The vulnerable Texas electric grid has survived Winter Storm Heather, which brought frigid weather to the Lone Star State and snow and equally frigid temperatures to the East and Middle Atlantic states. Texans, who have become familiar with cold winter weather and searing summer heat bringing statewide blackouts, responded to pleas from the high-voltage transmission grid operator, the Electric Reliability Council of Texas, known throughout the state as “ERCOT,” for conservation measures.
At a press conference last Friday (Jan. 12) hosted by ERCOT, the Public Utilities Commission of Texas, the Texas Railroad Commission (which regulates oil and gas infrastructure), and state emergency managers, Gov. Greg Abbott said, “The State of Texas is working tirelessly to keep Texans safe and warm as an extraordinarily cold weather system begins to impact our state. Texans are urged to be prepared for a multi-long period of extreme cold weather and avoid going outside until this winter storm system has passed. I also encourage motorists to stay off the roads.”
Electric customers responded by turning down their thermostats and eschewing use of electricity gobbling appliances such as ovens, clothes washers, and driers. Some 60% of Texas homes heat with electricity and many homes are poorly insulated. Last Sunday (Jan. 14), Bloomberg warned, “An Arctic blast that’s sweeping through North America is heightening the risk of blackouts. With more cold still in the forecast, electric grids from Texas to Alberta will continue to be under strain and some power prices have surged.”
The same day, ERCOT issued a news release: “Due to continued freezing temperatures, very high demand, and unseasonably low wind, operating reserves are expected to be low during the morning hours of Monday, January 15, prior to the solar ramp up. As a result, ERCOT is asking Texans to conserve electricity use, if safe to do so, Monday, January 15, from 6 a.m. – 10 a.m. CT. ERCOT is expecting similar conditions on Tuesday, January 16, and will continue to closely monitor conditions and keep the public informed through our communication channels.”
The winter storm spread over much of the U.S. The Tennessee Valley Authority called for customers to conserve. “Our generating plants and transmission system are performing well. As the snow and bitterly cold temperatures move through the Valley, we could set an all-time record for power demand Wednesday morning,” said the giant federal power agency. Thermometers dropped to the mid-teens Tuesday night in the Washington-Baltimore region. New York city saw its first snow in over 700 days.
Unlike other large regional transmission organizations such as the giant PJM in the Middle Atlantic region, Texas does not use a formal capacity market – paying generators in advance to be ready to supply power in emergencies. Instead, the Texas market relies on classical economic theory, allowing prices to rise as failing supply is unable to meet demand (up to a maximum of $9,000 per megawatt hour, more than 50 times the normal price). Those high prices are designed to reduce demand and induce power producers to bring more supply online.
“This decision resulted in $16 billion in additional costs to ERCOT’s market” — Carrie Bivens, director of the state’s Independent Market Monitor.
The PJM capacity market has had its own problems, but has avoided the severe, killing blackouts in Texas. Also, according to the Houston Chronicle, Abbott exercised political pressure on Texas regulators to keep prices at the maximum even after the February 2021 Winter Storm Uri deep freeze was over.
The newspaper reported that former ERCOT CEO Bill Magness testified in court that Abbott told the public utility commission to keep wholesale power prices to stay at the maximum price cap for days after the crisis was over. “This decision resulted in $16 billion in additional costs to ERCOT’s market,” according to Carrie Bivens, director of the state’s Independent Market Monitor.
–Kennedy Maize