PUCT/ERCOT Planning Error: Calling F. A. Hayek

The title of the article is ERCOT’s emergency response program needs better oversight. Paul Takahashi  wrote:

ERCOT forced 67 power facilities offline during the February freeze, including five natural gas facilities that later requested they be exempt because they were critical to Texas’ electricity grid.

ERCOT confirmed in May that it forced dozens of natural gas facilities to go offline during the February winter storm under a program that pays large industrial power users to shut down when electricity supplies are short.

At the time, the Electric Reliability Council of Texas, which manages the state’s power grid, said it did not know how many facilities supplying fuel to natural gas power plants were forced offline.https://digital.olivesoftware.com/olive/ODN/HoustonChronicle/Ads/ArticleInsert.htm

Well, now we know, thanks to a University of Texas at Austin report released last week.

ERCOT forced 67 power plant fuel facilities offline, including five natural gas facilities that later requested they be exempt from power outages because they were critical to Texas’ electricity grid, according to the UT report. A dozen researchers at UT’s Energy Institute were given access to confidential data from ERCOT, including data from the grid manager’s emergency response program, as part of their study of the February blackouts.

“We don’t exactly know what they were, but they were in that fuel supply chain of moving fuel to power plants, said Josh Rhodes, a research associate with UT’s department of mechanical engineering and an author of the 101-page report. “So these entities would have been turned off whenever the emergency response program was triggered.”

In the wake of deadly and devastating power failure, one question looms large: Why did ERCOT allow natural gas companies that supply the fuel that powers our grid to participate in this voluntary emergency program? After all, natural gas companies need power to provide natural gas, and natural gas power plants need natural gas to provide power.

ERCOT created the emergency response program as a sort of insurance that helps the grid operator balance power demand and supply on the grid. When demand exceeds supply, ERCOT can call on heavy industrial power users that have signed contracts to reduce electricity consumption.

More than 400 heavy power users, such as data centers and manufacturing plants, have entered into “demand response” contracts with ERCOT, which requires them to install an automatic circuit switch or manually shut down operations when there are less than 1,750 megawatts of spare power on the grid.

Cutting power to these industrial users can help ERCOT shed more than 5,550 megawatts of power from the grid, enough to power some 1.1 million Texas homes on a hot summer day. Industrial users can potentially save millions of dollars on their electricity bills by entering into a demand response contract with ERCOT and other utilities operating similar programs.

If cutting power to volunteering customers fails to stabilize the grid, ERCOT can mandate rolling blackouts on other power consumers. The widespread blackouts in February killed at least 200 Texans and caused billions of dollars of property damage statewide.

UT researchers said they cannot say who owns these natural gas facilities and how much they were compensated for participating in the program, under confidentiality agreements with the Public Utility Commission. The PUC is the state agency that oversees ERCOT and funded part of the UT study.

Researchers also said it was unclear how much of an impact shutdowns of natural gas compressors and processing facilities had on natural gas power plants. Some 25,000 megawatts of natural gas power capacity went offline during the storm, enough to power 5 million Texas homes on a hot summer day.

Power plant operators have blamed inadequate natural gas supplies for the catastrophic power failure during the storm. Natural gas production in Texas fell by nearly half during the storm, and the largest share of generation outages occurred at natural gas power plants, according to the Energy Department.

The Texas Oil and Gas Association, the state’s largest industry trade group, for months has said Texas had enough natural gas supply and that fuel limitations represented a small percentage of problems at power plants during the storm.

In either case, ERCOT needs better oversight over which industrial users can participate in its emergency response program to prevent critical facilities underpinning Texas’ electricity grid from automatically being shut down during the next power crisis. TXOGA, the oil and gas trade group, has pushed for enhanced communication between ERCOT and the industry, and called for a mapping of critical natural gas facilities.

Jay Zarnikau, a research fellow at UT’s economics department and one of the UT report authors, said more attention needs to be paid on this emergency program and whether critical natural gas facilities should be able to participate.

“It’s a topic that deserves some consideration,” Zarnikau said. “What are the eligibility criteria for participating in an emergency program?” [email protected] twitter.com/paultakahashi

The post PUCT/ERCOT Planning Error: Calling F. A. Hayek appeared first on Master Resource.