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Top American energy regulators issue recommendations for Texas grid overhaul in wake of winter storm

Morgan O'Hanlon, Dallas Morning News

Sep 23, 2021

Top American energy regulators issue recommendations for Texas grid overhaul in wake of winter storm

Federal and North American energy regulators issued recommendations Thursday for improving the Texas grid as they reviewed the causes of the state’s winter energy crisis.

State lawmakers and energy regulators have already worked to complete some, but not all, of the proposals, which means state officials may have even more work ahead to secure reliability. The leading causes of the winter outages identified by the report were freezing that physically prevented generation, problems with natural gas fuel supply and mismanagement of available resources.

Among the recommendations suggested in the Federal Energy Regulatory Commission and North American Electric Reliability Corporation were mandating reliability standards and imposing associated $1 million-per-day fines for inadequate generator winterization. Also suggested were providing funding for natural gas winterization and identifying critical natural gas infrastructure.

Legislation passed by the Texas Legislature this year mandates the creation of a committee to map critical natural gas infrastructure. However, energy policy experts have been critical of what they think are inadequate penalties for noncompliance with winterization standards.

Doug Lewin, a Texas-based energy policy expert, pointed out that while FERC does not have jurisdiction over the market structure of the Electric Reliability Council of Texas, Texas’ grid operator, it does have a say in its reliability standards. During the Thursday morning presentation of the report, Richard Glick, FERC’s chairman, guaranteed the weatherization standards outlined in the report would not be “ignored or watered down.”

“The subject matter we are considering today literally is a matter of life and death,” Glick said, explaining the gravity of the situation.

But while discussing the proposed recommendations, FERC commissioners said some of the biggest problems that led to February’s grid collapse weren’t addressed in their report.

Neither market restructure nor interconnection were included in the FERC/NERC list of recommendations.

“Depending on an energy-only market for resource adequacy is really an accident waiting to happen, and it happened in February,” said FERC Commissioner Mark Christie. “In an energy-only market … no one has an obligation to serve.”

However, Christie noted that capacity markets, which ensure reliability by paying suppliers to commit to certain levels of generation for delivery years into the future, have their own problems.

At the end of August, the Public Utility Commission of Texas, which oversees ERCOT, held a daylong workshop in which it reviewed comments from market participants (generators, transmission companies, and others) about such a market restructure. The PUC does have the power to change the structure of ERCOT toward a capacity market, but it hasn’t yet indicated how far it will head in that direction and what steps toward re-regulation it will take.

Commissioners also pointed out that the PUC has staved off interconnection between ERCOT and other grids in order to avoid federal oversight. They noted that the issue had become political.

PUC Commissioner Will McAdams, who, like other current commissioners, was appointed by Gov. Greg Abbott this year, said in a July meeting that he was “nibbling around the corners of something very dangerous,” referring to interconnection.

Federal aid
Texas regulators may receive some help for these projects from federal legislation introduced Thursday.

“I know the Texas Legislature’s undertaken the majority of the responsibility to try to harden the grid and weatherize our grid, but that’s an area that the federal government can assist with grid resiliency grants,” said U.S. Sen. John Cornyn in a press conference on Thursday.

The “Power On Act,” authored by Cornyn and U.S. House Reps. Eddie Bernice Johnson, Kevin Brady and Michael Burgess, all of Texas, said it will encourage weatherization not only in Texas, but across the country.

“The POWER ON Act would assist electricity providers and suppliers with federal funding to protect their facilities and infrastructure against future extreme weather events,” said a news release about the legislation by Cornyn’s office.

The bill would authorize $100 million in grants annually for fiscal years 2022 through 2026. Those grants would be formula-based and allocated through an application process.

The legislation would help prevent other threats, not just winter storms, Cornyn said.

“It’s not just weather, it’s cyberattacks,” he said. “Everybody now realizes, if they didn’t before, how dependent we are, not only on electricity, but how vulnerable our grids can be and what the consequences of being unprotected are.”

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