The North American Electric Reliability Corp. (NERC), testifying in Congress this week, pointed directly at the natural gas industry in Texas for a major share of blame for the February rolling electricity blackouts. It’s an issue that economists have earlier raised.
NERC CEO James Robb March 11 told the Senate Energy and Natural Resources Committee, “Regulation and oversight of natural gas supply for electric generation needs to be rethought. – While natural gas is key to supporting a reliable transformation of the grid, the natural gas system is not built and regulated to serve the needs of an electric power sector that is increasingly dependent upon reliable natural gas service. As it relates to BPS reliability, clear regulatory authority is needed over natural gas when used for electric generation.”
That’s a position that likely will get push-back from the state’s powerful natural gas industry, which faces weak federal regulation at the state level and from the Federal Energy Regulatory Commission.
Robb also said, “Natural gas is essential to a reliable transition. As variable resources continue to replace other generation sources, natural gas will remain essential to reliability. In many areas, natural gas[1]fueled generation is needed to meet energy demand during shoulder periods between times of high and low renewable energy availability.”
Controlled load shedding, which the Electric Reliability Council of Texas, the state’s grid operator, ordered during the freeze, Rob said, “is an unwelcome last resort measure to avoid uncontrolled cascading outages across an entire interconnection.” ERCOT’s orders, he said, “helped prevent even more widespread suffering.” The Texas grid “was winthin minutes of frequency and voltage collapse, necessitating the dramatic action they took.”
Robb noted that NERC, the nation’s electric reliability monitor, has long looked at Texas skeptically. “NERC’s assessments have consistently highlighted reliability risk in Texas. As far back as nine years ago, the 2012 Long-Term Reliability Assessment expressed this warning about ERCOT, He said Texas has had repeated bouts of cold weather that have caused rolling outages. But it appears the state’s regulators and utilities have done little about that.
The market mismatch between gas and electricity has also flummoxed a feckless FERC for years. Robb’s testimony highlights the problem in New England, where there is inadequate gas pipeline capacity to serve both traditional heating and industrial customers, and the relatively new need for gas electric generation. He observed, “. A cold snap in December 2017/January 2018 led to natural gas shortages and fuel oil was burned to preserve reliability. If the cold front had not dissipated after January 8, several more hours of freezing weather would have exhausted the fuel oil in inventory and ISO-New England would have been forced into load shedding to preserve reliability. It was a near-miss event.”
In a related development, the Texas Public Utility Commission, as reported in Utility Dive, refused to address alleged overprices of some $16 billion recommended by ERCOT’s independent market monitor. The online newsletter said PUC Chairman Arthur D’Andrea has faced increasing pressure from the state’s governor, lieutenant governor and other stakeholders since the Electric Reliability Council of Texas’ independent market monitor revealed last week that the market was overcharged $16 billion. The issue was caused by longer-than-necessary scarcity pricing that held the region at its market cap of $9,000/MWh for 32 hours.”
Two members of the TPUC have resigned since the freeze. D’Andrea and the two remaining members told a Texas house committee that changing the pricing from the state’s unregulated market “could bankrupt municipal or public power providers, and is unlikely to achieve customer cost savings.”
–Kennedy Maize