Texas monitor says state power-grid operator overcharged $16 billion in electricity bills during power outages

Power lines are seen on February 19, 2021 in Texas City, Texas
Natural gas and power operators in Texas were blitzed by arctic temperatures in February.

  • A watchdog for Texas’ power-grid operator said it overcharged as millions went powerless.
  • The Electric Reliability Council of Texas is not federally regulated.
  • The report said power prices were set at $9,000 per megawatt per hour, the highest price possible.
  • Visit the Business section of Insider for more stories.

Potomac Economics, an independent market monitor for Texas’ Public Utility Commission said that the state’s power-grid operator massively overcharged residents as the state was rocked by a deep freeze and power grid failures in late February.

The overcharges came in at a total of $16 billion, according to the filing. The report recommended that the Electric Reliability Council of Texas (ERCOT) take measures to reverse the charges.

In its report, the monitor determined that as Texas was gripped by multiple snowstorms, prices were inflated for 33 hours longer than necessary. 

“Therefore, the [independent market monitor] recommends that the Commission direct ERCOT to correct the real-time prices from 0:00 February 18, 2021, to 09:00 February 19, 2021, to remove the inappropriate pricing intervention that occurred during that time period,” the report said, adding that ERCOT should retroactively reset prices to normal.

Bloomberg reported that the Public Utility Commission of Texas, which regulates ERCOT, would discuss the monitor’s report at a meeting on Friday.

ERCOT, largely privatized and under its own regulation system, allows for wholesale power prices to be determined by supply and demand. 

The report indicated that during the February storm, the Public Utility Commission directed the power-grid operator to set power prices at $9,000 per megawatt per hour, which is the highest possible price operators are permitted to change in the state of Texas.

In the weeks after the freeze and power failures, ERCOT, the Public Utility Commission, and state leaders have been embroiled in crisis, as state legislators have called for new energy leadership and answers. 

The chairman of the Public Utility Commission resigned, and yesterday, former ERCOT CEO Bill Magness was ousted by the power grid’s board.

Seven of fifteen ERCOT board members have resigned since the freeze, with five resigning after it was revealed that they did not reside in Texas. 

The outages, widely lasting from February 10 to February 17, as natural gas and power operators were blitzed by arctic temperatures and shoddy power-grid infrastructure not meant to withstand the winter weather. 

Millions of Texans were left powerless, and with water damage, and at least 80 Texans died due to cold temperatures and related causes.

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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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‘Abbott owned it in 2011. He owns it today’: Harris County Commissioner Adrian Garcia wants justice and energy solutions after Texas freeze

Harris County Precinct 2 Commissioner Adrian Garcia
Harris County Precinct 2 Commissioner Adrian Garcia.

  • Insider spoke with Harris County Commissioner Adrian Garcia about what residents need after the Texas freeze.
  • Garcia pointed the finger at Gov. Abbott and said, “Abbott owned it in 2011. He owns it today.”
  • Storm Uri, alongside power grid failures and decades-long mismanagement, left millions powerless.
  • Visit the Business section of Insider for more stories.

On Monday morning, Harris County Precinct 2 Commissioner Adrian Garcia introduced a resolution at the Commissioner’s Court meeting – a meeting of all four of the Harris County’s commissioners, the officials responsible for the county’s roads, bridges, and policy budget decisions, moderated by County Judge Lina Hidalgo.

Harris County encompasses Houston, the fourth-largest city in the US, with over 4 million inhabitants. The Houston Chronicle reported that at least 1.4 million Houston-area households were impacted by Storm Uri and power grid failures, which lasted from February 10 to February 17.

In the aftermath of the deep freeze – which incapacitated much of Texas’ power grid, left millions powerless for a week, and killed at least 80 Texans – Garcia, the former Harris County Sheriff, called for the entire Public Utility of Commission of Texas to resign, and for Gov. Greg Abbott to “replace the members with dedicated and experienced individuals who can lead the agency out of its current state of failure.”

The Harris County Institute of Forensic Science said that at least 25 Harris County residents died during the deep freeze, with the toll expected to rise.

The PUCT regulates the Electric Reliability Council of Texas power grid. The PUCT failed to heed winterization warnings outlined by the Federal Energy Regulatory Commission in 2011, according to local news station WFAA. Garcia also said that Abbott, then-Texas’s attorney general in 2011, should have acted sooner.

Garcia’s resolution, which passed and was followed by harrowing testimonies from Harris County residents who lost loved ones, homes, and businesses, opened the door for conversations about how Harris County could move away from ERCOT to a new power grid system. 

Insider spoke to Garcia about how Harris County is dealing with the aftermath of the freeze, and who should be held accountable. This interview has been edited for length and clarity.

Currently, what are the biggest needs right now for residents in Harris County at this moment?

We’re working to provide a response to all of the challenges of the community. And although, we’re still recovering from a winter freeze, the reality of it is – is that this is much more compounded from the fact that we were dealing with a pandemic before the winter freeze came in. So just like it was during the pandemic, the economy has been disrupted. And so providing people food, nonperishable food items, and water has been a critical mission drain almost the entirety of the pandemic.

But when you throw a winter freeze, an unprecedented historical winter freeze into the equation, now it’s become more food, water, and other essentials. But a unique one is the fact that we also have to help people get their plumbing problems addressed because although the city water lines are functioning and other main utilities are functioning, the water is drinkable. It’s safe. The problem is people cannot turn on their water lines at their homes. Even though they can live in those homes, they can’t turn on those water lines and get drinking water to their faucets because there’s lines inside their homes that have disrupted. And as a result, their homes have, or will receive water damage.

Texas freeze water shortage
A “Product Limits’ sign is seen next to water shelves in a supermarket in Houston, Texas following winter storm Uri that left millions without power and caused water pipes to burst, on February 20, 2021. – Texas authorities have restored power statewide bringing relief after days of unprecedentedly frigid temperatures, but millions were still struggling on February 20, 2020 without safe, drinkable water.

Could you explain some of the maybe less directly visible, but still ongoing crises that are kind of coming out of this deep freeze and power grid failure?

Well, it is a lot of what we’ve already heard is that schools are disrupted. Some of the schools also received water damage. The vaccine process has become much more complicated because people are like, well, I had an appointment to go get my vaccine today, but I’m trying to fix my plumbing at home.

And then look, the state for some reason, has it in for struggling families, because now Sid Miller, the agricultural commissioner was cutting critical funding to food banks, like the Houston Food Bank is needed in order for us to provide fresh produce and non-perishable food items to the homes of families. And so there’s a lot of things that are moving that have made the overall process complicated. But these are the issues that are in the forefront of people’s minds. They’ve got to get their plumbing fixed. They want to get their vaccines, but they also get to feed their families.

Texas storm lead technician
Troy Watts, a senior lead technician with John Moore Services, holds a busted pipe following an unprecedented winter storm that swept across Texas and left many of its residents without power and water for multiple days in Houston, Texas on February 22, 2021. Despite the boil advisory being lifted, many residents are still unable to drink their water until a plumber can address the cracks in their pipes, which were caused by freezing temperatures.

On a state leadership level, where does the responsibility lie for how everything related to the state’s power grid was handled over the last few weeks, and in years prior?

Well, look. In 2011, the governor was then the attorney general, but he spoke up. He spoke up about the last winter freeze that we had in 2011. He inserted himself right in the middle of the conversation, although he was not the governor. And so the fact that he’s been in state government leadership for 18 years, it’s hard not to look at him and say that he doesn’t bear any part of the responsibility.

And then, as attorney general, he said, we’re going to look into this. We’re going to keep this from ever happening again. And then, we had some explosions in 2013, refineries. And now as the governor, he said, we’re going to look into this. It’s not going to happen again. And now more explosions in 2020. And I’m the commissioner now. And I know for a fact that he has not reached out to our office to say, what can we do to help? Here’s my plan. Here’s what I’m looking to do.

So consistently from 2011 as the attorney general, 2013 as the governor, 2020 as the governor, and then in 2021, with this freeze where his campaign donors are resigning from the Public Utility Commission, his former employee has resigned from the… or used to work in ERCOT and is part of the Public Utility Commission. The governor owns this debacle, from beginning to end with failed promises, failed leadership. And so look, with the time that we all had to prepare for this winter freeze, my precinct was able to acquire generators. We were able to make a plan to stand up warming centers. We were able to get employees to staff those warming centers to make difficult decisions with their families. We were able to get food and water.

The county had a broader warming center plan, but it didn’t work because those facilities did not have generators. So people who would have otherwise gone to libraries came to the precinct to warming centers because we were prepared. Imagine if I had the resources or repairs, the county had had the resources that the governor has at his disposal, what more we could have done to protect our residents? And so I’m sorry, I’m not trying to pick a fight, but the reality of it is he’s the governor. He’s appointed his donors. People he knows incredibly well, if not personally, to these critical areas of responsibility and leadership within the PUC. He has indicated as the attorney general that this freeze would never ever happen again. So I’m sorry, it’s happened again. He owned it in 2011. He owns it today.

GettyImages 1231221887
A man looks for information on his cell phone as he rest at the George R. Brown Convention Center on February 17, 2021, in Houston, Texas.

And in the context of the warming centers, both in your precinct and the county broadly, are you seeing or anticipating any kind of COVID-19 surges in the aftermath of the freeze?

Yes. Look, why were we telling people to think about celebrating Thanksgiving, Christmas, and New Year’s differently? Because we didn’t want the co-mingling of families. And as a result, the potential for superspreaders to occur at the community level.

It’s the same thing now. Look, pipes have busted. And if that had happened to my sister who takes care of my 97-year-old mother, do think I would say, sorry, go get you a hotel room? No, I would say, come on over to our house and then risk the potential, the possibility of my mother being infected. So this is exactly what we are concerned is going to happen in Harris County as a result of this freeze. Families are taking care of families. People are coming together. People are calling for, for lack of better words, strangers who are plumbers to come fix their homes. And all of this is bad. It’s a bad mix for trying to control the pandemic.

I’ve been following your push for Harris County to leave ERCOT. So I wanted to ask you about what you think that should look like, and then what the processes in place are right now, like what’s possible right now and in the near future?

Well, what it should look like is what the state government should have been looking at since 2011. We should have been thinking about how to make all counties much more resilient. But Harris County, because of our size, our place in the state and national, if not global economy, should have received some degree of prioritization. And so, we should have had a more robust winterization program and strategy, but we should have been looking at what if another major freeze to that of 2011 could have happened again.

Because that one, although not as severe as this one could have caused near similar challenges for us, if it had happened under the same details that had happened in 2011. So what this simply looks like is a robust, candid, and thorough discussion about what should the strategy look like? I’m not about doing a knee-jerk reaction to say, we’re going to unplug from here. I want a strong, thoughtful, strategic conversation that provides for resiliency, that provides for our business community to have a grid that they can depend on, in particular our refineries. Many of our refineries had to undergo emergency shutdowns because it became too late for them to realize that it was not a one-day freeze, but rather nearly a week-long freeze. And this was something that they were not prepared for. So they had to undergo emergency shutdowns, which are dangerous for everyone involved. The refinery workers, the surrounding community, and our economy in particular.

I’m keeping an open mind, and I want to bring thoughtful people into the conversation to see what this ought to look like. But the fact remains at this, we have three different systems. We have the West Texas system, the East Texas system, and then we have our ERCOT. So the fact that Harris County can’t think about our self-interest or that of our immediate region would be a failure. We would be doing exactly what the state has done. We would have failed on behalf of our citizens, our business community.

And look, we have seen failed promises on behalf of Attorney General Abbott, now Gov. Abbott. I’m not going to sit around and stay quiet and assume the state is committed to fixing this. So I have decided to take action here locally, and we’ll see what the cost involved could be. But we got to have this conversation because we know the state’s not looking out for us.

Texas freeze family power outage
Surrounded by tarp and bedsheets, Evelyn Hernandez, 15, and her sister, Daeslyn Hernandez, 1, keep warm by the glow of a camping stove on their family’s front porch following an unprecedented winter storm in Houston, Texas on February 18, 2021. The Hernandez family lost power on Monday morning and are preparing for another deep freeze.

Are you bringing in experts from other states or federal regulators that work on this into this conversation as well, or is this all happening within the state?

No. In fact, I’m looking to get the federal government to be a part of the thought process. And so, I’m going to be reaching out to the Department of Energy, but I want to make sure that we’re bringing the smartest academics, the smartest industry people, and bringing in some of our local leadership as well, from some of our industries to have that conversation of what this could look like.

And look, I’m not looking for a quick fix because for something of this magnitude, there is no quick fix. But imagine what we could have gotten if, for the last 10 years, the state had made a commitment to fix it. I don’t know whether it’s going to take us 10 more years to fix it, but we lost 10 years in net action on this issue. So I’m looking to bring those people together and see where that leads us.

And what is another crisis compounding in Harris County in the aftermath of the freeze that people should be aware of?

Well, the reason that this is critical, is because there’s no doubt that there were businesses around the state, around the country that were looking to come to Harris County, Texas. Today, they may not because they cannot count on the fact that we were prone to power outages. They can deal with predictable rolling blackouts, like the East grid had. They had outages, but there’s were planned in 45-minute increments. And so, they have some of the similar infrastructure that we have, but they didn’t have the full power outages that we had. So the fact that the business community has to count on the light being on, on the lights working and electricity and power to fund their operations tells me that they may be rethinking the possibility of relocating to Harris County, Texas.

Secondly, I think there may be some businesses here in town saying we have flooded enough and we have had outages enough. Maybe we need to look to somewhere else in Texas or across the country to take our businesses. So to me, these are the potential long-term impacts of what has been happening here in Harris County. And look, Harris County has been under Republican control for decades, and we’re now bringing action to the table because I feel very strongly that had there not been a change in county government, we probably wouldn’t be having this conversation once again.

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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.

Read the original article on Business Insider

Reliance on fossil fuels will lead to more energy disasters like Texas

texas storm
A Waco, Texas, resident clears snow from his driveway alongside his dog on February 17, 2021 as severe winter weather conditions over the last few days has forced road closures and power outages over the state.

  • The crisis in Texas exposed vulnerabilities in America’s energy system.
  •  Fossil fuels dependence makes our energy systems more vulnerable.
  • Local clean energy, efficiency and microgrids can make our energy
    system more resilient.
  • Johanna Neumann is the senior director of Environment America’s Campaign for 100% Renewable Energy.
  • This is an opinion column. The thoughts expressed are those of the author.
  • Visit the Business section of Insider for more stories.

Americans across the nation have been watching in horror as frigid conditions have cut power to millions of Texas homes and thrown people into desperate circumstances. They’re now wondering: Could that happen here?  

The answer is “yes.” Texas faced a similar winter energy crisis in 2011. Just last year, California cut power to millions of people to prevent wildfires sparked by live power lines. Floods and hurricanes have disrupted power supplies for many Americans in recent memory as well. 

The hard truth is that our energy system is more fragile than it should be. With climate change bringing more extreme weather, that’s only likely to get worse. In order to prevent a catastrophe, we need to fix three key vulnerabilities in our current system.

Energy resilience 

First, we’re dependent on too few centralized power plants that produce most of our energy, and we rely on transmission lines to carry it long distances to our homes. Problems with just a few of those power plants or transmission lines can quickly affect millions. 

Second, extreme weather events are becoming more frequent. The infrastructure we built 30 or 50 years ago isn’t equipped to handle more common or severe deep freezes in Texas, increasingly abundant wildfires in the West, or today’s wetter, more powerful hurricanes.

Third, our energy system’s dependence on fossil fuel is adding more climate change-causing pollution to our air, which will cause even more extreme weather in our future. And as the events in Texas showed, fossil fuels can be unreliable when you need them most.

What happened in Texas should be a wake-up call, and it must spur elected officials, regulators and utility companies to build a better and more resilient system. 

Preparing for the next Texas-sized disaster

What might a more resilient energy system look like? And how do we make this a reality?

 First, US communities need to produce more of our power locally, and redesign the grid so that problems in one area are less likely to cause outages far, far away. Rooftop solar, energy storage technologies such as batteries, electric vehicles, and community “microgrids” all have a role to play. 

Rooftop solar panels can be a difference-maker in extreme weather because they produce energy very close to where we use it. Meanwhile, more batteries in our garages, basements, or in our electric vehicles, allow us to store energy for later. Local energy generation also allows us to actually use much more of the power we produce, since at least 67% of the power we generate from fossil fuel power plants is lost through escaped heat and we lose even more when that power has to travel long distances over inefficient lines. 

Another way to build energy resilience is to use less energy in the first place. Energy efficiency improvements can reduce stress on the grid at times of high demand, and better-insulated homes, schools and offices are more comfortable in any weather. 

State leaders could cut energy waste by requiring utilities to hit energy-saving targets by helping their customers use power more wisely. The utilities can use a medley of approaches, including behavioral programs that put smiley faces on the bills of the most efficient customers, rebate programs for efficient appliances such as electric heat-pumps, and giving customers access to free energy audits, weatherization services and low-cost financing.

Paradoxically, even as we produce and store more of our energy locally, we should reinforce our ability to share electricity across the country. Texas’ standalone grid left it unable to receive sufficient help from other parts of the country as its own power plants were going offline. Even the most self-sufficient areas will need to get help sometimes – and that’s what good neighbors do.

From wildfire-ravaged California to hurricane-hit Puerto Rico, utility planners are learning from their experiences. They aren’t blindly replacing the same flawed centralized energy systems. Instead, they are deciding to daisy-chain together local microgrids, heavily powered by solar, which can function independently and as a network. Under this set-up, if there’s a problem in one area of one local network, it stays contained, and those who have surplus power can come to the aid of areas that have high demand. 

Let’s be clear: improving the resilience of our energy system also requires moving away from fossil fuels. Renewable energy is necessary to reduce the disruptive impact of climate change, and studies have shown that it is possible to build an energy system that runs on clean energy and keeps the lights on. And, unlike fuels such as gas and coal that are inherently finite, renewable energy sources will always, well, renew.

As 29 million people huddle in the cold in Texas trying to keep warm, governors, state lawmakers, and regulators should pay close attention to what went wrong, and recognize that simply doubling down on the same failed approaches that put the state at risk will only serve to set us up for the next disaster. A cleaner, safer, more resilient energy system is possible. With smart planning and decisions, we can make it a reality.

Johanna Neumann is the senior director of Environment America’s Campaign for 100% Renewable Energy. Environment America is a national network of 29 state environmental groups with members and supporters in every state.

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