PUC accused of doing too little
Regulators, others describe longstanding failures
lawmakers accused the state’s top utility regulator Thursday of not doing enough to head off the winter power outages that killed dozens of Texans and left millions in the dark last week.
“I would contend you are choosing not to leverage the authority we have given you,” said Sen. Brandon Creighton, R-conroe. “That is a serious problem.”
Speaking on the first day of public hearings on the crisis, Deann Walker, chair of the Public Utility Commission, insisted that her agency has little effective power over the group that manages the Texas electricity grid and cannot make electric companies invest in preparing for the type of frigid conditions that crippled the state for several days.
“I know that I don’t have total and complete oversight,” Walker said, countering earlier remarks from the head of the Electric Reliability Council of Texas, known as ERCOT.
The exchange came as state lawmakers began a sweeping investigation into the outages that cut electricity and water to millions of Texans and have left some homeowners with crippling utility bills. Regulators and energy executives began to paint a picture Thursday of longstanding failures, including a lack of weatherproofed facilities, limited communicatexas
tion among agencies and with the public, few regulatory tools and a market that incentivizes profits when supply is short.
Republican senators grew especially frustrated with Walker as she provided only limited responses and attempted to deflect blame away from the commission and onto ERCOT.
Sen. Donna Campbell, R-new Braunfels, said Walker’s job is to oversee the competitive electric markets and ERCOT’S budget and that the utility commission is supposed to enforce statutes and rules for the power industry.
“You don’t seem to demonstrate the knowledge it takes to do that, and that’s concerning,” Campbell said. “I don’t know how much more ‘I don’t know’ I can take anymore.”
At one point, Campbell said Walker had not responded quickly or forcefully enough to warn the public of what was approaching. Walker said she was warning other government officials that power could be disrupted as early as Wednesday and Thursday before the storm. But the public notices didn’t start until millions were already out of power.
“Why wouldn’t you let Texans know?” Campbell asked, without a response from Walker.
In the House, top energy executives expressed deep regret for the outages and urged lawmakers to improve the reliability of natural gas, which powers the bulk of the grid and was in short supply amid freezing temperatures. They vowed to make improvements at their own companies but did not lay out specific reforms and did not commit to weatherproofing their power plants for future cold fronts — a measure that is mandated in other states and has been rejected in the past by the Republican-led Legislature.
Curtis Morgan, president and CEO of Vistra Energy, one of the state’s largest power providers, said gas shortages were the biggest drain on his generating units.
“We had power plants ready to produce power that either couldn’t produce any or couldn’t run at their peak,” Morgan said, pleading that the state help coordinate gas supplies to power plants in the future.
Morgan suggested that the state had been slow to warn the public about the potential for long-term blackouts. He said specifically that his staff had contacted ERCOT, lawmakers and the governor’s office four days ahead of the storm to warn them that demand for power could end up outstripping supply. ERCOT did not seem to address the issue with urgency or push out the appropriate communications, according to Morgan.
“I was concerned that we were not sending that signal from the state level,” Morgan said. “We were doing that with customers; I just did not see that (from the state) at a time I thought was warranted.”
Walker told lawmakers that the utilities commission had also warned Gov. Greg Abbott’s office and the office of Lt. Gov. Dan Patrick that the storm could cause blackouts.
Bill Magness, president and CEO of ERCOT, which has come under intense fire from Abbott and other Republicans, defended his entity’s actions while testifying before the Senate. He said ERCOT ultimately made the right call in having periodic outages around the state to prevent a catastrophic blackout that would have damaged power plants and transmission lines, leaving Texans in the dark far longer than they experienced.
When pressed, Magness said there was nothing he would have done differently but that he understood the consequences of the power outages.
“Texas suffered last week in ways they shouldn’t have to suffer,” he said.
Creighton was unsatisfied, at one point criticizing Magness for refusing to give an opinion on whether the state’s deregulated structure needs reform.
“This is not a chamber of commerce update,” Creighton said. “This is the largest train wreck in the history of deregulated electricity.”
Creighton said what the public wants from ERCOT is direct, clear answers on how to fix what went wrong in Texas.
He brought up the death of Carrol Anderson, a 75-year-old Vietnam veteran from Crosby whose oxygen machine lost power during the outages. Anderson was found dead in his pickup; he had been looking for small portable tanks.
Vistra’s Morgan said his faith in the deregulated market had been “shaken” by the crisis, and he warned that the state’s decision to allow high wholesale electricity prices during scarcity periods is dangerous during storms like last week’s.
“With a $9,000 (per megawatthour) price cap, the market has to reach that in order to get enough assets on the system to keep reliability,” he said. “It doesn’t have to be that way. These are all choices we make.”
The reserve margins also vary in Texas, which means generators get paid only for the electricity they sell, unlike in other states, where they also get paid for maintaining their capacity to serve customers.
Morgan said capacity markets have 30 percent reserve margins, compared with a 15-percent margin in Texas.
“We can probably still use the same market design, but we might need to think hard and long about whether we like the $9,000 (per megawatt-hour) cap and whether we like the volatility that comes with it,” he said.