible to ensure we have a reliable grid this winter.