“Better late than never” department, Texas edition

On March 5, former FERC Commissioner Tony Clark wrote a great article about the Texas power grid fiasco. I read it at the time and wanted to write a post about it – just as soon as I was done dealing with my own posts about that subject, and then Colonial Pipeline, and then the EO…etc. I just reread the article (really an opinion piece), and I don’t think it’s lost any of its relevancy in the intervening three months.

Here is the article. For each myth, I have comments (and some disagreement) on some of the points he makes. I’ll let Mr. Clark’s writing speak for itself, so please read it now.

Myth: “The market is working, and no grid could have prevented something like this.” I totally agree with his statements here. I love this sentence of his: “No market should threaten the safety and well-being of citizens.” Amen. The reason markets are in place is to serve the needs of the public. If a market isn’t doing that, it should be fixed; and if it can’t be fixed, it should be abolished. But there’s no reason why the Texas deregulated model has to be completely scrapped. Most other states have figured out how to design markets that work for their citizens, not kill them. Texas can, too.

Myth: “If the Texas grid was just interconnected with the rest of the U.S., everything would have been ok.” I certainly agree with him that, if the ERCOT grid had been connected to the Eastern and/or Western Interconnects, the outage probably wouldn’t have been prevented, since Texas wasn’t the only state experiencing this cold wave. On the other hand,  none of the other states experienced problems anything like those in Texas. They were able to draw power from other states that were prepared for the cold weather; Texas (specifically the ERCOT grid) couldn’t do that.

I continue to believe that having their own grid – mainly in order to free a small number of power producers from having to comply with some federal regulations – is a luxury that Texans can’t afford anymore.

After all, in February there were hundreds of deaths (the highest estimate I saw was around 800) and billions in direct costs, plus the billions in charges that are in dispute and likely to be paid in large part by – of course – the Texas ratepayers and taxpayers. On top of that, there will be some long-term discouragement of new investment in Texas, caused by the cloud of uncertainty that will hang over power rates for probably the next 5-10 years. All of this so a few owners of power plants could save some money by not having to comply with some regulations. Is this a great tradeoff?

There’s another reason why I think the ERCOT grid should be connected to one of the other Interconnects: I’ve been advocating that there needs to be partial federal funding for grid cybersecurity investments (and there’s clearly need for federal dollars for non-cyber grid security investments as well. There was some in the pandemic recovery act, and there will likely be a lot more in the infrastructure act).

The reason why this is a legitimate federal expenditure is that investment in an interconnected grid benefits the whole country, since the resources in one area back up those of another area that is experiencing a temporary problem (of course, this is why interstate highway upgrades get federal funding, even though some of them – especially “spurs” going to a particular destination off the highway – primarily benefit local residents).

But guess what? Investment in the ERCOT grid almost entirely benefits citizens of Texas (and not all of them, since areas including El Paso and northeastern Texas aren’t part of ERCOT), because grid resources in ERCOT aren’t immediately available to relieve a shortage in another area like the Southeast US or Oklahoma (of course, by “immediately” I mean within a second or so. There are DC ties between ERCOT and other grids, but they have to be activated manually, which is too long to avert a cascading failure. In the 2003 Northeast blackout, it took less than six minutes for the disturbance to change from a local problem in northern Ohio to a complete shutdown of the grid in much of the US Northeast and Upper Midwest, as well as almost all of Ontario).

So I would advocate that further federal investment in the ERCOT grid – at least for reliability purposes – should be made contingent on ERCOT joining either the Eastern or Western Interconnects (but not both. That would cause a big control problem, since the US simply isn’t set up now to be a single national grid).

Myth: This would not have happened if Texas and California had “capacity markets.” Commissioner Clark argues that capacity markets wouldn’t alone have prevented the February outages, which I agree with. On the other hand, I don’t think there’s much question that capacity markets are an important component of a long-term solution to the problems that caused the outages, and I doubt he would disagree with that.

Myth: It’s renewables' fault. I completely agree with what he says on this topic. It was ridiculous for Gov. Abbott to immediately blame renewables after the February event. Some wind turbines froze up during the outage, but it wasn’t even half of them. And if every single wind turbine in Texas had been disabled, that alone could never have led to the outage, since wind energy only constitutes about 5% of the Texas power supply (although that’s a huge percentage, compared to most other states).

Myth: This is all just about freak cold weather. I totally agree with what he says here.

And I love his closing comment: “The analyses are just emerging when it comes to the tragedy of recent weeks, but one thing is certain: Resilience is crucial. This is why the regulatory tools that have worked well in the past are best positioned to meet the challenges of the future.”

My comment on this comment? Amen.

Any opinions expressed in this blog post are strictly mine and are not necessarily shared by any of the clients of Tom Alrich LLC. Nor are they shared by the National Technology and Information Administration’s Software Component Transparency Initiative, for which I volunteer. If you would like to comment on what you have read here, I would love to hear from you. Please email me at tom@tomalrich.com.