February 16, 2011
State regulators tried to assure Texas senators Tuesday that they have the necessary authority to fix the problems that led to the Feb. 2 rolling blackouts, but some lawmakers remained skeptical.
Sen. Kirk Watson, D-Austin, said he wouldn’t want to rush to judgment after one hearing, but he said rolling blackouts are not acceptable.
“We had failures that in some instances were avoidable,” Watson said at a state Senate hearing. “It is unacceptable to have a system that is unprepared.”
By all accounts, the Texas electricity industry was not fully prepared for the severity of the Feb. 2 winter storm that crippled 82 of the state’s 550 generating units.
The daylong hearing in front of two Senate committees was the first time that all the players in the outages — regulators, power company executives, utility representatives and natural gas operators — were in the same room to tell the public what happened and why.
The picture that emerged was that the 82 plants —including some of the newest units run by the biggest power companies — could not handle the cold weather. The situation was worsened by an ineffective communications system among the Electric Reliability Council of Texas, regulators and utilities, leaving thousands of Texans steaming as rolling blackouts hit their neighborhoods with little or no notice.
Trip Doggett, CEO of ERCOT, testified that the operators of the state’s electric grid “averted what could have been a major disaster” by following their emergency plans, including ordering rolling outages.
He blamed inadequate winterization of equipment and poor communication between officials and the public.
Barry Smitherman, chairman of the Public Utility Commission, said his agency has a rule requiring power generators to submit weatherization plans but said it is reviewing the need to update the plans.
Sen. Glenn Hegar, R-Katy, asked Smitherman how the public and lawmakers would know that weatherization measures would improve, given that the plans are confidential because of competitive and national security reasons.
“I want confidence that you are making every effort,” he said. “Who’s going to be sure everything is being done?”
As rising demand outstripped falling power availability, the wholesale price of electricity skyrocketed from about $50 a megawatt-hour to $3,000 on the open market.
Smitherman said he saw no signs of market manipulation of the situation. But he stressed that the PUC has ordered a full investigation by the state’s independent energy market monitor to confirm that initial assessment.
Sen. Leticia Van de Putte, D-San Antonio, said she wanted data to show that market manipulation didn’t occur: “We need to be sure someone wasn’t withholding power.”
As for communication, the rolling blackouts that started before 6 a.m. Feb. 2 caught officials off-guard.
Smitherman first got word of the situation in a 3:21 a.m. e-mail he received on his phone that he did not read at the time. Doggett said he got the first phone call at 6 a.m., while he was in the shower.
In the hour before Doggett was alerted, ERCOT operators had deployed reserve generation, issued an energy watch and begun asking utilities to cut their power demand. But the grid quickly lost more than 8,000 megawatts of generation as demand climbed.
Doggett said ERCOT already has automated its alert system to speed the flow of information. An alert from an ERCOT shift supervisor now will automatically go to the Department of Public Safety’s State Operations Center, which will contact police, firefighters and other first responders.
The alert also will go to local electric transmission operators as well as to Doggett and Smitherman.
With prodding from Watson, ERCOT released a partial list of the plants that went down. It included 22 units run by Calpine and 11 by Luminant — two of the state’s biggest power companies.
Sen. Mike Jackson, R-La Porte, asked why the cold weather affected some of Luminant’s new generators.
“I would be ready to file a lawsuit against whoever engineered a plant that goes down the first time it’s 20 degrees,” Jackson said.
Luminant CEO David Campbell said operators learn about a plant’s special needs by going through a storm.
“We thought we had taken the steps to make it through the night.” Campbell said. “We’ll learn from this.”
Several Central Texas plants went down, at least briefly, or did not start because of the weather or unrelated mechanical reasons. The list included units at Austin Energy’s Decker Creek Power Station and units run by the Lower Colorado River Authority.
NRG Energy, which provides power to its retail outlets, Reliant Energy and Green Mountain Energy Co., had few problems with its plants. “We just spent a lot of time to be sure they are ready for winter,” said John Ragan, the company’s regional president.
Sen. Troy Fraser, R-Horseshoe Bay, noted that NRG also started up more generators than it thought it would need, in case of an emergency.
“We potentially could have lost money,” Ragan said. “It was worth it so we could cover our obligations.”
“You basically gambled some of the company’s money to be sure people didn’t run out of power,” Fraser said. “We salute you.”
Doggett said there were isolated examples of utilities not having enough natural gas to generate electricity, but he said that was a minor factor.
He said the bigger problem was that in some instances, electricity generators cut off power to gas production operations because they didn’t know where the operations were located. Doggett said ERCOT and the utilities should locate production facilities so they can be exempt from future blackouts.
The hearing — a joint effort by Fraser’s Natural Resource Committee and the Business and Commerce Committee — ended without agreement on whether lawmakers should do anything to ensure that fixes to the system are made.
With both the PUC and ERCOT under Sunset review, which requires the Legislature to authorize their continued existence, lawmakers will have ample opportunity to address the issues.