Power demand is expected to surpass the peak energy demand from Texas’ February freeze

A woman stands in the dark of her home looking outside
Ricki Mills looks out from her home as she waits for a fire hydrant to be turned to get water, in Dallas. The single mother had her apartment flooded in February by a pipe that burst during the record winter cold and was waiting for repairs to restore water to the apartment complex. Less than six months later, the state faces threat of another blackout.

  • Texas’ electric grid managers are warning residents to conserve energy to prevent blackouts.
  • ERCOT said that several generators are currently in need of repair.
  • Power demand on Monday is expected to surpass the peak energy demand from Texas’ February freeze.
  • See more stories on Insider’s business page.

Texas’ electric grid managers warned residents to reduce electricity usage “as much as possible” through June 18 as several of the state’s generators face outages.

Generators creating roughly 15% of Texas’ power are in need of repair, according to a press release from the Electric Reliability Council of Texas (ERCOT). More than 70% of generators facing outages are thermal-based, meaning they are reliant on coal, gas, or nuclear energy to generate power.

ERCOT said that Monday’s peak load forecast on the electrical grid may exceed 73,000 MW, surpassing the peak demand set in the February freeze of 69,692 MW. According to ERCOT, the highest peak demand record for the grid is 74,820 MW, which occurred in August 2019. For reference, 1 MW can power around 200 homes during the summer.

The state’s grid is also facing strains because wind-generated power is “roughly 1,500 MW lower than what is typically available for peak conditions,” though ERCOT noted that experts expect wind output to increase throughout the week.

“We will be conducting a thorough analysis with generation owners to determine why so many units are out of service,” said ERCOT Vice President of Grid Planning and Operations Woody Rickerson. “This is unusual for this early in the summer season.”

The highs in Texas are expected to hit at least 100 degrees Fahrenheit during ERCOT’s proposed period of energy conservation.

ERCOT faced a bevy of criticism for a massive blackout, that impacted much of the state, in February, which led to an estimated 700 deaths and the “biggest epidemic of CO poisoning in recent history” as families tried to stay warm amidst freezing temperatures, according to a ProPublica report.

After signing two bills in June, Gov. Greg Abbott said that “everything that needed to be done was done to fix the power grid in Texas.”

Texas State Sen. Kelly Hancock said in June that the legislature’s mission was to prevent February’s blackout from reoccurring.

“Our ultimate goal was to make sure that those individuals, those consumers, our constituents back home, never ever had to deal with this issue ever again,” Hancock said.

Despite the intentions of the Texas legislature, ERCOT’s website shows that energy prices are skyrocketing as the state electric grid becomes more and more reliant on its reserves.

ERCOT provided a few tips for Texans to reduce their electric use:

  • Set thermostat to 78 degrees or higher as “every degree of cooling increases your energy use by six to eight percent”
  • Turn off all unused lights and pool pumps
  • Refrain from using large, high energy-use appliances like washing machines, ovens, and dryers
  • Turn off and unplug anything unnecessary

This story is developing. Check back for updates.

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ERCOT fired its CEO and the head of Texas’ utility regulator resigned following the state’s devastating storm blackouts

texas weather
Roads were covered with snow and sleet on February 15, 2021, in Spring, Texas.

  • ERCOT fired CEO Bill Magness Wednesday, after a storm left millions of Texans without access to power.
  • DeAnn Walker, head of the Texas Public Utility Commission (PUC), had resigned on Monday.
  • Lt. Gov. Dan Patrick had called for both of their resignations in the aftermath of February’s blackouts.
  • Visit the Business section of Insider for more stories.

Texas’ power grid operator fired its CEO on Wednesday following devastating blackouts in February that left millions of people across the state without access to power and clean drinking water for days.

Bill Magness’ dismissal from the Electric Reliability Council of Texas (ERCOT) came just two days after the head of Texas’ utilities regulator resigned.

State lawmakers, including Texas Lt. Gov. Dan Patrick, had called for both leaders to resign after last week’s Texas Senate hearing into the storm and its effects.

Magness was fired by the company’s board after an emergency meeting Wednesday night, CNN reported. 

ERCOT, a non-profit that operates 90% of the state’s electric load, came under fire after lawmakers said it had failed to prepare for the heavy storm that cut off large chunks of the state’s power supply.

Five of ERCOT’s board members had already resigned following the disaster.

Magness has a 60-day termination notice, during which he’ll continue to serve as the company’s president and CEO, ERCOT told CNN. The company expected to start searching for Magness’ replacement immediately, it told the publication.

Meanwhile, DeAnn Walker, the head of the Texas Public Utility Commission (PUC), resigned on Monday, which the PUC said was “effective immediately.” The commission regulates the state’s electric, telecommunication, and water and sewer utilities, including ERCOT.

“I stand proud that I worked endless hours over the past two and a half weeks to return electric power to the grid,” Walker wrote in her resignation letter, per The Wall Street Journal. She did not explicitly say why she was resigning.

“Despite the treatment I received from some legislators, I am proud that I spoke the truth.”

A major winter storm that hit Texas on February 15 caused sources of electricity, like natural-gas plants, to go offline, while simultaneously increasing the demand for energy as people across the state turned on heaters to stay warm.

This caused a huge shortfall in energy, and the wholesale price of electricity surged 10,000%. One Army veteran said he was billed $16,000 for power.

Millions in the state also lost access to clean drinking water and were asked to boil their water, after power outages hit treatment facilities.

President Joe Biden declared it a “major disaster.”

The huge spike in bills happened because of Texas’ deregulated energy market. Customers who signed up to buy their power based on its wholesale cost, rather than as part of a fixed-price contract, are vulnerable to price fluctuations, such as those that occurred during the storm.

Just hours before Walker’s resignation, Lt. Gov. Patrick released a statement calling on both Walker and Magness to resign.

“Both the PUC Chair and ERCOT CEO said they were prepared the day before the storm hit in full force, but obviously they were not,” Patrick said.

Patrick said they hadn’t considered that the freeze could shut down power plants, or that crews would not be able to make emergency repairs, and said their calculations on how much energy would be unavailable during the storm were inaccurate.

“These two issues alone accounted for hundreds of thousands of homes being without power and threatened a statewide blackout,” he said.

“They hoped for the best instead of planning for the worst,” he added.

Texan Sen. Ted Cruz has also come under fire after he went to Mexico during the storm.

US officials, including Houston mayor Sylvester Turner, have called on the state of Texas to pay residents’ hefty utility bills. Officials from Harris County, which includes Houston, are looking into leaving Texas’ deregulated power grid.

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The head of Texas’ utility regulator has resigned following blackouts that left millions without power and water

texas weather
Roads were covered with snow and sleet on February 15, 2021, in Spring, Texas.

  • DeAnn Walker, head of the Texas Public Utility Commission (PUC), resigned on Monday.
  • A storm in February left millions of people across Texas without access to power and clean drinking water.
  • Lt. Gov. Dan Patrick had called for her resignation. The PUC regulates the state’s utilities.
  • Visit the Business section of Insider for more stories.

The head of the Texas Public Utility Commission (PUC) has resigned, after blackouts in February left millions of people across the state without access to power and clean drinking water for days.

The PUC said Monday that DeAnn Walker had resigned from the role, “effective immediately.”

The PUC regulates the state’s electric, telecommunication, and water and sewer utilities, including the Electric Reliability Council of Texas (ERCOT), a non-profit that operates 90% of the state’s electric load. 

State lawmakers, including Texas Lt. Gov. Dan Patrick, had called for her resignation after she testified during a Texas Senate hearing last week that lasted almost 24 hours.

“I stand proud that I worked endless hours over the past two and a half weeks to return electric power to the grid,” Walker wrote in her resignation letter, per The Wall Street Journal. She did not explicitly say why she was resigning.

“Despite the treatment I received from some legislators, I am proud that I spoke the truth.”

A major winter storm that hit Texas on February 15 caused sources of electricity, like natural-gas plants, to go offline, while simultaneously increasing the demand for energy as people across the state turned on heaters to stay warm.

This caused a huge shortfall in energy, and the wholesale price of electricity surged 10,000%. One Army veteran said he was billed $16,000 for power.

Millions in the state also lost access to clean drinking water and were asked to boil their water, after power outages hit treatment facilities.

President Joe Biden declared it a “major disaster.”

The huge spike in bills happened because of Texas’ deregulated energy market. Customers who signed up to buy their power based on its wholesale cost, rather than as part of a fixed-price contract, are vulnerable to price fluctuations, such as those that occurred during the storm.

Just hours before Walker’s resignation, Lt. Gov. Patrick released a statement calling on both Walker and Bill Magness, the CEO of ERCOT, to resign.

“Both the PUC Chair and ERCOT CEO said they were prepared the day before the storm hit in full force, but obviously they were not,” Patrick said.

Patrick said they hadn’t consider that the freeze could shut down power plants, or that crews would not be able to make emergency repairs, and said their calculations on how much energy would be unavailable during the storm were inaccurate.

“These two issues alone accounted for hundreds of thousands of homes being without power and threatened a statewide blackout,” he said.

“They hoped for the best instead of planning for the worst,” he added.

Five of ERCOT’s board members have resigned following the disaster. Texan Sen. Ted Cruz has also come under fire after he went to Mexico during the storm.

US officials, including Houston mayor Sylvester Turner, have called on the state of Texas to pay residents’ hefty utility bills. Officials from Harris County, which includes Houston, are looking into leaving Texas’ deregulated power grid.

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One of Texas’ most prominent left-leaning economists knows exactly why its power grid failed

Power lines are seen on February 19, 2021 in Texas City, Texas
Power lines in Texas City, Texas.

  • Economist James K. Galbraith said policymakers failed Texas during the state’s recent power outage.
  • Texas’ deregulated electrical system incentivized the cheapest production without accounting for resilient machinery.
  • Galbraith says the only way to fix the system is to turn it into a public utility.
  • Visit the Business section of Insider for more stories.

Millions of Texans lost power last week and were stuck living in freezing conditions as their electrical bills skyrocketed. The crisis was totally preventable, according to a left-leaning economist who teaches at the University of Texas at Austin, and the reason why has to do with the state’s deregulated electricity system.

James Kenneth Galbraith, a government professor at the University of Texas at Austin, wrote in a Project Syndicate commentary that these failures were baked into Texas’ power grid as soon it embraced deregulation under former Gov. Rick Perry in 2002. 

The Texas system had three vulnerabilities, according to his commentary:

  1. Competition to provide power in the cheapest way possible meant that machinery was not well-enough insulated against extreme cold;
  2. Wholesale prices could fluctuate while retail prices depended on consumer contracts;
  3. And prices would rise when demand for power was the greatest.

Rather than working to overcome the vulnerabilities, Galbraith wrote, policymakers did nothing. And he has a unique perspective on the matter of government regulation. His father was famed 20th-century economist John Kenneth Galbraith, a former Harvard professor and advisor to several Democratic administrations, who long advocated thoughtful government intervention – and regulation.

John Galbraith’s views came back into vogue after the Great Recession of 2008, and James’ work in Texas has long swum against the state’s deregulatory tide, a fact brought into vivid relief by the current power crisis. In his own right, James has formerly served as executive director for the Joint Economic Committee of the US Congress and directs the University of Texas Inequality Project.

James Galbraith took Insider inside how Texas fell apart and left its residents freezing amid a polar vortex amid a pandemic.

The problems with Texas’ deregulated system

Galbraith told Insider that while Texas created an incentive for energy producers to produce in the cheapest way possible, it didn’t provide another to build resilience into the system for extreme events. This caused demand to go up while supply for electrical sources went down, causing major losses of power.

“The facilities that are fed by natural gas ran into a freezing up of their meters, pumps and fuel lines. In some cases, the power plants went offline and they had to cut power to the wells,” Galbraith said. “So that was kind of a death spiral. At the same time, the consumer demand was going up very quickly, and in an electrical system, supply and demand have to be balanced at all times.”

When Texas moved to a deregulatory electrical system in 2002,  it handed over the reigns to the nonprofit Electrical Reliability Council of Texas, which has around 70 providers. These companies competed with each other to keep prices low for consumers, but they also created a market where a surge in demand could overpower supply, as happened in early 2021.

Galbraith said the fossil fuel industry made “enormous contributions” to political leaders like Gov. Perry, who continued to support the fossil fuel industry as Sec. of Energy under former President Donald Trump.

Perry’s views seem unchanged: he wrote in a blog post on February 17 that Texans would rather continue dealing with blackouts than having a regulated electricity system.

How the crisis could have been prevented

When Texas previously experienced extreme cold weather in 2011, Galbraith said that should have made clear to policymakers that the state’s deregulated system was unstable, but they didn’t take action then.

“They should have kept the system under a full-fledged regulatory regime, which other states have,” Galbraith said. “And that meant that they should have been supervising the generating companies to ensure that they were doing a proper job of being prepared for worst-case scenarios. It’s not hard to work out what they should have done.”

If the state’s leaders took action in 2011, the 2021 freeze could have gone over much differently. But since it didn’t, Galbraith said he’s not sure if there’s a way forward that doesn’t involve taking over the whole system and making it a public utility that decides on distributions and investments.

“There’s so many weak links in the system right now that it’s hard to believe that there’s any fix available that’s short of a really comprehensive reformation of the system. I’m certainly prepared to advocate that.”

Moving forward

Lawmakers have responded to Texas’ crisis in varying ways. Texas Sen. Ted Cruz came under fire for going to Cancun during the power outage, and current Gov. Greg Abbott blamed solar and wind as causes for the blackouts and said on Fox News on February 16 that the outages show “how the Green New Deal would be a deadly deal for the United States of America.” 

Rep. Alexandria Ocasio-Cortez of New York, who first introduced the Green New Deal legislation, responded by raising nearly $5 million for Texans confronted with costly electrical bills. Similar efforts were spearheaded by former Rep. Beto O’Rourke, who lost to Cruz in the 2018 midterms.

 

 

Galbraith pointed to the electrical company Griddy, which supplied thousands of Texans with electricity at the wholesale price during a given time, and under a deregulated market, the prices spiked during the freeze, causing customers to face $5,000 electric bills for just five days, the Dallas Morning News reported

Some Texans owed Griddy over $15,000, according to The New York Times, while the Wall Street Journal reported that Texas electric bills were $28 billion higher under the deregulated system.

However, Galbraith said that while the skyrocketing of electrical bills is a significant problem, the biggest issue is the failure of the system as a whole to provide power to millions of people.

“You have to ask: who’s liable? And I think the political leadership in the state of Texas is liable,” Galbraith said. “Because the people didn’t sign up to for the power system that was going to cause the pipes in their homes to break, and that is not the way a responsibly run system would work. They’re the ones who are stuck with those bills. That’s the scandal.”

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Five of Texas’s ERCOT board members resign after massive power grid outage during winter storm

winter storm texas snow
Ice and snow blanketing roads in Odessa, Texas, on February 15, 2021.

  • Five members of the Electric Reliability Council of Texas submitted their resignations. 
  • ERCOT, a non-profit, operates 90% of the state’s electric load. 
  • The group was criticized after massive power shutoffs during unprecedented winter storms.  
  • Visit the Business section of Insider for more stories.

Five board members including the chair of the Electric Reliability Council of Texas will resign on Wednesday. 

ERCOT Board Chair Sally Talberg, Board Vice Chair Peter Cramton, Finance and Audit Committee Chair Terry Bulger, and Human Resources and Governance Committee Chair Raymond Hepper submitted a joint letter of resignation on Tuesday, according to filings with the Public Utility Commission of Texas.

“Our hearts go out to all Texans who have had to go without electricity, heat, and water during frigid temperatures and continue to face the tragic consequences of this emergency,” Talberg, Cramton, Bulger, and Hepper said in their joint statement: “We have noted recent concerns about out-of-state board leadership at ERCOT. To allow state leaders a free hand with future direction and to eliminate distractions, we are resigning from the board.”

ERCOT operates about 90% of the state’s electric load. 

Unprecedented winter storms pummeled Texas over the last two weeks, causing shutoffs to heat and power for over three million Texas residents. Federal regulators had previously issued warnings to the state about its preparedness for cold weather, but the suggested power plant upgrades were not mandatory.

“With the right follow-through, Texas can lead the nation in investing in infrastructure and emergency preparedness to withstand the effects of severe weather events-whether in the form of flooding, drought, extreme temperatures, or hurricanes,” they wrote. “We want what is best for ERCOT and Texas.”

The fifth board member, Vanessa Anesetti-Parra, director for the independent retail electric provider market segment, also sent a notice of resignation. A sixth individual, Craig Ivey, has withdrawn his application to the board. 

Last week, ERCOT’s board was criticized after it was discovered that a third of the fifteen members did not live in the state, the Austin-American Statesman reported. 

All five resigning members live out of state, as does Ivey. 

In a statement, Gov. Greg Abbott who previously called on the organization’s leadership to resign said ERCOT “failed to do its job” during the storms and said the state will continue to investigate the nonprofit. 

“ERCOT leadership made assurances that Texas’ power infrastructure was prepared for the winter storm, but those assurances proved to be devastatingly false. The lack of preparedness and transparency at ERCOT is unacceptable, and I welcome these resignations,” he said. 

Have a news tip? Contact this reporter at salarshani@insider.com

 

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At least two lawsuits filed against Texas’ energy committee claim it was aware of shortcomings in the state’s energy supply from previous winter storms

texas storm
Pike Electric service trucks line up after a snow storm on February 16, 2021 in Fort Worth, Texas.

At least two lawsuits have been filed alleging that Texas energy committee at the center of its ongoing power crisis knew of the state grid’s shortcomings from past winter outages.

A lawsuit filed in Harris County, which includes Houston, on Thursday is seeking up to $10 million in damages from the Electric Reliability Council of Texas, or ERCOT, for its lack of preparedness leading up to Winter Storm Uri that hit much of the southern US on February 14. 

It was filed by Fort Bend County residents Mauricio and Daysi Marin. Mauricio Marin still relies on oxygen after recovering from COVID-19, the disease caused by the novel coronavirus, and alleges the utility provider did not adequately prepare him for an extended outage, according to a report from Law360.

“ERCOT’s forecast for the maximum electricity that would be consumed far under-estimated the reality,” the lawsuit said. “As a result, millions were plunged into darkness and cold as a result of a loss of electricity.”

Another lawsuit filed in Nueces County on Friday goes a step further, alleging ERCOT was aware of its energy supply’s weaknesses following similar winter outages in 1989 and 2011 and could have done more to winterize its system prior to the February 14 storm that left roughly 4 million Texans without electricity and heat at its peak. Millions of residents are still without water.

“This cold weather event and its effects on the Texas energy grid were neither unprecedented, nor unexpected, nor unforeseen,” the Nueces County suit alleges.

A spokeswoman for ERCOT said the committee hadn’t yet reviewed the lawsuits, but will respond accordingly once they do.

“Our thoughts are with all Texans who have and are suffering due to this past week,” the spokeswoman told Insider. “However, because approximately 46% of privately-owned generation tripped offline this past Monday morning, we are confident that our grid operators made the right choice to avoid a statewide blackout.”

ERCOT investigated past outages and recommended winterizing at-risk generators and production plants, the Nueces County suit says. In the winter of 2011, however, generators that failed in 1989 failed again, indicating that ERCOT’s previous mitigation efforts “were not adequate, or were not maintained,” according to an investigation by the Federal Energy Regulatory Committee report in 2011 that is cited in the lawsuit.

“The massive amount of generator failures that were experienced raises the question whether it would have been helpful to increase reserve levels going into the event,” the 2011 FERC report said.

The suit alleges many of the same generators, transmitters, and distributors failed again starting February 14 in what could have been an avoidable catastrophe. The suit does not indicate the amount it is seeking from ERCOT and other energy providers.

Roughly 81,000 customers are still experiencing outages as of Saturday morning, according to a company that tracks outages across the state. Temperatures were forecast to rise on Saturday as well, providing some relief to Texans who had gone days without heat in freezing temperatures. 

When the unusual winter storm struck the state power plants malfunctioned right when demand for electricity shot up as people tried to stay warm. As a result, ERCOT was forced to cut power to millions of households because there wasn’t enough energy to go around.

As of Saturday, at least 37 people had died as a result of the storm and the resulting outages, according to a NBC report Friday. Many died from carbon monoxide poisoning from household generators or in their cars while trying to stay warm, while others died from hypothermia and exposure to brutally cold temperatures. Many areas are still under a boil water notice, meaning drinking water could be contaminated, as much of the state’s grid comes back online.

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