With Crisis Behind it, ERCOT Now Faces the Music

Investigations, Hearings Begin this Week for Texas Grid Operator

Feb 22, 2021

With the ERCOT system back to normal operations, Texas politicians and regulators are taking initial steps to ensure a similar crisis doesn’t happen again.

With the ERCOT system back to normal operations after coming within “seconds and minutes” of total collapse last week, Texas politicians and regulators have begun taking initial steps to make sure a similar crisis doesn’t happen again.

Texas House Speaker Dade Phelan has called for the State Affairs and Energy Resources committees to hold a joint hearing on ERCOT’s response to last week’s winter storm, which left more than 4 million customers without power at one point and led to dozens of deaths. The Senate Business and Commerce Committee will also soon hold hearings, Lt. Gov. Dan Patrick said.

That hearing will be preceded by an urgent meeting of the ERCOT Board of Directors on Wednesday. The board will hear from CEO Bill Magness and discuss the long-term outage’s financial effect on the market. (See “Talberg Calls Urgent Board Meeting,” ERCOT Focuses on Restoration, not Blame.)

But those meetings are only the tip of the iceberg.

During an emergency open meeting Friday night, the Public Utility Commission, which has regulatory oversight of ERCOT, said it was launching an investigation into the factors that, combined with the “devastating winter weather,” disrupted the flow of power to millions of Texas homes.

Texas Attorney General Ken Paxton earlier Friday announced his own investigation into the power outages and the prices that spent days at ERCOT’s scarcity cap of $9,000/MWh. Paxton has requested ERCOT and 11 other entities hand over documents that show communications between them.

“We will get to the bottom of this power failure, and I will tirelessly pursue justice for Texans,” Paxton said in a statement.

ERCOT, AEP Texas, Calpine, CenterPoint Energy, Griddy Energy, La Frontera Holdings, Luminant, NRG Texas Power, Oncor Electric Delivery, Panda Sherman Power, Temple Generation I and the Texas-New Mexico Power Co. have until March 15 to reply to the AG’s office.

ERCOT Crisis — An Oncor crew battles the leftovers of last week’s winter storm to restore power. | *Oncor Electric Delivery*

U.S. Speaker Nancy Pelosi has indicated the House of Representatives will look into ERCOT’s response. Sen. Joe Manchin (D-W.Va.), chair of the Senate Energy and Natural Resources Committee, has promised to do the same with his committee. The Texas Democratic and Republican delegations sent separate letters to the grid operator asking how it anticipated demand and why it waited to announce outages.

In addition, FERC and NERC have announced a joint inquiry into the grid’s operational issues in the Midwest and South as the storm rolled through.

“There will be a lot of review and determination afterward, and there should be. We don’t want to see this happen again,” Magness said during one of the daily briefings ERCOT held last week.

The lack of winter weatherization has emerged as the primary suspect for the massive generation shortfall that led ERCOT to call for rotating outages after sub-zero temperatures knocked almost 10 GW of power — most of it thermal — offline during the early-morning hours of Feb. 15.

Without as much as 45 GW of generation — about 40% of its capacity — to work with, staff had to ask for as much as 20 GW of load to be taken offline. With transmission service providers unable to rotate the outages, some customers’ outages lasted more than 80 hours.

Magness stood by his operators and said the situation could have been much worse without their quick action.

“We were seeing generators coming off [the grid] in rapid succession,” he said. “Our frequency went to a level where, had the operators not reacted quickly enough, it could have been catastrophic.” (See ERCOT: Grid was ‘Seconds and Minutes’ from Total Collapse.)

A postmortem following similar weather and rotating blackouts in 2011 identified inadequate winter weatherization as one of the major issues leading to the outages. Texas Comptroller Glenn Hegar, then a state senator, drafted Senate Bill 1133, requiring the state to track and report how well prepared the Texas Interconnection is for extreme weather. The PUC filed that report in 2012.

“We must have the necessary processes and procedures in place to ensure that the burden of such drastic weather events does not risk the health and safety of Texans in the future,” Hegar wrote in an opinion piece published Sunday. “The outages represent a failure to meet our duty to Texans and a black eye that our economy cannot afford.”

FERC and NERC issued a similar report that recommended generators winterize their equipment, including insulating pipes. “Many generators failed to adequately apply and institutionalize knowledge and recommendations from previous severe winter weather events, especially as to winterization of generation and plant auxiliary equipment,” the agencies said.

Gov. Greg Abbott, who early last week called for the resignation of ERCOT’s leadership and labeled the event “a total failure by ERCOT,” has asked lawmakers to mandate and fund winterization efforts. Currently that is done on a voluntary basis by generation owners.

Dan Woodfin, ERCOT’s senior director of system operations, said last week that staff conduct about 100 spot checks a year on power generators’ plans to withstand extreme heat or cold. Those reviews were conducted virtually this year, he said, because of the COVID-19 pandemic.

“They have financial incentives to participate in the market,” he pointed out, referencing ERCOT’s $9,000/MWh price cap during scarcity conditions.

Dallas-based Vistra was one company that was prepared. U.S. Rep. Colin Allred (D-Texas) recounted on Twitter a discussion he had with CEO Curt Morgan on Saturday morning. According to Allred, Vistra on Feb. 9 foresaw that the temperatures, which would eventually hit zero or below in some parts of the state, would play havoc with Texas’ energy infrastructure.

“They alerted ERCOT immediately, as well as the [natural gas regulator] Texas Railroad Commission and other state government officials,” Allred said. “By their account, no one seemed to react with the haste and urgency they believed necessary, and they emphasized that ERCOT’s projections of the power supply were far below the demand they were seeing.”

Vistra said in a release that its generation subsidiary, Luminant, only lost about 1 GW of its 19 GW of capacity, which included nuclear, natural gas, coal, solar resources and battery resources. The company estimated it was able to produce about 25 to 30% of the grid’s power on Feb. 15-16, above its normal market share of 18%.

“The reality is, the infrastructure in Texas was not built to handle weather this extreme,” said Vistra spokesperson Meranda Cohn. “However, the coordination and planning by authorities across the broader energy sector were seemingly disproportionate to the severity of the situation. The warning signs were there, but the public was unaware of the gravity of the situation, which led to people being unable to respond and make the necessary adjustments for their families.”

While Abbott has criticized ERCOT for poor communications throughout the crisis, Magness pointed out several times during the media briefings that he stood beside the governor for a press conference on Feb. 13 prepping the public for what was to come.

ERCOT on Feb. 8 issued an operating condition notice through Feb. 16 for extreme cold weather. It was quickly followed by an advisory and a watch, the latter of which indicates the control room anticipates tight grid conditions. Magness told his board on Feb. 9 that the state would see its coldest weather in decades and that staff were expecting to set a new all-time winter peak demand mark. (See ERCOT Bracing for Winter Storm, Record Demand.)