Why devastating Texas power outages are unlikely in Ontario

Amassive power outage in Texas during winter storm Uri produced state-wide shock and outrage. The electricity operator shut down more than a third of the grid, leaving up to four million people without power, with 30 deaths and economic damage estimated at US$18 billion. Bitter cold hiked demand for electricity and slashed the output of gas, wind and other generators that failed in the deep freeze. As a result, rolling blackouts were implemented to balance supply and demand and prevent a collapse of the entire system.

Responsibility for managing the generation and transmission of electricity to two-thirds of the United States and Canada falls to nine market and system operators, including the Electric Reliability Council of Texas (ERCOT) and Ontario’s Independent Electricity System Operator (IESO), a provincial agency whose board I chair. Critics, including defensive politicians, have blamed ERCOT and the industry for a lack of preparedness and issued dire warnings to other grid operators in North America to expect more episodes of extreme weather.

Keeping the lights on is a business where you should never say never. Yet there are several important differences in Ontario’s electricity system that prevent a similar occurrence here.

Ontario is part of a robust regional market that connects to Quebec, Manitoba, New York, Michigan, Minnesota and jurisdictions beyond. Trading occurs on an hourly basis, largely for economic reasons, but imports also address electricity shortfalls. It’s telling that in Texas, the city of El Paso did not suffer prolonged outages; it had upgraded its generators and is part of the Western Interconnection, a grid that extends to western Canada, unlike the separate ERCOT system.

Though Ontario currently has surplus energy, that has not always been the case. The province can import 20 per cent of what it needs on a peak day. Compare that to Texas, which has peak demand three times Ontario’s yet can import less than two per cent of its peak.

Last year, 45 per cent of energy used in the Lone Star State came from natural gas, 23 per cent from wind and 18 per cent from coal. Because of Ontario’s different supply mix its fuel security is very high. Nuclear and hydroelectric base-load generation represent about 85 per cent of our electricity needs (60 and 25 per cent, respectively). Wind and gas account for another eight and seven per cent, respectively, with biofuel and solar combined contributing around one per cent.

Output from wind turbines is obviously weather-dependent. Gas responds to changes in demand, providing critical power when need is high and sitting idle when it is not. Backing up wind with gas capacity minimizes greenhouse gas emissions and keeps Ontario’s supply 94-per-cent non-carbon emitting, among the highest in the world.

Gas infrastructure is constructed to withstand Canada’s frigid winters and has a history of good system performance during extreme weather, including the polar vortexes in 2014 and 2015. As well, the delivery system is built to transport fuel to generating stations during intense cold. Unlike most of Texas’ gas generating stations, our units are housed in buildings to insulate them. Wind generators are also able to operate in Canada’s winters. In real time, the IESO approves transmission and generator-planned outages, depending on expected system conditions. That is another way we prepare for freezing temperatures — which are not black swan events here, as they are in Texas.

Though Ontario and Texas both operate wholesale electricity markets, their approaches are fundamentally different. Texas relies on investors to respond to short-term market signals, including high prices when supplies are extremely tight. ERCOT saw prices rise to over US$9,000 per megawatt (MW) hour, while Ontario’s hourly price is capped at $2,000 (Canadian) per MW. In addition, our pricing structure smooths price spikes in consumers’ electricity bills.

The IESO works with stakeholders, including generators, transmitters and distributors, to estimate requirements and create competitive mechanisms to acquire resources. We currently forecast a need for additional power in the second half of the decade. In securing it, we are determined to avoid the previous government’s crippling and uneconomic long-term procurement contracts, which continue to burden ratepayers.

What can we learn from Texas? Most importantly, that we cannot be complacent. Texan grid-operators implemented changes after an extreme winter 10 years ago and may have thought they had it covered. They clearly didn’t.

The IESO and our partners in Ontario’s electricity system are focused on two overarching goals: reliability and affordability. Our policies and practices are designed to contain costs while ensuring that Ontarians can keep the lights on and indoor temperatures comfortable during a scorching heatwave or prolonged deep freeze. Since variable temperature is part of the province’s charm (records show a 100-degree difference between the record high and low!) we are determined to avoid a Texas-like debacle.