Credit: Gary Ellis
In early February 2011, a severe winter storm hit the American Southwest, including Texas. As previously mentioned, the 2011 winter storm led to rolling blackouts due to demand outpacing supply. Investigations into why the electric grid had failed to meet capacity were conducted in the months following, with two key reports being issued, one by FERC and another released by PUCT.
FERC’s report found that the primary cause of the blackouts during the storm was due to a lack of weatherization within the facilities of the generating entities that make up the Texas grid. Interestingly, FERC pointed out that PUCT had recommended better weatherization for parties involved in producing electricity after a winter storm in 1989:
Despite the recommendations issued by the PUCT in its report on the 1989 event, the majority of the problems generators experienced in 2011 resulted from failures of the very same type of equipment that failed in the earlier event. And in many cases, these failures were experienced by the same generators. . . . The failures of these repeating units alone eroded a large share of ERCOT’s reserve margin going into the morning of February 2, 2011, putting the entire system in jeopardy.
In the FERC report’s key findings and recommendations section, it found, among many issues during the 2011 storm, that the lack of any regulation “requir[ing] generators to perform winterization left winter-readiness dependent on plant or corporate choices,” and that generators had been “reactive as opposed to being proactive in their approach to winterization and preparedness.”
As part of its recommendations, FERC’s task force began by simply recommending that, regardless of the low probability of severe winter events, “all entities responsible for the reliability of the bulk power system . . . [should] prepare for the winter season with the same sense of urgency and priority as they prepare for the summer peak season.” The recommendations also suggested that ERCOT reform its outage approval system in order to have more flexibility and regulatory power to deny and cancel planned outages “in cases of approaching extreme weather conditions,” along with recommending ERCOT be able to direct generating entities to “utilize pre-operational warming prior to severe cold weather,” and verify with each entity “its preparedness for severe cold weather.”
Specifically addressing the problem of lack of winterization among companies that generate electricity within the grid, the task force recommended that “[s]tatutes … direct utility commissions to develop the best winterization practices for its state, and make winterization plans mandatory” with “the authority to impose penalties for non-compliance,” as well as attestations from senior management that their generating units have successfully met the standards required for winterization.
Requir[ing] generators to perform winterization left winter-readiness dependent on plant or corporate choices.
After the 2011 winter storm, the Texas legislature passed Senate Bill 1133, directing PUCT to “analyze emergency operation plans developed by electric utilities,” and “prepare a weather emergency preparedness report on power generation weatherization preparedness,” which was to include “recommendations on improving emergency plans and procedures.” The act also granted PUCT the discretion to “adopt rules relating to the implementation of the report” and the ability to submit subsequent reports should weatherization technology improve or if there are any changes to the weatherization requirements.
PUCT’s report was released in 2013, and conducted by Quanta Technology, LLC. The report found that the Emergency Operations Plan (EOP) to be submitted to PUCT by each generating entity lacked enough detail for evaluations, that EOPs were not submitted by every entity that was required to by the rule, and that EOPs failed to address extreme weather preparedness. The report also critiqued plants for their failure to include extreme weather operating limits and address the recommendations from the 2011 FERC report. The report recommended standardizing the information required by EOPs and ensuring all entities have EOPs through means such as attestation forms and provided a list of best practices for cold weather preparedness with accompanying recommendations for PUCT to develop an effective mechanism to ensure compliance. In its final thoughts on cold weather preparedness, the report concludes that “[w]hether the solution lies with the implementation of a NERC or regional standard, the ultimate best practice may be to ensure known solutions are applied and tracked to ensure a repeat of the February 2011 event is avoided.”
Perhaps the most prescient recommendation made in the Quanta Report is the highlighting of the importance of extreme weather preparedness coupled with a warning about waning vigilance due to the infrequency of severe weather events:
Of critical importance, extreme weather preparedness should receive a level of attention commensurate with the risk posed by other situations that threaten the ability of the plant to remain operating and online. As these extreme weather events are generally infrequent, the importance of continued vigilance in maintaining and implementing adequate EOPs tends to diminish as time passes for many reasons. As a result, it would be prudent for the PUCT to consider how to codify these expectations for generating entities to maintain sufficiently detailed EOPs and routinely practice their implementation in order to be adequately prepared for maintaining operating integrity during extreme cold weather events.
Unfortunately, the recommendations made by FERC and Quanta failed to be codified in a way that sufficiently prepared the state for the much stronger 2021 winter storm.
“Whether the solution lies with the implementation of a NERC or regional standard, the ultimate best practice may be to ensure known solutions are applied and tracked to ensure a repeat of the February 2011 event is avoided.”
Following the release of the Quanta Report, PUCT proposed amending Sections 25.53 and 25.362 of the Texas Administrative Code, resulting in more detailed information being required in EOPs and ERCOT assessments of generators’ reliability during extreme weather. Pushback from ERCOT over collecting information on weather design limits and critical failure points made up the bulk of the organization’s submitted comments during the notice and comment period. ERCOT argued that this requirement would have questionable value because “ERCOT’s collection of such information is incomplete and . . . any conclusions drawn from such data are likely to be unreliable.”
ERCOT additionally argued that the data they had was flawed because, while generators must provide their minimum and maximum ambient temperature data whenever they register with the system, most generators just do not provide that information because “manufacturers do not provide this data or did not provide that data at the time the plant was constructed . . . [and the data that is submitted] do[es] not necessarily reflect the actual operating limits of the plant.” For these reasons, ERCOT’s comments to PUCT posited, “ . . . ERCOT believes that submitted, as part of its extreme weather assessment, the limited information it does maintain about generator weather design limits is not likely to be helpful and could potentially be misleading.”
ERCOT continued by critiquing the Critical Failure Points requirement, arguing that its lack of expertise and familiarity with what could only be gleamed from an intimate working knowledge of each individual plant should be reason enough to strike down the requirement.
Critiques of the proposed amendments came from the industry as well. Energy corporations like NRG Energy also commented on the proposed rule changes, recommending instead that “the commission take a light-handed approach to amend the requirements for registered power generating companies,” because those companies “fail to prepare their generating units to operate during emergency conditions already face the self-policing results provided by the competitive wholesale market.”
“An inability to generate during an emergency can either result in a foregone opportunity to sell power in a high-priced market, or the purchase of expensive replacement power to cover a [power company’s] obligations. Both of these results provide ample incentive to have generating units ready to perform in an emergency.”
Continuing, NRG’s comment concluded that, “[a]n inability to generate during an emergency can either result in a foregone opportunity to sell power in a high-priced market or the purchase of expensive replacement power to cover a [power company’s] obligations. Both of these results provide ample incentive to have generating units ready to perform in an emergency.”
Here, the threat of regulation that could prevent the loss of power in an emergency weather event served as a signal to again sing the refrain of the deregulated market. First, a severe weather event does not have to be an emergency, but an opportunity for the market that a corporation will surely meet, therefore regulation is not required. Second, the anxiety surrounding this is unfounded because the market accounts for failures because corporations that fail will lose in the market, therefore they’ll either adjust to account for their failure or they will lose their market share to a corporation that will do what is needed. With this ironclad logic, NRG concluded that “. . . [a]ny additions or modifications” to the rule that PUCT proposed “will likely not be as effective as the incentives inherently provided . . . in the competitive wholesale market.”
NRG concluded that “[a]ny additions or modifications” to the rule that PUCT proposed “will likely not be as effective as the incentives inherently provided . . . in the competitive wholesale market.”
On the other side of the notice and comment period, while changes were implemented regarding EOPs, no other significant change that would actually require compliance to weatherize the electric grid occurred. The lack of action by PUCT, ERCOT, and the political offices of the Texas government beyond these minor, incremental changes left the grid open to the perfect storm: a “once-in-a-generation” blizzard covering the entire state for days in 2021.