Regulator Testifies Electricity Overcharging During Fatal Texas Deep Freeze Was Pushed By Governor Abbott
from the whoops-you-froze-to-death-surcharge dept
U.S. infrastructure policy is treated as annoying and boring… until a crisis hits and suddenly everybody cares. As millions of Texans found out last year when the state’s energy infrastructure crumbled like a rotten old house under the weight of heating energy demands, leaving millions without power during a major cold snap. While the state engaged in a lot of performative nonsense in the wake of the breakdown, nothing much changed. Most of the state laws passed to “fix” the problem just punted any meaningful action down the road, while carving out big exemptions for natural gas companies that helped write the laws.
A year later and the gas companies that refused to upgrade and weather proof their infrastructure, still largely haven’t done so. What have they done? Well, late last year they decided to hit Texas natural gas customers with a major and obnoxious new $3.4 billion surcharge with the blessing of state regulators:
“Texans will be paying for the effects of last February’s cold snap for decades to come, as the state?s oil and gas regulator approved a plan for natural gas utilities to recover $3.4 billion in debt they incurred during the storm. The regulator, the Railroad Commission, is allowing utilities to issue bonds to cover the debt. As a result, ratepayers could see an increase in their bills for the next 30 years.”
Texas consumers had already experienced electricity price gouging during the tragic blackout. During the power outage and deep freeze, the price of electricity in Texas was pegged at $9,000 per megawatt hour, up from $50 per megawatt hour before the blackout. Initially, this was deemed the exclusive decision by the Electric Reliability Council of Texas (ERCOT). That decision is estimated to have resulted in ERCOT overcharging state electricity companies by an estimated $16 billion during the tragedy, costs that were obviously passed on to Texas business and residential consumers.
But in court last week, former ERCOT boss Bill Magness testified that the decision to keep Texas electricity prices unreasonably high during the outage came at the direct behest of Texas Governor Greg Abbott:
“The former head of the organization behind Texas’ electric grid testified in court on Wednesday that he was following Texas Gov. Greg Abbott’s orders when he directed power prices to remain as high as possible for several days during Texas’ winter storm blackouts in February 2021, the Houston Chronicle first reported.
The former chief of the Electric Reliability Council of Texas (ERCOT), Bill Magness, said that Abbott’s orders came at a time when power plants were already starting to turn back on again.
Texas is largely detached from federal utility regulations. Instead, wholesale power prices are determined by supply and demand. When demand is high, ERCOT allows prices to go up in the hope Texas power companies will add more electricity to the grid. In this case, pegging power prices at up to 150 times normal cost forced many companies to buy power at unreasonable rates, triggering financial collapse for the smallest. Including Brazos Electric Cooperative, which is suing ERCOT claiming that $1.9 billion in additional costs drove it into bankruptcy.
Abbott’s office had previously denied that the Governor was not “involved in any way” in the decision to keep prices maxed at $9,000 per megawatt-hour even after things started to normalize. ERCOT and Abbott justified the decision by claiming that lowering prices would have driven more users back on to an already strained grid. The problem is that weatherproofing systems to prepare for climate change would have prevented any of this from happening in the first place (hard to do when you insist climate change isn’t real). The other problem; Abbott and his ilk aren’t keen on things like consumer protection and tough regulatory oversight, which results in Texas consumers holding the bag when all is said and done since high costs are always passed on to consumers.
246 Texans died during the February 2021 freeze, the majority by hypothermia. And while Texas consumers have dodged a repeat so far, they also haven’t seen the same kind of sustained, lower temperatures yet that let to the 2021 grid collapse. It’s only a matter of time, and there’s not a whole lot of evidence anybody involved learned much of a lesson. Granted this same lesson isn’t going to be exclusive to Texas; as climate change runs face-first into the U.S. trifecta of infrastructure neglect, greed/corruption, and a general disdain for consumer protection and functioning regulators, outcomes are going to be similar across numerous states. Wash, rinse, and repeat until somebody actually learns something from the experience.
Filed Under: energy prices, ercot, greg abbott, texas
Comments on “Regulator Testifies Electricity Overcharging During Fatal Texas Deep Freeze Was Pushed By Governor Abbott”
Imagine how bad it would have been with regulations
Texas is largely detached from federal utility regulations. Instead, wholesale power prices are determined by supply and demand.
Ah the wonders of The Holy Free Market, it enables and encourages such glorious and beneficial behavior.
Except this was regulated, which was why ERCOT (or the governor) could force all utilities to pay a certain price, and why there was a cap on that price. It was just regulated terribly.
This post and the Tribute story talk about “over”charging, about prices being “too high”, without saying anything about how the “correct” price is determined. Perhaps they mean high in comparison to “market” prices, but you’re bitching about the market, so there’s obviously some dispute about how much faith we should have in markets. The prices were high, in theory, to incentivize generators to take extraordinary steps to put power onto the grid. Do we say the prices didn’t come down “on time” because we know that lesser incentives would have worked at an earlier time?
(It’d be easier to say the prices were too high based on the power companies and customers who went backrupt, but that would be a pretty lax interpretation of the phrase—like stating it as a fact that food prices are too high as long as anyone’s using food banks or any grocery stores are failing, without considering the supply side.)
That reasoning is a fallacy, because when the grid started to fail in Texas the only steps available where the extraordinary ones, otherwise they could have ended up with a Black Start situation which would have meant that the grid would have been out of commission for weeks if not months. There is no need for monetary incentive in such a situation, it’s purely about survival and saving the grid.
The price could have been set at a reasonable high price anyway and the outcome would have been the same with rolling blackouts. Now we have a situation where Texans have to foot the bill, a bill which is largely just billions of dollars manufactured out of thin air with nothing to show for it although someone sure did collect on that money…
And this whole outage was predicted to happen again after the blackout of 2011 if no steps where taken to winterize the grid, no one listened.
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The incentive was for the generation companies, and why should they give a shit about “saving the grid”? None of the costs to restore it would be borne by them, and they know the grid operator will frantically be trying to restart it. Without incentives, the generators could hypothetically decide it would be cheaper to simply shut down for a few weeks than to help.
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I see you have no idea at all how an electrical grid works, let me give you a dose of reality here:
If the grid goes down due to cascade failures and overloads things will break – badly. If such an event occurs, the electrical grid will be down for weeks if not months. There is no “start” button on an electrical grid, everything has to be vetted beforehand due to how it went down – every line, generator and substation.
Then you can use a “black start generator” that provides initial electricity to get a main generator operational and which must have an appropriate load applied to it, because a generator without a load tend to break in funny ways. Then you have to do this for each and every generator on the grid until you reach a point where you have enough generating capacity to start load-sharing while keeping an equilibrium between load and generation. If you miss something you can crash the grid again and you have to start over.
This is something that is called a “black start”, and no sane person ever want to be in that situation because the losses would be in the 100 of billions for the reason I gave above – no electricity for weeks or months. In the latest Texas black-out 6 of the 12 black start generators where out of commission which means that if the grid had failed completely it could have been months before the whole grid could have been restored.
And while the grid is down, no one is making money, quite the opposite, everyone will be hemorrhaging money like crazy. The worst part of this scenario is that you will have a state full of people desperate to survive, essentially refuges in their own country.
So you can take your stupid “Without incentives, the generators could hypothetically decide it would be cheaper to simply shut down for a few weeks than to help.” and shove it where the sun doesn’t shine, because someone who intentionally shuts down their generators and causing a black start event won’t exist afterwards – they will all be in jail one way or another (that is, if they survive the Texans wanting to lynch them).
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I don’t see this matching the reality. The truth is that nobody would “intentionally” cause a black start event, certainly not in any way that would leave a paper trail. They’d just say it was not practical to keep their non-winterized plants going—which is what many did say when their plants went offline. What you seem to not realize is how damn close they let it get—ERCOT officials have claimed they were minutes away from needing a black start, so who’s going to prison for letting that happen? I don’t see it as absurd that $9000/MW·h might have caused one or more stragglers to try a bit harder, possibly being the reason a full blackout was narrowly avoided. (Well, the whole situation leading up to it was absurd, as was pushing that rate onto consumers, but it was too late for an easy fix.)
The Northeast Blackout of 2003 actually did require a black start. It was caused by negligence on several levels—directly, due to insufficient tree-trimming, indirectly by the software bug that cause alarm failures and by every regional operator who let themselves be dragged down rather than islanding themselves (as e.g. the Philadelphia-area PJM Interconnect did). Who went to prison or suffered any siginificant business consequences because of it? I don’t recall anyone even being fired.
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No plant was shut down because it wasn’t practical to keep it running due to winter conditions, almost every plant went down due to a lack of fuel (ie frozen well-heads/pipelines) or icing conditions for wind-power/PV. Some plants where shutdown because the operators couldn’t pay for fuel (the price for natural gas was more than 100 times expensive due to demand and supply issues). Other plants went offline due to high loads before they could shed it. A nuclear plant went offline because its water supply froze.
And no point did an operator shut down its plant because it was “not practical” to run it during winter conditions, they all went down for a host of reasons some of which I listed above.
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Frozen heads/pipelines or icing conditions… water freezing… seems pretty winter-related to me.
As for the supply and demand issue, that was mostly caused by supply crashing down due to the power companies’ own failures.
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There is a distinct difference between practical and forced.
A forced shutdown is due to conditions that makes it impossible to operate, a shutdown due to impracticality is due to conditions making it inconvenient to operate.
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It was never “impossible”. The events of a decade ago meant everyone knew winterization was necessary. The plants that shut down did so because they’d deemed it impractical or inconvenient to set up a winterized gas supply. Note that it doesn’t necessarily mean winterizing the whole gas network; power plants could’ve had local storage, periodically topped up by tanker trucks. It only needs to be enough to restart the plant with no external power—an emergency supply probably not much more expensive than a hospital’s.
Or perhaps regulators found it impractical to require that or to admit that gas pipelines must be regulated as part of the grid. There’s stupidity and incompetence all around. When my area had a large-scale power outage, tanker trucks were driving constantly to top up diesel generators… driving from really far away, because the local diesel storage facilities didn’t have generators and couldn’t dispense fuel with the power out.
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essentially refuges in their own country.
Not country but “state”, or to a Texan, republic. Except the panhandle, where the DOE stores 15,000 plutonium “pits” for future WMDs under helium atmosphere, the grid of Texas is severed from the rest of America.
Humans scavenge isotopes of Iodine through the skin, thus a prophylaxis is to saturate the thyroid with “good” iodine. I don’t know a prophylaxis blocking the attitudes of Texans.
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They are the grid. Derp.
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Sure, technically, but if we’re not willing to regulate the whole thing as one entity, modeling it as one isn’t going to give us a good understanding of past or future events. If the power generators felt as you suggest, they’d have winterized a decade or more ago, to protect themselves (“the grid”).
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If the only motivation is to make as much money as they can in the short term without looking to greedy, winterization slips very far down the list of things since it costs money. They had a heads-up in 2011 that there where problems but no one took it to heart and did something about it.
i wonder how much of a handout Abbott got for doing this, when people, particularly the old and children were at highest risk? as usual, dont do the job they were elected to do but fill their own pockets with as much as possible!
Is the double negative (“denied”, “not involved”) intended?
Abbott’s office had previously denied that the Governor was not “involved in any way”
The Quote mark is mis-placed.
Abbott’s office had previously denied that “the Governor was not involved in any way”.
Would fit better.
The actual source is clear, and the exact opposite of what you (and Karl) wrote:
It’s so weird, Abbot is one of the most capable, diligently dedicated to his constituents, reasonable, insightful, egalitarian and compassionate Governors to ever hold the position.
Yet somehow everything he does makes him look like a terribly callous partisan hack with only himself, party politics and special interest lobbyists in mind to the detriment of citizens and even the separation of powers our government was founded on. It’s so weird when you know his decisions only have everyone’s best interest in mind. I wonder if the lizard people who secretly run the deep state cabal are controlling his mind when actual decision making time comes along?
I’m pretty sure doing the bare minimum to make sure your constituents have the option to not freeze to dead doesn’t quite fit the bill for “touch regulatory oversight”.
Of course it does.
This state has a “stand your ground” law in place, so preventing people from killing each other already seems like it’s “tough regulatory oversight” in general.
So, how is it any different when you try to prevent a company from killing its customers?
Lets vote for the death cult, whats the worst that can happen?
You know, like Abbott and Costello. What a joke.