Texas Power Outages

Who owns Texas grid?
The power grid in Texas is called the Electric Reliability Council of Texas (“ERCOT”) and it is run by an agency with the same name. Technically, nobody “owns” ERCOT, as it is a non-profit corporation under Federal law. It is controlled by a 16-member Board of Directors that come from different segments of the energy industry.

ERCOT is overseen by the Public Utility Commission of Texas (“PUCT”), as well as the Texas Legislature. Importantly, because ERCOT exists and produces power solely within Texas, it is not subject to Federal oversight by the Federal Energy Regulation Committee. ERCOT is the only power grid in the United States that is not subject to Federal regulation.

Why does Texas have its own power grid?
While there are many theories about why Texas maintains its own power grid, the decision to operate in this manner is principally one of independence. Texas is the largest energy producer in the United States (and also one of the largest consumers of energy). By maintaining its power grid 100% within Texas borders, ERCOT is able to avoid Federal rules and regulation. Historically, this state of affairs has been attractive to state politicians with a strong preference for state independence, such as Lyndon Johnson, George Bush, Sam Rayburn, and Rick Perry.

Where does Texas power come from?
ERCOT supplies 90% of the power load consumed by Texans. Most of that power, however, is not sold directly to Texans by ERCOT. According to the Texas State Comptroller’s office, 75% of the power generated by ERCOT is sold on the wholesale market to investor-owned utilities companies (also known as Retail Electricity Providers “REPs”). These companies own the infrastructure you see everyday, including power lines, meters, and the like. Customers can choose from among the state’s 300 REPs based on factors such as each company’s reliance on renewable energy sources. The other 25% of Texans who are served by ERCOT receive power from utilities owned by the state’s municipalities (for example, Austin Energy).

As for the sources of energy supplied to Texans, most electricity in the state (47%) comes from plants fired by natural gas. Coal and wind-generated electricity make up 20% each. The remainder comes from nuclear energy, solar, and a handful of lesser-known sources. The attached chart, published by ERCOT, illustrates the breakdown.

texas electricity sources

What causes power grid failure?
Simply put, power grids fail when two conditions are present: (1) the grid is run at or near maximum capacity; and (2) some event happens that causes a plant within the grid to trip off line (examples would be a powerful lightning strike or a fire within a generator). Once one plant disconnects from the grid, other power plants ramp up in an effort to meet the demand from the inoperable plant. If all of the plants are already near capacity, however (such as during a major winter storm event), the operational plants cannot handle the additional load. Consequently, those plants have to disconnect from the grid to avoid costly failure events. Unfortunately, that can leave millions of customers without power.

Massive power outages can also result if a large transmission line fails (as opposed to the whole plant failing). Once a major line fails, its load shifts to nearby lines. Those lines can then also become overloaded and fail, especially if the entire system is already at or near capacity.

Who is ERCOT?
As noted above, ERCOT is the name of the grid that supplies power to 90% of Texans, as well as the name of the non-profit corporation that runs it. ERCOT was founded in 1970 and acts as a broker between wholesale electricity buyers and sellers.

ERCOT’s network consists of nearly 50,000 miles of high-voltage transmission lines, all within the State of Texas. The grid has capacity to generate over 82,000 megawatts of electricity and supplies power to over 26 million Texans.

ERCOT is headquartered in Taylor, Texas. It has backup operations in Bastrop, Texas.

Who is the Texas Public Utility Commission?
The Public Utility Commission of Texas (“PUCT”) is the state agency charged with overseeing ERCOT and other power producers within the state. The agency is charged with making sure Texans receive adequate and reliable electricity. Although ERCOT creates its own market rules and operational protocols, those must be filed with PUCT and PUCT is responsible for ensuring compliance.

After 2011 storms, what were the warnings and recommendations given to ERCOT about the Texas power system?
According to some sources, ERCOT has long known about potential problems with the grid. While most people remember 2011 winter storms that caused major power outages across the state, many have forgotten that a similar event happened back in 1989. Following that event, PUCT published a report that warned of failure conditions that apparently exist to this day.

Indeed, according to a 2011 article published by the Statesman Journal, the 1990 PUCT report noted that “The [1989] winter freeze greatly strained the ability of the Texas electric utilities to provide reliable power to their customers. Record and near-record low temperatures were felt throughout the state resulting in a significantly increased demand for electrical power. At the same time that demand was increasing, weather-related equipment malfunctions were causing generating units to trip off the line.” The PUCT report further noted that the result was a “near loss of the entire ERCOT electric grid.”

Importantly, that report also contained recommendations for avoiding the problem in the future, namely, “All utilities should ensure that they incorporate the lessons learned during December of 1989 into the design of new facilities” and “ensure that procedures are implemented to correct defective freeze protection equipment prior to the onset of cold weather.’”

Thus, ERCOT has known of warnings and recommendations concerning heavy winter power loads for over 30 years.

Was there truly a failure to ensure adequate generating capacity and why?
It appears so. As noted above, PUCT gave ERCOT warnings and recommendations regarding winterization of power-generating equipment as far back as 1990. According to the New York Times, Federal authorities also warned Texas that its power infrastructure lacked sufficient winterization protections following the 2011 snowstorm and statewide rolling blackouts.

You may recall, however, that ERCOT is not subject to Federal authority. Thus, any warnings by the Feds could be ignored without consequence. Interestingly, some industry experts theorize that if Texas had stronger connections to interstate power-sharing networks, it could have relied on its neighbors to avoid grid failures in the recent storms. Power-sharing across state lines,  however, would mean that Texas would have to succumb to Federal oversight. This may be a key reason why the state’s power grid remains independent and remains ill-equipped to handle extreme weather events.

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