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Posts Tagged ‘electric reliability council of texas’

This is a reprint of a post by Jake Dyer from the RechargeTexas.com blog

The rolling blackouts that swept through Texas last February have been blamed on the unexpected failure of generation plants. The temperature dropped during a cold snap, the plants froze up, and then — before anybody really knew what hit them — the lights went out.

And now we’re in the middle of another weather event – this time a heat wave – and just as before a large number of generation plants have failed. The loss of capacity during the February event sent wholesale electricity prices soaring to $3,000 per megawatt/hour, or more than 50 times higher than typical. The same occurred this week as well.

Clearly somebody is making money off the bad weather.  One expert, Oregon-based economist Robert McCullough, raised the possibility that there was  “artificially-created scarcity” last February. That’s regulatory lingo for market manipulation. Although not leveling any specific accusations, McCullough concluded that the cold weather alone could not explain the failure of the state’s power grid to operate reliably.

However, another expert,  the state’s independent monitor of the wholesale energy market, concluded the punishingly high price spikes in February were understandable, given the circumstances. He found no evidence of hanky-panky by electric companies.  Likewise, a federal report largely blamed the inclement weather, although it said plant operators could have done a better job.

This week’s event has not drawn such scrutiny. What’s clear, however, is that more than 20 generating plants unexpectedly failed during the middle of a heat wave. In February, 80 plants went down during a cold snap. Although the ERCOT grid operator hasn’t again ordered blackouts, the organization has taken other emergency steps this week. And if the situation gets worse, some businesses could have their power cut or there could even be more forced outages.

The fact that the lights went out in February prompted a statewide demand for answers.  If ERCOT is able to stave off rolling blackouts during this heat wave, it is unlikely that there will be a widespread outcry for a market manipulation investigation but Texans should be aware, that in a deregulated, market driven energy market, the potential for market manipulation is always there.

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ERCOT announced a yellow alert at 3:15 today when they smashed through the state electric use record by over 2,000 MW.  With only 1800 MW of reserve available around 4:30, we are periously close to triggering rolling blackouts. 

With no end in sight for this excessive heat wave, it is imperative that Texans severely curtail their electric use.

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The Public Utility Commission (PUC) sunset bill (H.B. 2134) would give the PUC the authority to approve or change the annual budget of the Electric Reliability Council of Texas (ERCOT),  stipulates that no member of the PUC could work for ERCOT for at least two years after he or she had stepped down, and fines would quadruple (from a maximum of $25,000 per day to $100,000 per day) for any company found to have manipulated the electric market for its own gain under the Sunset bill that will be heard in House State Affairs Committee on Monday, March 14th.

Rep. Burt Solomons (R-Carrollton)

State Rep. Burt SolomonsHouse Bill 2134 largely tracks the recommendations approved in January by the Sunset Advisory Commission and includes language that the Carrollton Republican has been advocating for at least two years to cut the number of ERCOT board members who have ties the electric industry.

State Affairs is scheduled to take up the Sunset bill during its hearing that convenes 30 minutes after the House adjourns Monday. The meeting will be held in Room 140 of the Reagan Building northwest of the Capitol.

To see the full text of H.B. 2134, click here.

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John Carona, republican senator from Dallas and chair of the Senate Business and Commerce committee (one of the two Senate committees that jointly heard testimony on the rolling blackouts earlier this week) told the Dallas Morning news that he doesn’t think the Legislature needs to inact any new laws to prevent another day of rolling outages.

On the other hand, the chair of the Senate Natural Resources committee, Troy Fraser, republican senator from Horseshoe Bay, is making plans for legislation.

Check out the blog by Dallas Morning News reporter, Elizabeth Souder by clicking here.

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Oak Grove coal fired power plant was one of the plants that caused rolling blackouts in Texas on February 2, 2011ERCOT just released an updated list of all of the power plants that were not operating Feb 2, contributing to the power shortages that caused the rolling blackouts.  That document is here, but we present the data below for your convenience.

Notice a trend? Natural gas and Lignite coal were the main power sources that couldn’t cope.

Meanwhile, the wind really saved our bacon. And since wind companies’ standard operating procedure is to bid into the market at $0 for their extra capacity (no fuel charge, so it doesn’t cost them anything to turn on the extra turbines if the wind is blowin’: unlike a gas plant that has to, you know, pay for their gas. Assuming they can get gas, that is.) wind did not contribute to the high prices of energy or manipulate the market.

For an even more in depth rundown, please see our testimony our Deputy Director, David Power, gave in front of a special joint session of the Senate Business and Industry and the Senate Natural Resources Committees.

PS- Sorry if the formatting on this list is hard to read- we tried as best we could to get all the data on here. (more…)

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Senator Troy Fraser, the chair of Senate Natural Resources Committee, warned the major electric generation companies this afternoon that unless they move swiftly to shore up their power plants against extreme weather, they can expect more regulations from state government.

Fraser said he would prefer free market solutions, but is prepared to impose new regulations, letting everyone in the room know that they were going to be leaning on the Electric Reliability Council of Texas (ERCOT), the Public Utility Commission (PUC) and the Railroad Commission, but clearly directing his remarks at the top executives of Luminant, NRG Texas and Direct Energy, who were there to testify as a panel during the hearing.

The following is Public Citizen’s testimony at today’s Senate (Business and Commerce and Natural Resources) hearing on the rolling blackouts. Public Citizen’s was the only public testimony given today, following the sea of invited testimony from agencies, retail electric providers, and electric generation companies.  If you want to watch the archived video of the hearing, click here. (more…)

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ERCOT has moved their regularly scheduled board meeting up from Tuesday to Monday, February 14th to allow for a special 2 hour time to take up a review of February 2, 2011 Energy Emergency Alert (EEA) Event. (more…)

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In a Public Utility Commission (PUC) hearing on Thursday, to address what happened to cause the rolling blackouts of Feb. 2, members of the commission accused the Electric Reliability Council of Texas (ERCOT) of ignoring dire energy forecasts, failing to communicate with other important decision makers, and understating the risk of rolling blackouts.

Texas PUC Commissioner Donna Nelson

Texas PUC Commissioner Donna Nelson

As part of a routine review of rules governing its relationship with ERCOT, PUC Member Donna Nelson requested to add language that says the commission at its own discretion and without ERCOT board approval may terminate the employment of the chief executive officer.

Board members indicated that what happened on February 2nd and the hours leading up to the decision to institute rolling blackouts throughout the state pointed to part of a pattern of ERCOT’s failure to communicate with the public and the PUC, the oversight agency for ERCOT.

Click here to view the archived video of yesterday’s PUC open meeting.

State officials seem determined to hold somebody accountable. The state Senate will also hold hearings in to the blackouts beginning next week.

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The Texas Railroad Commission added an emergency item to their agenda today so it could hear from the Texas Energy Reliability Council about natural gas service’s impact on the rolling blackouts that swept the state.  They told the Commission that Texas was never in danger of a natural gas shortage during last week’s statewide deep freeze and no electric generating company with an “uninterruptible” contract for gas had to do without.

Of course, one could also read that as gas supplies could have been interupted at generating facilities that chose to purchase their fuel under contracts offered at a lower price, but with the risk that delivery cannot be absolutely guaranteed in all circumstances.  That is, in fact what happened, so if those plants had been able to get delivery of natural gas, it is possible that the state might have been in danger of a natural gas shortage.

During the prolonged winter storm, gas production in the Barnett Shale was shut down as well as some others around the state. But that short-term gap in supply was filled by tapping reserves warehoused in underground salt domes, at least for those power plants that had uninteruptable contracts.

But be forwarned,  the Electric Reliability Council of Texas (ERCOT) warns that more blackouts might be needed as state braces for Arctic Blast Round 2 and  issued another plea for conservation, especially during the peak-use hours of 6 a.m. to 9 a.m. and 4 p.m. to 8 p.m., saying the grid is still down some 2,700 megawatts of capacity and that rolling blackouts might return with the next round of sub-freezing weather.

ERCOT said tomorrow’s peak demand is projected to exceed 54,000 megawatts between 8 p.m. and 9 p.m. , and then top 58,000 megawatts between 7 and 8 Thursday morning. That would surpass the current winter peak demand record of 56,334 megawatts, which occurred Feb. 2.

Today’s hearing at the Railroad Commission was the first public review of the circumstances surrounding the rolling blackouts. It focused solely on natural gas supplies and production.

A more comprehensive hearing will occur Feb. 15 when the Senate Business and Commerce Committee meets jointly with the Natural Resources Committee to review issues surrounding the outages.

If you want to watch today’s hearing, you can catch it online at www.texasadmin.com.

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By promoting cleaner energy, cleaner government, and cleaner air for all Texans, we hope to provide for a healthy place to live and prosper. We are Public Citizen Texas

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Brian Lloyd, the executive director of the Public Utility Commission has directed the electric reliability monitor (the Electric Reliability Council of Texas) and the electric market monitor (Potomic Economics)  to investigate all of the events surrounding last week’s rolling blackouts and electric generation failures.  This includes “all preparations” made by ERCOT and all actions taken once the emergency was in full force.  He has also directed them to pay particular attention to whether rules governing market manipulation and potential price gouging were violated.

Below is Lloyd’s letter.

PUC rolling blackout investigation letter

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Wednesday, State Rep. Lon Burnam and his staff got little in the way of a satisfactory answer from ERCOT as to why as many as 50 power plants were off line, and predicted that the issue will remain a hot topic especially in light of the fact that ERCOT is up for a sunset review this session.  He also raised the question about who stands to benefit from this event and he is not the only one.

Public Citizen and Sierra Club called on Governor Perry and the Commissioners at the Public Utility Commission and the Electric Reliability Council of Texas, (ERCOT) to investigate the cause of the outages and the response by the state’s regulated and unregulated electrical utilities and who profited.

In the early hours on Wednesday, prices on the wholesale electricity market shot up 66 times from 3:00 AM through 11:00 AM and the electricity companies made millions overnight as electricity prices rose to the cap of $3,000.

John Fainter, who heads the Association of Electric Companies of Texas, told the Texas Energy Report that such price spikes cannot be immediately passed on to ordinary customers in the competitive market who have fixed-rate contracts, but you can bet that eventually ratepayers will pick up that cost and some generators will rake in a windfall.

Fainter also said that allegations that some suppliers might have engaged in market manipulation to drive up the price is extremely hard to prove because you have to show that power that was otherwise available was deliberately withheld until it got to a certain price.  (watch the documentary Enron: The Smartest Guys in the Room to see how this works.)

We don’t disagree with Fainter’s assessment, but still believe that the wide price spike should be investigated.

Thursday, the need for continuing the series of rolling blackouts was lifted by ERCOT mid-morning. But the state’s generating capacity was still down by some 3,000 megawatts that afternoon. ERCOT said that voluntary efforts on the part of Texas residential and commercial users to curb consumption helped alleviate the crisis while insisting the state’s electric grid was never in danger of suffering a crippling catastrophic failure.

So kudos to all you Texas consumers who suffered in the cold and dark during the blackouts and then, girded by soup, hot drinks and blankets, continued to help out the utilities and the regulators by turning down your thermostats, turning off your TVs and computers, and paying your electric bills.  Must stop writing now, since in doing my part,  my thermostat is set to 58 degrees and my fingers are numb.

Click here to read an article by Forrest Wilder for the Texas Observer on utility profiteering during the rolling blackouts.

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By promoting cleaner energy, cleaner government, and cleaner air for all Texans, we hope to provide for a healthy place to live and prosper. We are Public Citizen Texas

Real Time Spot Pricing Report

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Yesterday, Lt. Gov. David Dewhurst said cold weather had knocked out about 50 of the 550 power plants in Texas, totaling 8,000 megawatts.  We can’t tell you which plants were down because that information is considered “confidential under market rules.”  According to ERCOT’s website, its market rules “are developed by participants from all aspects of the electricity industry” and reviewed by the Public Utility Commission. This coupled with an increase in demand caused the Electric Reliability Council of Texas to launch the longest period of planned outages in state history, affecting 1.4 million consumers before being halted mid-afternoon.

What we do know is wind energy played a major role in keeping the blackouts from becoming more severe. Between 5 and 7 am yesterday morning (the peak of the electricity shortage) wind was providing between 3,500 and 4,000 MW, roughly the amount it had been forecast and scheduled to provide. That is about 7% of the state’s total electricity demand at that time, or enough for about 3 million average homes. (more…)

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A massive winter storm rolled through Texas last night causing 7,000 megawatts worth of power plants to shut down and in the wee hours of the morning, the Electric Reliability Council of Texas (ERCOT), the grid operator, declared an energy emergency.

ERCOT called on state energy suppliers to cut about 4,000 megawatts worth of power demand equal to about 2.9 million homes, leaving homes dark and without heat for up to an hour (some folks for even longer), causing some schools and businesses to shut and creating traffic snarls as traffic lights stopped working during rush hour. (more…)

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Windmills south of Dumas, TX

Windmills south of Dumas, TX -by Wikipedia

When Texans turn on their lights, run their air conditioning, charge thier cell phones or even plug in their plug-in hybrid cars, they are getting an increasing amount of power from the wind. 

Figures released by the Electric Reliability Council of Texas (ERCOT), the pseudo state agency that regulates the Texas electric grid, earlier this month show that last year, nearly 8 percent of the power on the state’s electric grid was generated by wind. That’s more than three times the national average.

Wind-generated power has been growing rapidly in the state, and Texas now has nearly three times as much wind capacity in place as the next-closest state, Iowa,  The state also broke the 10,000 megawatt barrier for the first time last year, according to the American Wind Energy Association.  The rapid growth (from 6.2 percent of the Texas grid’s generation in 2009 to 7.8 percent last year) came despite transmission-line constraints in West Texas, which has the vast majority of the state’s wind capacity. This limitation has resulted in some wind turbines having to be shut down even when the wind is blowing, because there is not enough room on the wires to move the power hundreds of miles away to the urban areas that need it.

Much of the new wind has come from a different part of Texas — along the Gulf coast in the south, especially Kenedy and San Patricio counties. The Public Utility Commission, says there are now about 1,100 megawatts of wind in ERCOT’s south zone. That translates to roughly one-ninth of the total wind capacity in Texas.

In addition, a privately owned transmission line built by a Florida-based renewables company, connected an enormous wind farm in Kendall and Taylor counties to the grid. That line began operating in fall of 2009, so the wind farm’s contribution showed up more fully last year.  The state has planned $5 billion worth of other transmission lines to remedy the congestion in West Texas, and just last week approved the route for transmission through the Texas hill country.

The big loser in the newest figures was natural gas. While natural gas is abundant in Texas, less polluting than coal and substantially cheaper than it was jut a few years ago, it is also easily replaced by the wind.  Lt. Governor Dewhurst has talked recently about providing incentives for new natural gas plants in an effort to slow or even halt the construction of new coal-fired plants.

The gas industry has talked of trying to shift more costs to wind to make up for the wind’s intermittency, arguing that other types of power plants pay penalties if they go offline unexpectedly, but wind is allowed to come and go in accordance with the whims of nature. However, there is no particular legislation right now that would change those dynamics.

Meanwhile, wind will continue to grow, and when the state-planned $5 billion transmission line is built-out, that should nearly double the wind-energy capacity that’s currently on the Texas grid.

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The Electric Reliability Council of Texas ran its “one day-ahead market” under the new nodal configuration yesterday and say that, as of last night, the old zonal market has been laid to rest forever.

Nodal is a market redesign and technology upgrade designed to enable location-specific pricing at more than 4,000 nodes instead of the four large and cumbersome congestion management zones used in the market design lo these many years here in Texas.

The project has been in the pipeline since 2003 and several target dates for taking it live had come and gone over the years. The surcharge passed on to customers has also spiraled, going from about 5 cents per megawatt hour in the beginning to nearly 17 cents.

The increases were needed to keep up with the ever-rising cost estimates that started at around $60 million but ended up at nearly $660 million.

The Public Utility Commission estimates that over time, electric retail customers will see significant savings under the new configuration, but getting it in place has been difficult, time-consuming and expensive.

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