Note: This editorial was written before the winter storm last week.
ERCOT has spent the last year preparing for this week’s freeze, forcing power plants to weatherize, inspect that weatherization and issue fines to any company that fails to meet the standards. They made estimates of how much energy Texans will use and overcompensated with standby power generation. Officials say the grid is ready, and this week could put those preparations to the test.
“I get paid to be nervous,” ERCOT chief executive Brad Jones said in an interview Wednesday night. But he expressed confidence in the electric power industry ahead of what the Electric Reliability Council of Texas forecasts as peak power demand for this storm: 72,000 megawatts of demand at 8 a.m. Friday.
But there is one crucial unknown that, beyond an act of God, could make or break the grid this week: natural gas production. The Electric Reliability Council of Texas has little information on how much gas the pipelines will carry to power plants, if there are any production issues, mechanical issues, or unexpected demand for residential customers. , which have priority over power plant customers.
This means that no matter how accurately ERCOT forecasts grid conditions, no matter how well power generators prepare their plants for freezing, the grid could still fail if natural gas suppliers were breaking down. Natural gas suppliers are not required to weatherproof their equipment, and no one knows how likely a natural gas outage is.
Jones has some ideas on how to fix this, and the natural gas folks should listen.
First, he wants to set up a gas office at ERCOT that would monitor pipeline supply information across the state. In this way, ERCOT could react immediately to any fuel problem.
With a gas office, ERCOT “would have an operator on duty 24 hours a day, seven days a week who would notify us of any restrictions on our gas system,” Jones said.
Second, Jones wants the Railroad Commission, which regulates oil and gas production, to set up an independent market monitor to watch the oil and gas markets for any wrongdoing. A few years ago, the Public Utility Commission hired an independent market monitor to monitor the wholesale electricity market.
Both of these ideas are solid ways to help secure our energy supply and market. They should be implemented as quickly as the regulatory cogs can turn.
As it stands, ERCOT has an overview of around 15% of the gas flows. It must improve. In collaboration with the Texas Energy Reliability Council, which the legislator created during the last session, ERCOT could set up a system of voluntary declaration of the suppliers on the volumes of natural gas and their possible constraints. It’s not about pricing or proprietary contract information, Jones said, just volumes. With the cooperation of the natural gas industry, ERCOT was able to create a gas counter within a few months, in time for the peak of electricity consumption in the summer.
But if natural gas suppliers resist, lawmakers may have to step in, postponing the project until the next session in 2023.
Jones’ second recommendation to set up an independent market monitor would not only eliminate any market manipulation that might occur in the oil and gas markets, but also give Texans reason to believe there is no no monkey in energy prices.
After accusations of market power in the wholesale electricity market years ago, the Public Utilities Commission hired an independent monitor, which reassured the industry.
Market prices for natural gas soared during last year’s storm, creating windfall profits for some companies and big bills for consumers. Some experts wonder if market players manipulated the supply to raise prices, but there have been no official reports of fraud. A market monitor could ensure good behavior, and even if there was never any fraud, a market agent would give Texans more confidence in natural gas markets.
Because after last year’s deadly blackouts, Texans lost faith in the entire energy industry. And that lack of confidence could have major implications for industry finances, the Texas economy and the upcoming election.