With a high-profile discussion going on at the Public Utility Commission, the Electric Reliability Council of Texas (ERCOT) — which runs the state’s power grid — and among stakeholders about whether or not Texas has adequate electric generation, the sudden warning early Monday morning that Texas was facing a power crisis of sots was literally a blast of cold air. Early Monday morning, with arctic winds affecting virtually all of the state, peak power demand hit nearly 56,000 MW hours — the second highest winter peak demand ever.
ERCOT – seeing power demand come dangerously close to total resources online and available — went into Emergency Action Alert Stage 1, calling on some contracts to reduce energy demand through their Emergency Response Service. Then just a short time later, they went into EAA Stage 2, calling upon other resources at their disposal. The crisis was soon over. Demand went down and a couple of plants that had been off-line went on-line.
What happened was a weather extreme, combined with some inopportune maintenance by some plant owners, and two plants that were expected to be on-line were off-line due to malfunctions caused by the extreme cold. While ERCOT did not announce which two plants scheduled to compete to provide power were off-line, one appears to be a unit at the Comanche Peak Nuclear Power Plant. According to the Nuclear Regulatory Commission, the Comanche Peak nuclear power plant was forced to reduce generation in order to repair a water pump. Luminant, which operates the plant, confirmed the repair but declined to answer questions about other facilities according to Reuters.
In addition to the two plants being down unexpectedly, another 13,000 MWs were down for scheduled maintenance since generally in Texas the winter is a time of low demand. Still those operating did make some money. According to ERCOT’s website, real time prices hit the market cap of $5,000 for nearly an hour Monday morning, before quickly declining after 9 AM.
The PUC will investigate Monday’s outages to see if protocols were followed, said commission spokesman Terry Hadley, while ERCOT will review its maintenance schedule and also whether the new “weatherization” requirements imposed on generators after the last big freeze in 2011 is actually working.
In the meantime, stakeholders will use Monday’s freeze — and the fact that the state came close to implementing rolling brownouts — as part of the discussion on whether Texas needs to fundamentally change its market structure. On the one hand, the system did work, with ERCOT calling on demand response to reduce demand when resources were stretched thin, and market prices did rise, rewarding generators who were able to meet demand when supply was tight. On the other, many would argue that the lack of new investment in fast-responding natural gas plants is cause for concern as population and demand increases in Texas.
Sierra Club has filed extensive comments in the PUC docket on the issue, arguing that relatively small new services can provide the cushion Texas needs, as we continue to invest in demand response, wind and solar. Implementation of new more efficient building codes, expansion of the utility energy efficiency programs, new more favorable treatment of onsite solar in Texas’s competitive markets, and clearer rules for energy storage resources will lead to more investment in these new more flexible technologies. A full forward capacity market, where all generators and demand response providers are paid a market clearing price for simply having the resource available if needed is not the answer in our view. Market forces should cause many of the older and less efficient — and more polluting — plants to retire, which should send a market signal to build newer more flexible plants and invest more in energy efficiency, onsite solar and demand response.
In the meantime, the discussion at PUC, ERCOT and the Texas Legislature will continue about how to keep the lights on, investment coming and modernize our grid, all while keeping prices reasonable.