Fed Report: ERCOT Could Use More Authority to Protect Against Blackouts

A joint federal report is the latest to examine
the February rolling outages in Texas.

Although previously rare in Texas, rolling blackouts have now occurred twice since the state deregulated its electricity markets. The most recent outage occurred on Feb. 2, when 1.3 million customers suddenly lost power. Not surprisingly, questions have been raised.

For instance, why did so many of the state’s power plants fail? During the most difficult point of the crisis, approximately one-third of the total generating fleet within ERCOT was unavailable. And did the blackouts expose problems in the wholesale energy market, where prices spiked dramatically?

A new report by the combined staff of two federal organizations attempts to answer some of those questions, while also making recommendations for reform. Released in August, the report finds no evidence of market manipulation during the blackouts and concluded that gas curtailments played little if any role. But the federal staffers also found that the ERCOT organization could use additional tools to protect against blackouts.

The organizations behind the two-inch-thick document are the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation — FERC and NERC for short. Their report joins other expert examinations of the February blackouts, including those from the Texas independent market monitor, from a federal grid reliability organization, and from a private consultant from Oregon.

Among the key findings of the latest report:

•  By communicating with generators and requesting them to come online earlier, ERCOT could have more promptly exposed mechanical issues experienced by generators. This could have prevented some of the failures.
• The typical design of generating facilities in the southwestern United States may have contributed to large number of units shutting down. Unlike generation facilities in the colder climates, southern generating units were built so that many of their auxiliary systems are exposed to the ambient air. Frozen sensing lines, frozen equipment, frozen water lines, frozen valves, blade icing, low temperature limits, and transmission loss caused the loss of 22,805 MW of generation.
• Although natural gas is an important fuel source for the state’s fleet of electric generators, natural gas curtailments did not appear to play a major role in the outages.
• FERC and NERC found no evidence of market manipulation during the event. This conclusion was similar to earlier findings by the state’s independent market monitor.

FERC and NERC also issued recommendations:

• ERCOT should consider rule revisions to allow it to reject scheduled outages by generating units.
• ERCOT should increase its extreme-weather requirements for generation reserves. ERCOT also should have the ability to direct generating units to initiate operational warming prior to forecasted cold weather.
• ERCOT should have the ability to verify a generators’ preparedness for cold weather, including the units’ operating limits and potential fuel needs.
• Generators should take steps to ensure they are prepared for severe cold weather events, including designing temperature parameters for existing units, using heat tracing equipment to inspect the units, and maintaining the unit’s thermal insulation. States in the Southwest should examine whether they need rules to compel generators to submit winterization plans.
• State legislatures should adopt minimum uniform standards for the winterization of natural gas production and processing facilities. Regulatory authorities also should determine whether critical natural gas facilities should be exempted from rolling blackouts.

The NERC and FERC staff compiled their data by conducting site visits with various entities involved in the outages. Staffers also toured facilities and conducted interviews with operations personnel and company executives. You can read their report here.

-- Daniel Gonzales and R.A. Dyer

Mothballed Plants to Ease Blackout Worries

ERCOT is taking steps to help gaurd against blackouts during the ongoing heat wave.Responding to record high electricity demand and the scorching heat, the state’s grid operator this week arranged for four mothballed generating units to temporarily come back online to guard against blackouts.

Operated by NRG Energy and Garland Power & Light, the old gas-fired units will be available through October. The Electric Reliability Council of Texas, the organization that manages the grid, said the gas plant operators will be paid to defray their fixed costs and fuel expenses.

“We don’t know if, or how much, these units will be needed, but if needed, the cost will be minor when divided by the 23 million consumers in the region and when compared to the much higher costs and problems from statewide rolling blackouts which these units will help avoid,” said ERCOT CEO Trip Doggett.

PUC Chairman Nelson has called for ERCOT to consider all options to protect grid reliability.Besides improving reliability, the move also could ease pressure in the state’s wholesale spot market for energy, where prices have spiked during the heat wave to $3,000 per megawatt/hour. That equates to about $30 per kilowatt/hour — or more than 600 times the lowest electric rates in the state’s retail market.

Spot market prices do not directly impact home utility bills but can indirectly impact them over time. Doggett said the NRG and Garland units will not displace operational units already bidding into the spot market. Nonetheless, it’s likely the added capacity will ease pricing pressure, especially as other units go down for unplanned maintenance.

In a letter last week, PUC Chairman Donna Nelson called upon ERCOT to take action to reduce the possibility of blackouts. “Look at all available options,” she wrote.

Ray Schwertner, Garland Power & Electric’s Utility Director, said his organization stood ready to help. “As a member of ERCOT, we want to be responsive to their needs, as well as the needs of the citizens of Texas,” he said.