Smart ways to stop power blackouts — once and for all
As early as this Thursday, the Legislature will begin hearings on the rolling blackouts that crippled much of the state during last week’s record cold snap. Lawmakers can save themselves the trouble. We already know what happened — and we have known for a decade.
The only thing more biting than the bone-chilling cold is the knowledge that this is not a new problem. Texas’ electricity grid has struggled with reliability during times of peak demand since at least 2011, and yet the fundamental issues remain unchanged. There are plenty of things that could be done, but they require two things sorely lacking in Austin: political will and leadership.
Last week was, of course, unprecedented. Everything froze — power plants, transmission lines, natural gas wells, generators, wind turbines in West Texas, compressors and water pumps. And before the ice had even melted, the search for scapegoats began. Gov. Greg Abbott quickly pointed a finger at the Electric Reliability Council
of Texas, which operates the state’s power grid.
“The Electric Reliability Council of Texas has been anything but reliable,” he said.
ERCOT, though, is simply the grid manager. It doesn’t generate electricity, and it doesn’t distribute it. It’s little more than a traffic cop for electrons. Blaming it for the loss of the 34,000 megawatts that went offline last week is like blaming a crossing guard for a freeway shutdown.
After the 2011 outage, in which frigid temperatures forced rolling outages and left some 3 million Texans without power (sound familiar?), the Federal Energy Regulatory Commission outlined steps that Texas power producers could take to prevent a repeat such as installing heating elements around pipes and increasing power reserves ahead of storms. FERC also noted it had made many of the same recommendations in response to a similar outage in 1989.
But those recommendations were never mandated, and so they never happened. Years later, we almost had a repeat of the problem in 2014, not to mention similar scares of electricity shortages heading into the summers of 2011 and 2018.
“There has to be responsibility,” said Marcie Zlotnik, former CEO of Houston-based StarTex Power, who’s spent years working in the power industry in Texas. “It’s the political world that has the ability to mandate, and there should be bipartisan support for this life-threatening issue.”
A mandate, though, has to come from either the Legislature or the Public Utility Commission. We Texans love the free market, of course, but in this case, the market doesn’t create any incentives for reli
ability.
Texas has an electric-only market, meaning generators are paid only for the electricity they sell. Winterizing plants and setting aside reserve power are big expenses that are rarely needed, so most generators aren’t going to spend the money unless someone makes them.
Policymakers could approach the problem a number of ways. They could, for example, require generators to meet reliability standards, meaning that before they can be licensed to operate, they must commit to winterizing plants and keeping a certain amount of generating capacity in reserve for crises.
Several years ago, lawmakers considered requiring generators to develop a “capacity market” — essentially a fleet of reserve power plants that could be activated in emergencies. But no one could agree on how — or if — those costs should be passed on to consumers. Generators weren’t willing to pay for them, and retail electric providers didn’t want to have to add those costs to customers’ bills. A capacity market would act as an insurance policy against weeks like the one we just had. Whatever the price, it’s probably far less than the cost of repairing the damage from thousands of busted water pipes across the state.
The PUC and ERCOT could also expand their existing demand response program that gives big commercial customers incentives to curtail use when demand spikes by lowering their bills the rest of the time. Unfortunately, those incentives are too weak to attract widespread use. The PUC could up the ante and offer it to residential customers as well as businesses.
They also could strengthen market oversight to inject more transparency, so we can see if any generators are withholding power in times of crisis and increase the consequences for those who do.
They could allow cities to build generating plants by issuing tax-free construction bonds, then allow power companies to compete for contracts to run the plants. That would add capacity, lower capital costs and increase competition.
The Legislature could allow cities to buy power on behalf of its citizens, using the volume of larger customer bases to negotiate lower prices and set reliability requirements in exchange for long-term contracts. That would add greater predictability to the market and encourage the construction of more generating capacity.
And we could incorporate more distributed power into the system, allowing subdivisions, neighborhoods or individual homeowners to create microgenerating sites using solar and wind power. While there are technical challenges, it would expand sustainability in times of crisis, and any excess could be added back to the grid.
We don’t have to just pick one option. We could do several of these. Last week serves as a bitter reminder of what happens if we do nothing.
Left to its own devices, the market has demonstrated once again that it doesn’t care if we all freeze in the dark.
We need policies that reflect the changing demands of a changing world — of a growing population and increasingly severe weather. We already know the problem. We need leaders willing to enact reasonable measures to protect the people of Texas.