In January 2014, power plants owned by Texas’ largest electricity producer buckled under frigid temperatures. Its generators failed more than a dozen times in 12 hours, helping to bring the state’s electric grid to the brink of collapse.
The incident was the second in three years for North Texas-based Luminant, whose equipment malfunctions during a more severe storm in 2011 resulted in a $750,000 fine from state energy regulators for failing to deliver promised power to the grid.
In the earlier cold snap, the grid was pushed to the limit and rolling blackouts swept the state, spurring an angry Legislature to order a study of what went wrong.
Experts hired by the Texas Public Utility Commission, which oversees the state’s electric and water utilities, concluded that power-generating companies like Luminant had failed to understand the “critical failure points” that could cause equipment to stop working in cold weather.
In May 2014, the PUC sought changes that would require energy companies to identify and address all potential failure points, including any effects of “weather design limits.”
Luminant argued against the proposal.
In comments to the commission, the company said the requirement was unnecessary and “may or may not identify the ‘weak links’ in protections against extreme temperatures.”
“Each weather event [is] dynamic,” company representatives told regulators. “Any engineering analysis that attempted to identify a specific weather design limit would be rendered meaningless.”
By the end of the process, the PUC agreed to soften the proposed changes. Instead of identifying all possible failure points in their equipment, power companies would need only to address any that were previously known.
“Too often, power companies get exactly what they want out of the PUC,” said Tim Morstad, associate director of AARP Texas. “Even well-intentioned PUC staff are outgunned by armies of power company lawyers and their experts. The sad truth is that if power companies object to something, in this case simply providing information about the durability of certain equipment, they are extremely likely to get what they want.”
State officials are again promising reforms. Lawmakers have called on officialswith the PUC and the Electric Reliability Council of Texas, which operates the power grid that spans most of the state, to testify at hearings later this week. Gov. Greg Abbott has called on lawmakers to mandate the winterization of generators and power plants, and Texas Attorney General Ken Paxton said he was launching an investigation into ERCOT and almost a dozen power companies, including Luminant. Separately, the PUC announced its own investigation into ERCOT.
Texas is the only state in the continental U.S. that operates its own electric grid, making it difficult for other regions to send excess power in times of crisis, especially when they are facing their own shortages, as they were last week. All other states in the Lower 48, as well as peripheral areas of Texas, are connected to one of two grids that span the eastern and western halves of the country.
Because Texas operates its own grid, the state isn’t subject to federal oversight by FERC, which can investigate power outages but can’t mandate reforms. Many energy experts say the very nature of the state’s deregulated electric market is perhaps most to blame for last week’s power crisis.
In Texas, a handful of mega-utilities controlled the distribution and pricing of the power they produced until two decades ago, when the Legislature shifted to a system where companies would compete for customers on the open market. Lawmakers said the change would result in lower power bills and better service, a promise that some experts and advocates say hasn’t been kept.
But under this system, power companies aren’t required to produce enough electricity to get the state through crises like the one last week. In fact, they are incentivized to ramp up generation only when dwindling power supplies have driven up prices.
“The fault on this one is at the feet of the Legislature and the regulators for their failure to protect the people rather than profits, the utility companies, rather than investing millions of dollars in weatherization that had been recommended in review after review of these kinds of incidents,” said Tom “Smitty” Smith, a longtime Texas consumer advocate and environmental activist. “They have chosen not to do that because it would be too expensive for the utilities and ultimately to the consumers.”
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