Energy News Today

Two ideas that could secure Texas energy supply and restore trust in the system

This op-ed is part of a series published by The Dallas Morning News Opinion section to explore ideas and policies for strengthening electric reliability. Find the full series here: Keeping the Lights On.

ERCOT has spent the past year preparing for this week’s freeze, requiring power plants to weatherize, inspecting that weatherization, and fining any company that doesn’t meet standards. They’ve made estimates of how much power Texans will use, and overcompensated with power generation on stand-by. Officials say the grid is ready, and this week may put those preparations to the test.

“I’m paid to be nervous,” ERCOT chief executive Brad Jones said in an interview late Wednesday. But he expressed confidence in the electric power industry ahead of what the Electric Reliability Council of Texas expects will be peak electricity 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 precious little insight into how much gas the pipelines will carry to power plants, if there are any production problems, mechanical problems, or unexpected demand for residential customers, who get priority over power plant customers.

That means, no matter how accurately ERCOT forecasts grid conditions, no matter how well power generators wrap up their plants for the freeze, the grid could still go down if natural gas suppliers fail. Natural gas suppliers aren’t required to weatherize their equipment, and no one knows how likely a natural gas failure might be.

Jones has some ideas about how to change this problem, and natural gas folks should listen.

First, he wants to set up a gas desk at ERCOT that would monitor information about supply from pipelines across the state. That way, ERCOT could react to any fuel problems right away.

With a gas desk, ERCOT “would have an operator on shift 24 hours, 7 days a week, that would let us know 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 observe the oil and gas markets and ferret out any wrongdoing. The Public Utility Commission hired an independent market monitor to patrol the wholesale power market a few years ago.

Both of these ideas are strong ways to help secure our energy supply and market. They should be implemented as quickly as the regulatory wheels can turn.

As things stand, ERCOT has insight into about 15% of gas flows. That needs to improve. Working with the Texas Energy Reliability Council, which the legislature created in the last session, ERCOT could set up a system of voluntary reporting from suppliers on natural gas volumes and any constraints. This isn’t about pricing or proprietary contract information, Jones said, simply volumes. With the cooperation of the natural gas industry, ERCOT could create a gas desk in a matter of months, in time for the summer peak electricity demand.

But if natural gas suppliers resist, then the legislature might have to step in, delaying the project until the next session in 2023.

Jones’ second recommendation to set up an independent market monitor would not only nuke any market manipulation that might occur in the oil and gas markets, but also give Texans reason to trust that there’s no monkey business in energy prices.

After accusations of market power in the wholesale electric market years ago, the Public Utility Commission hired an independent monitor, giving the industry some comfort.

Natural gas market prices spiked during the storm last year, creating windfall profits for some corporations and resulting in big bills for consumers. Some experts wonder if any market participants manipulated supply in order to boost prices, but there haven’t been any official reports of fraud. A market monitor could ensure good behavior, and even if there was never any fraud, a market cop would give Texans more confidence in natural gas markets.

Because after the deadly outages last year, Texans have lost trust in the entire energy industry. And that lack of trust could have major implications for the industry’s finances, the Texas economy, and the upcoming election.

Find the full opinion section here. Got an opinion about this issue? Send a letter to the editor and you just might get published.

Read More: Two ideas that could secure Texas energy supply and restore trust in the system

2022-02-02 21:49:43

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