Ex-power grid regulator talks challenges
Will Mcadams was the first person appointed to the Public Utility Commission of Texas after its three commissioners resigned in the wake of the widespread power outages during the deadly February 2021 freeze.
He served on the PUCT from April 2021 until his December resignation, earning a reputation as the commission’s most outspoken member by the time he left. Mcadams worked on improvements to the power grid operated by the Electric Reliability Council of Texas and on initiatives for everyday Texans to sell power back to the grid, among other projects.
Mcadams, 42, is joining Mike Toomey & Associates, an Austin-based lobbying firm, and discussed the grid’s evolution since 2021’s Winter Storm Uri and what challenges remain. The conversation has been edited for clarity, conciseness and style.
Question: How is the Texas grid different now compared to the grid that failed in 2021?
Answer:
We’ve got a robust weatherization policy for our power plants that’s in place. That weatherization policy worked during the January winter storm that we just saw.
We also have new capabilities like virtual power plants that are small now, that are growing quickly. They’re providing backup power to the system from regionally diverse locations that are close to population centers. The program allows everyday consumers to begin to support system needs and align their interests with that of the grid.
We also contract for more backup power now than we did (before) to account for contingencies like the variability of a system based more on intermittent power sources like wind and solar, or a concentration of power plants tripping offline like we experienced during Winter Storm Uri.
Q:IF the grid is fixed, why are we still being asked to conserve electricity during the summer and winter, and why are we still worried about outages?
A:
Because the grid didn’t stand still. People (are) converting systems to electricbased systems, and demand growth keeps going up. It’ll keep increasing as the economy grows, as new businesses move to Texas, as people consume more energy.
The grid is stable, the steps we took after 2021 stabilized the system. But now it’s the policies that we’re developing for the future that need to attract new sources of energy and to make the system more resilient to the changing needs of Texas consumers.
Q: How should regulators try to balance reliability and affordability, especially in decisions where the two might be at odds?
A:
The primary responsibility at the Public Utility Commission of Texas is to act as a substitute for competition in areas of a market where very little competition exists. ERCOT tells us what they believe they need to account for and address contingencies. We analyze what they actually need versus what this could cost everyday Texans.
ERCOT is in the unenviable situation of trying to just solve for reliability, which may be a moving target as that demand continues to grow. But the commission must force them to do it in the most efficient way possible.
Q: There’s been a lot of talk at the PUCT and ERCOT about the need for more dispatchable generation with rapid demand growth. How do regulators balance the reliance on fossil fuel power plants to keep the lights on and the need to decarbonize?
A:
The PUC does not have the authority nor the capability to command capital to be deployed. That’s not an option available to the commission to just say we need all new natural gas plants. The legislature and the voters did approve the (Texas) Energy Fund, which can prioritize a state-backed funding source for new dispatchable capabilities. But I think the key term there is dispatchable capabilities; not necessarily all natural gas facilities or all nuclear facilities or all coal facilities or you name it.
But the market is designed to signal what is the appropriate investment of capital, and that could be toward zerocarbon resources. But if you have purely intermittent resources with no dispatchable capability, the market needs to understand that you do run the risk of price volatility. Even purely renewable resources are well-incentivized to construct their business plans with having some type of dispatchable capability in the plan, meaning pairing with batteries to some scale so that they can dispatch power at times of acute system need.
Q: Would you consider batteries dispatchable? A:
Absolutely. They’ve already done yeoman’s work to assist the grid during times of our greatest need this year, and I think they will continue to do so. The challenge for the system is to find ways to appropriately signal their dispatch of power and to provide policy signals that incentivize them to build longer-duration batteries.
Q: How should regulators and legislators encourage the buildout of transmission, needed to bring cheap renewable energy to demand centers and avoid grid emergencies, without unduly burdening consumers with that cost?
A:
Those backbone systems are what the rest of the market will build out upon. I believe that’s what the commission needs to focus on. Because that’s going to cause a lot of anxiety, both within consumer groups focused on costs, but also that necessitates eminent domain, taking of private land for the public interest. Those are not easy projects to devise and implement. You have to approve them very judiciously.
The commission needs to focus on those because that will sap a lot of political capital on the part of the legislature and the commission itself. Whereas 10,000 smaller lines criss-crossing Texas all over the place will just elicit public resistance to those projects, because it will affect a more broad population of Texans in a more negative way than a positive way.
Q: What you’re saying is you’d rather see a smaller number of large-scale projects that might take more time to approve, but that’s better than 10,000 smaller lines?
A: That’s correct.
Q: A recent Dallas Morning News story about a plan to connect the Texas grid to Pattern Energy’s Southern Spirit Transmission line, which would connect to other states. Should Texas pursue more connection to other power grids, and if so, how?
A: Texas is pursuing more connections to other power grids. The legislature has authorized the commission to investigate those on a case-bycase basis. The Southern Spirit project has been approved by the commission. That will increase the state’s interconnectivity with the rest of the national system by 300% if that project is fully developed.
But do I think that we just need to create 100% transfer capability between ERCOT and the rest of the national grid? No, I do not. Ultimately when a large weather event like a Winter Storm Uri or a Heather or an Elliott approaches Texas, it’s not going to just concentrate on Texas. It’s going to be a regional impact.
When that happens, power grids across the country call native power generated in their region back, and they sequester that power to serve their own needs. In those instances, if you’re putting all your eggs in the basket of transfer capability, you’re going to have a reliability event, and consumers are not going to enjoy that situation.