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Is there still cause for concern about the blackouts of 2021?

In a recent television interview, Governor Greg Abbott said he could guarantee the lights would stay on this winter. Many Texans, however, remain skeptical about the progress made by the Electric Reliability Council of Texas, the PUC, the Texas legislature, and other authorities in charge of the power grid.

Unease over electric grid reliability

In February 2021, ice storms swept the US from the Ohio Valley to the Rockies and south into Texas. Dallas had a record low of -2º, and Del Rio had a record 9 inches of snow. Unable to withstand the temperatures, generation facilities of all types froze up or had other mechanical failures. Grid operators implemented rotating power outages, and this likely prevented overwhelmed equipment from catching on fire. Although the results would have been worse had operators not initiated the blackout, over 5 million homes and businesses lost power, some for 3 days or more. Official counts vary, but hundreds of deaths have been listed as having been a result of the storm, whether from hypothermia, carbon monoxide poisoning, or other related causes.

Considering this, it is perhaps only natural that Texans are wondering about what this season holds in store for them.

Changes to the Texas electric grid

Seeming to justify Governor Abbott’s confidence about the electric grid reliability is a projected 15% increase in grid capacity as compared to last winter. Likewise, he cited almost a dozen related laws he has signed to improve the infrastructure and the Texas electric grid. From the time they were introduced to the legislature, however, many of them have been criticized for not doing enough. While these laws may help, critics say they wouldn’t prevent catastrophe in the event of another storm of the same scale as last year’s.

Generators around the state are being winterized, but there are already questions of whether or not this will be enough. The state’s regulators are inspecting over 300 of the state’s energy generation facilities in December 2021 to make sure appropriate winterization improvements have been made. More than 70% of electricity generators have reported being ready, but many have filed for exemptions or extensions. 13 facilities did not file their reports by the December 1, 2021 deadline.

Furthermore, most of the progress has been limited strictly to the electricity generation portion of the industry. Natural gas, which accounts for a majority of the state’s power–including that for power plants, themselves–is regulated by the Railroad Commission of Texas, and they are not scheduled to craft weatherization rules until at least September 2022.

A history of grid failures

2021 was not the first time Texas has suffered through similar problems–and promises. Feb 2011 saw rolling blackouts across over 75% of the state. Afterward, the North American Electric Reliability Corporation released its recommendations of how Texas could prevent another such disaster with its energy grid. Due to the costs, however, these recommendations were ignored.

Even in 2011, Texans noted that this was not the first time something like that had happened to us. A similar grid failure and subsequent power outage took place in December 1989. Then, too, recommendations were made to prevent another such disaster. Then, too, the recommendations were ignored.

Texas faced a similar concern over its ability to avoid outages this past summer. 2021 was projected to be one of the hottest on record, and although much of the United States did indeed suffer through heat waves, Texas remained relatively mild. Regulators had said the state was prepared with plenty of reserve margin. Without a significant test of the grid, though, Texans are still left wondering what it can handle and if last winter’s catastrophe could happen again.

As a sign of this, electricity companies have been warning of gas shortages and thus price hikes. Will these reserve margins be low enough to trigger another wave of outages?

Several factors are at play when considering the reserve margins, not just extreme weather. Across the US and across the globe, economies have started to rebound from the pandemic faster than expected. In Asia especially, this has resulted in shortages and rising gas prices. Many utilities have tried to buffer this by using more coal. The U.S., for example, is expected to use 23% more coal in 2021 for its electricity generation. However, coal, too, is in short supply right now. The U.S. is prepared for a “normal cold season,” but many experts are questioning if prolonged cold spells could create problems.

Contributing factors to rolling blackouts

Although it is to point to individual factors, ultimately, it was not any one thing that caused the system failure and subsequent power outages. A long list of factors made the outages as bad as they were.

  • Failures happened in every type of generation technology. Although it was initially said that renewable technology–particularly wind–was to blame, various gas, coal, and nuclear generators also failed.
  • Different generators were forced to go offline for different reasons. Among the reasons listed for going offline were “weather-related issues,” “equipment issues,” “fuel limitations,” “transmission ans substation outages,” and “frequency issues.”
  • Various generators were not properly winterized. Some generators had not winterized their systems to be able to withstand the record temperatures. Several who claimed to be properly winterized failed at temperatures above what they should have been still able to operate.
  • Demand was underestimated for severe storms. The worst-case-scenario for electricity demand turned out to be about 14% too low.
  • Weather models didn’t adequately warn of the coming storm. Forecasts missed both the timing and the severity of the storm.
  • Too much capacity loss occurred too quickly. By Feb 15, 2021, so much capacity had been lost from power generators especially when compared to the record demand at the time, that operators had to implement rolling black outs to prevent total system failure.
  • Gas production and distribution were below demand levels. Production was down 85%. Up to 65% of the Permian Basin’s processing systems reported outages. Before the storm even arrived, gas generators were be shorted the gas they needed to operate. When the storm did arrive, generators were without the fuel needed to keep up with the storm. In addition to gas equipment freezing, the utilities were not adequately informed about problems.
  • Gas storage levels were dangerously low. Gas stored in underground facilities was already being withdrawn at its peak rate. Combined with the low injection levels, storage levels were at an unprecedented low. Overall, the system was being taxed to its limit.
  • Power was cut to locations that were critical pieces of the supply chain. When system operators make the decision to shed load, they have to make sure power is still routed to critical parts of the infrastructure. Dozens of critical locations, however, turned out to be on the list of meters that would be shut off in the event of an emergency. Of these, at least five of these critical locations did, in fact, have their power shut off.

These factors interplayed with each other to create a catastrophe of such a great magnitude. If any one–or more–of these factors could have been removed from the equation, the effects would not have been nearly as bad. The storm might still have created problems for Texans, but the results would not have been as devastating.

Short and long-term effects

It’s not surprising that this question should be on Texans’ minds. It’s still a recent memory, after all, for over 5 million people who lost power, some for as long as 3 days. Power loss affected other utilities as well. Water treatment stations were damaged or lacked the pressure to produce safe water. As a result, as many as 12 million Texans were without water or were being told to boil their water. In San Antonio, people were using trash cans to collect water from the River Walk. These, however, were only the immediate consequences. In the following weeks and months, it became evident that the storm had long-reaching effects on the entire Texas energy sector.

  • Gas prices shot up over 4,000% to $400/MMBTU. For the gas producers who could still produce, this turned into a veritable gold mine.
  • Increased gas prices led to a spike in the wholesale market rates for electricity. Texas had a cap at $9,000 per MWh, and prices hit that and stayed there. Customers who were paying market rates ended up with astronomical bills for just those few days of usage. Residential users had bills into the thousands of dollars. Some commercial customers had bills in the tens of thousands of dollars. In this sense, those without power turned out to be the fortunate ones.
  • In choosing between bad publicity and financial loss, some providers absorbed all or part of customer’s inflated bills. More than one provider filed bankruptcy in the following months.
  • While a select few gas producers came out ahead, many other companies at different points in the supply chain faced devastating financial loss. Some generators had to contend with equipment failure. Gas generators either couldn’t get the fuel to operate or could only get it at unmanageable rates. Many providers, cooperatives, and municipalities failed to adequately hedge their rates and suffered losses from market rates higher than what they charged customers.
  • Several entities have defaulted on their payments to ERCOT. Ultimately, this debt will likely be passed on to the consumer, raising electricity costs for years.