Energy

8 Key Questions That Texas Power Providers Should Be Asked This Week


By law, the biennial sessions of the Texas Legislature can last no more than 140 days in odd-numbered years, meaning this current session has 42 days remaining in it until it must be adjourned on May 31. Just 6 weeks left for policymakers to decide what, if any reforms they will make to how the Texas power grid functions after it failed Texans so miserably during the arctic freeze in mid-February.

In the heat of any legislative session, 6 weeks fly by in a flash. I was personally employed as an energy lobbyist in Texas in 2011, when a very similar arctic freeze event caused blackouts around the state, shocking many Texans into their first awareness about the increasing level of instability of their power grid, an instability that has only grown worse since that time. I looked on then as the state’s power generators, who profit nicely during such emergencies due to their ability to legally charge exorbitant rates for their product, strategically worked to run out the clock on that year’s legislative session in order to ensure no major reforms were implemented.

Their efforts then were successful, and as a result, policymakers did not implement any requirements that their facilities be weatherized to withstand such events or any significant reforms to the market-based mechanisms on which the grid is based. The failure by the legislature to act then arguably led directly to the disaster 10 years later, in which millions of Texans were left without power and/or drinkable water for days, and more than 200 perished as a result.

Unfortunately, the power generators and their lobby appear to be employing the same strategic approach this time, testifying most recently in a hearing last week that no major systemic reforms are required at this time, and advocating that it all be taken up in an interim study that would effectively put off any real action until the 2023 session of the legislature, if then. But we’ve had 10 years to “study” the problems with the Texas grid, and Texans who suffered through this February’s catastrophe, during which power generators were allowed by ERCOT to charge rates as high as $9,000 per kilowatt hour of generation, deserve answers now, not two more years down the road.

The Texas electricity grid is woefully short of reserve baseload generating capacity now, today, as was made obvious last week when, on the mildest April days imaginable, grid manager ERCOT sent out warnings asking consumers to conserve electricity due to inadequate available generation.

The generators continue to tell legislators that they should let the free market system that the de-regulated Texas grid is based on work. But that is the same system that abjectly failed to create the needed market signals for these very companies to build new baseload capacity for a full decade now. Texans are concerned about what all of this means for the stability of the grid when the heat really sets in during July and August, and rightfully so.

With another key hearing scheduled to take place this Tuesday before the House State Affairs Committee, legislators should demand on behalf of their constituents that witnesses representing the generator community provide real, direct, quantified answers to several key questions. That is, after all, their duty as representatives, isn’t it?

As a citizen of Texas myself, and a 7th generation Texan, I decided to do my own duty and draft a set of questions for committee members to consider posing during this hearing. Here they are:

  • How much of your company’s own generation failed Texans during the winter storms in February? Provide specific answers for each energy source, i.e., coal, natural gas, wind, solar or nuclear.
  • Following the freeze and blackout event of 2011, why didn’t you weatherize your plants over the decade before this latest crisis? Who, in your view, will pay to weatherize your plants now? Your own lobbyists have circulated a plan that would have taxpayers subsidize any efforts to weatherize your proprietary facilities. Wouldn’t that in fact be a market distortion, what some would call a bailout?
  • Following the disaster in 2011, you were strongly advised by this legislature, the Public Utilities Commission and the federal government to weatherize your facilities, although you were not required to do so. Why did you choose to ignore this advice?
  • How much revenue did you make selling power into the market during Arctic Storm Uri? We have seen estimates varying from $12 billion to as much as $46 billion for your sector. Are those estimates accurate? If not, be specific in quantifying why not.
  • How much revenue did your company earn during last week’s power capacity pinch that ERCOT warned about?
  • Do you think Texas has enough reserve generation capacity to avoid future catastrophic failures during a summer heatwave or another Uri? If so, how do you explain Texans receiving phone calls from ERCOT in mid-April asking them to conserve electricity?
  • The Houston Chronicle recently reported that more than 200 Texans lost their lives in mid-February when your un-weatherized facilities froze up for days on end and they were left without power and, in many cases, drinking water. Do the cost/benefit analyses your company employed to make the conscious decision not to weatherize your facilities over the past decade include consideration of the potential loss of so much human life?
  • The simple math shows that even if you finally weatherize all your plants, chances are high that Texas still would not have enough dispatchable power to meet demand in an extreme weather event like Uri. If the legislature does not approve a plan like the one Berkshire Hathaway has put forward to create a new source of backup power to activate in an emergency, what do you and your company advocate as the “free market” solution to ensure nothing like the deadly, catastrophic events of mid-February ever happen to Texans again?

These are questions that members of the legislature should be asking anyone who proposes an “interim study” or otherwise suggests that policymakers do nothing to mandate significant reforms to the grid right now, in this session. Unfortunately, these questions have not been asked or answered in previous hearings on the matter.

Tuesday would be a good time to start asking the right questions and demanding direct, substantive answers to them. Members of this legislature may not get another chance.



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