Texas Bills Begin to Address Power Grid Resiliency

Two new Texas laws seek to weatherize the state’s electricity infrastructure, but some experts say the measures fail to go far enough.

Power lines in Houston, Texas on Feb. 16, 2021, during the unusually heavy winter storm that blanketed much of Texas with snow, knocked out electricity to millions of homes and left many struggling to find clean water. (AP Photo/David J. Phillip, File)

AUSTIN, Texas (CN) — Texas Governor Greg Abbott signed two reform bills Tuesday that aim to prevent future failures of the state’s power grid as a response to February’s deadly winter storms, which left millions of Texans without electricity for weeks.

Senate Bill 2 will reduce the number of board members at the Electric Reliability Council of Texas, ERCOT, from 16 to 11. ERCOT manages the state’s electricity grid, receiving power from generators and scheduling and directing that energy to customers. The governor, lieutenant governor and House speaker will arrange for a committee to select the board’s members.

Senate Bill 3 seeks to “weatherize” the power grid, charging power companies with protecting their facilities against deep freezes and sky-high summertime temperatures. It will also require state regulators to issue emergency alerts to warn of imminent power outages.

Six former regulators wrote a report released June 3 that calls SB3 “a good start” but notes that “the magnitude of climate threats requires us to do better.”

“SB3 and other new statutes adopted by the Texas Legislature have provided a swift and focused response to the February disaster, but there is more work to be done to address all of the causes of the February 2021 Arctic outage and prepare for the challenges ahead,” concludes the report, whose authors include former Texas Public Utility Commissioners and regulatory advisers.

For much of February 2021, storms plunged Texas temperatures into the single digits, knocking out massive swathes of the state’s power grid, killing more than 150 Texans and causing some residents to see energy bills in the thousands of dollars.

In an effort to prevent the grid from collapsing, ERCOT officials instituted rolling blackouts, intentionally turning off the power for many buildings and households to sustain energy at critical infrastructure such as hospitals.

CPS Energy, San Antonio’s municipal power company, panned ERCOT’s measures. The utility sued ERCOT in March, alleging ERCOT’s policies would pass unfair costs to San Antonio homeowners and other Texans.

“After overcharging the market at least $16 billion on Feb. 18 and 19, 2021, as found by the Independent Market Monitor, and causing numerous market participants to default, ERCOT is asking CPS Energy and its customers to pay for these defaults of others through an unconstitutional uplift program,” alleged attorneys representing CPS Energy in a May 24 court document.

Previous versions of the bills would have tasked Texas’ renewable energy firms with shouldering the brunt of the financial burden of maintaining the grid’s ancillary services. Natural gas, coal and nuclear plants also failed during the February storm.

According to a 2020 Texas Comptroller report, wind, solar and hydroelectric power compose just more than one-fifth of Texas’ energy production, while more than two-thirds of the state’s electricity is generated by natural gas and coal. So the impact of shutdowns at natural gas plants, which alone contribute to 47.4% of the state’s total electricity generation, was more strongly felt than the 20% of power no longer generated by wind turbines frozen in place during the storm.

A House bill would have given power companies $2 billion to pay for the weatherization upgrades, but the final bill does not create such a fund. Without state dollars, utilities will need to raise the funds for winter-proof facilities on their own — via rate hikes, private financing and other measures that will eventually impact homeowners, businesses and other buyers of Texas energy.

Notably absent from the bills before Abbott are any measures to directly address the damages sustained by ordinary Texans whose health was jeopardized during the crisis, whose homes suffered burst pipes and collapsed roofs, or who lost wages and work opportunities during the storm.

A preliminary estimate by the Perryman Group, an econometrics firm in Waco, Texas, suggests that the February freeze will have caused losses between $86 and $128 billion due to business interruption, reduced productivity and facility damages that are still being felt.

“These amounts are in the range of (and potentially above) the losses associated with the most expensive weather events in Texas to date, Hurricanes Harvey and Ike,” reads the report.

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