FERC Chairman Richard Glick said Thursday he may seek new reliability standards to ensure generators and grid operators are prepared for severe winter conditions following this week’s devastating outages in Texas and neighboring states.
While praising the efforts of those working to restore power to the affected areas — particularly Texas, where more than 350,000 outages were still reported across the state as of Thursday afternoon — Glick emphasized that losing electricity for days in the middle of a record cold snap was “simply unacceptable” and “constitutes a humanitarian crisis.” (See related story, ERCOT: Grid was ‘Seconds and Minutes’ from Total Collapse.)
Many customers were without power for days, and more than 35 deaths have been attributed to severe weather in Texas and other states. FERC and NERC announced on Tuesday that they will conduct a joint inquiry into the causes of the crisis. (See Anger Rises over Midwest Power Restoration.)
On Monday, FERC announced that the Office of Enforcement’s Division of Analytics and Surveillance will be combing through wholesale natural gas and electricity market data to determine if any market participants engaged in market manipulation or other violations. The Division uses trading data to screen transactions at most physical and financial natural gas trading hubs in the U.S. and the organized and bilateral wholesale electricity markets. Evidence of wrongdoing would become the subject of non-public investigations.
Separately, FERC announced that it will open a new proceeding to examine the threat that climate change and extreme weather events — including droughts, extreme cold, wildfires, hurricanes, and prolonged heat waves — pose to electric reliability and how grid operators prepare for them. The proceeding will include an opportunity for parties to submit comments, followed by a technical conference.
Glick Open to Changing ERCOT Status
Although ERCOT’s markets are not under federal jurisdiction, Glick noted that Texas is subject to NERC’s reliability standards, which are approved by FERC. He promised that the organizations’ inquiry would recommend steps necessary to prevent similar events in the future, possibly including “the imposition of new mandatory standards” for cold weather preparedness.
“[We] need to ensure that the results of the inquiry don’t just sit on the shelf gathering dust, like so many other reports of this kind, and that we don’t do what happened after the 2011 event in Texas and Arizona — rely on voluntary guidance to protect the public. We don’t have to guess how effective that was,” Glick said. “Instead, I’m prepared, if necessary, to support the imposition of new mandatory standards to make sure that electric generators and others are better prepared when weather strikes next time. And there will be a next time.”
Glick also said Congress and Texas should reconsider what he called the “go-it-alone approach” — ERCOT’s limited connection to the Eastern and Western Interconnections, which has allowed it to avoid being covered by the federal government’s jurisdiction over interstate transmission. “Does it really make sense to isolate yourself and limit your ability to get power from neighboring regions just to keep FERC at bay?” he asked.
He added that with climate change “already having a dramatic impact on our weather,” there is a clear need for quick action to reform readiness standards for the grid.
While commending Glick for his response to the emergency, Commissioner Neil Chatterjee argued that until the FERC-NERC inquiry is complete it is “too soon to try to advocate for solutions” including new mandatory standards. Chatterjee also distanced himself from Glick’s suggestion that Texas consider strengthening its ties to the other interconnections, urging participants to “let the experts dig into it.”
Commissioner James Danly urged deliberation as well, observing that it has been “extraordinarily difficult to get even the basics” for comparing the performance of different types of generation during the cold spell.
“It is my fervent hope that my colleagues will show the solicitude to Texas that they often seem willing to afford all of the other states in pursuing their policy goals,” Danly said. “I see no reason to change ERCOT’s status unless Texas itself wants to.”
Anger at Premature Blame
Commissioners joined Glick in expressing frustration about what he called “interest group flacks trying to pin blame on one generation source or another.” Some figures in media and politics have speculated that renewable energy resources such as solar panels and windmills bear most of the blame for the widespread outages, although ERCOT data shows greater loss from thermal resources than from renewable ones. ERCOT said renewable performance “has been around the levels planned for.”
“Propagating such misinformation is irresponsible, and it’s callous, in light of the serious emergency situation we’re facing,” said Commissioner Allison Clements. “And presenting the cause of the outages should be done in a thorough, deliberate fashion, after we get the official data released. … For now we should continue to focus on the restoration of power.”
Chatterjee Questions Closing Resilience Docket
Also Thursday, the commission voted 4-1 to close the resilience docket it opened in January 2018, after rejecting then-Energy Secretary Rick Perry’s call for cost-of-service payments to coal and nuclear generators (AD18-7). (See FERC Rejects DOE Rule, Opens RTO ‘Resilience’ Inquiry.)
Some commissioners acknowledged the apparent inconsistency of closing the docket considering the ongoing energy crisis in Texas and the Midwest.
The docket sought feedback on how to define resilience and how each of the RTOs and ISOs assess resilience in their footprints. (See RTO Resilience Filings Seek Time, More Gas Coordination.) But the majority said it concluded that a “generic” response to resilience concerns in all regions was inappropriate and might violate the Federal Power Act.
“That is not to suggest that resilience concerns are no longer an issue or that RTOs and ISOs have addressed all threats to the resilience of the bulk power system,” they said. “To the contrary, the resilience and reliability of the bulk power system must — and will — remain one of the commission’s paramount responsibilities and concerns.”
Instead, they said the issues should be addressed “on a case-by-case and region-by-region basis. Be it wildfires in the West, hurricanes in the Southeast, or even the extreme cold weather experienced this week in Texas and the Great Plains, these threats present stark, but different challenges to the reliability of the electric grid. Addressing those individual challenges in a manner that is both effective — for the grid and the region — and consistent with our statutory authority under the FPA requires an approach that is tailored to the specific threats and circumstances in a particular region, not a one-size-fits-all solution.”
Commissioner Chatterjee dissented, saying he was “not satisfied with a piecemeal, passive approach to ensuring its resilience, especially in the face of anticipated load increases due to economy-wide electrification goals.”
“The commission is well positioned to, for instance, adopt a definition of resilience that could be implemented in all regions, describe categories of resilience concerns that would include extreme weather events and common-mode failures, and then take additional steps to ensure that the commission, RTOs/ISOs, and stakeholders can understand how each RTO/ISO assesses the resilience of its region,” he said. “Such a holistic review would not only assist RTOs/ISOs and their stakeholders in considering different approaches to these efforts, but also help the commission understand how to best assess and address bulk power system resilience.”
Commissioner Danly filled a concurrence, but said he was concerned “that the resilience issues raised in this proceeding have not been solved — indeed, in most cases they have not even been addressed.”
He said the blackouts this week in ERCOT, SPP and MISO — following those last summer in CAISO — indicated an “urgent need for reform” to address market failures that are leaving dispatchable generation without enough revenue to invest in necessary upgrades.
“Many regions lack meaningful capacity markets, and the regions that do have capacity markets often allow state-subsidized resources to suppress prices such that the capacity markets cannot achieve one of the goals they were designed to achieve, which is to provide for revenues adequate to create incentives for the construction and operation of sufficient generation capacity to ensure reliability,” Danly said.
He also said RTO rules have been insufficient to persuade most gas-fired generators to obtain firm fuel contracts. “Increasing penalties when generators fail to obtain natural gas is a poor substitute for a market structure that compensates them for ensuring adequate fuel supplies in the first place,” he said. “Another increasingly serious problem is that intermittent resources largely are planned for, operated and compensated as if they provide reliability benefits that they, in fact, are incapable of providing.
“We have tended to focus too much on low, short-term prices and development of new, clean power sources to the detriment of reliability,” he continued. “I do not believe these latest power crises to be yet another perfect storm, but a case of reaping what we have sown.”
Commissioner Mark Christie joined with Clements on a separate concurrence, saying RTOS and ISOs “must be willing to face and speak inconvenient truths about what is — and is not — feasible from an engineering standpoint, given the state of technology. They must also tell the public and the elected political leaders at both the state and federal levels about the realistic impacts on the bills consumers will have to pay for reliability. Politically driven mandates and deadlines may not be grounded in engineering reality, and we depend on the leadership of each RTO and ISO to provide forthright information about what is needed to ensure the 24/7 power supply Americans expect.”
Resilient Society’s Rehearing Request Addressed
Separately Thursday, the commission sustained its 2018 ruling rejecting Perry’s request for a Notice of Proposed Rulemaking and addressed issues raised by Foundation for Resilient Societies in a rehearing request (RM18-1-001). The rehearing request had been automatically denied when the commission failed to act on it within 30 days.
“Resilient Societies raises various arguments that the commission should have considered specific issues or should have initiated additional proceedings, but none of its arguments persuade us that the January 2018 order was in error on the threshold question of whether the proposed rule and the record in Docket No. RM18-1-000 satisfied [FPA] Section 206,” the commission said. “For example, while Resilient Societies raises concerns about ‘ghost capacity’ in ISO-NE, those concerns do not demonstrate that ISO-NE’s existing tariff or the tariffs of other RTOs/ISOs are unjust and unreasonable.”
