It is what it is, and what it is isn’t much.
Texas lawmakers on Sunday passed a final proposal to shore up the state’s power grid in response to this year’s deadly outage crisis, agreeing on a raft of reforms that experts welcomed but also fear won’t go far enough.
The legislation, Senate Bill 3, would require power plants and some natural gas suppliers to prepare their operations for extreme cold, a step that state regulators and many companies have avoided for decades despite repeated blackouts and promises that market incentives would ensure reliability.
It would also create a statewide emergency alert system, force industry participants to communicate more often and mandate that key gas facilities be registered as critical so their power isn’t unintentionally shut off during shortages. Hundreds of gas facilities reportedly lost power during the winter storm, pinching off fuel supplies to power plants.
[…]
The proposals address several longstanding weaknesses, though still amount to a gamble in the wake of one of the state’s deadliest natural disasters, leaving its already isolated power grid vulnerable to similar disruptions for the coming winter, before key weatherization requirements would take effect.
Energy experts have warned that without quick structural improvements to power plants, gas wells and the supply chain that connects them, millions of Texas homes could again be without power in dangerously frigid conditions. February’s storm knocked out power to an estimated 4.5 million homes and killed at least 200 people — and likely many more.
Critics also caution that the final provisions leave broad discretion to gas suppliers, who provide most of the fuel for the electricity grid. The legislation allows for minimal fines against those that don’t comply and leaves oversight of infrastructure updates to the Texas Railroad Commission, whose members receive funding from the industry and have long opposed weather requirements.
The state’s gas production fell more than 20 percent over five days during the storm.
This month, Republicans in the House rejected amendments from Democrats that would have increased penalties for gas suppliers that don’t winterize and would have required progress on winterization within six months of the measure becoming law. Democrats still praised the reforms that made it into the final draft.
“I voted for this bill because there is a lot of good in it,” Rep. Jon Rosenthal, a Houston Democrat and engineer in the oil and gas industry, tweeted shortly after the vote. “But make no mistake – this bill is not enough to ensure that we won’t have another massive blackout. It leaves much discretion to RRC/PUC/ERCOT and the guardrails aren’t nearly tight enough.”
See here, here and here for some background. We may go to a special session for the Republicans’ failure to muscle through the voter suppression bill and some of Dan Patrick’s pet priorities, but taking substantial action on the power grid will not be on the agenda. It’s always hard to say what issues will and won’t be relevant and germane to voters in the next election because you never know what else may come up, but to the extent that this issue will be debated it will be in the terms of what Abbott et al thought was important enough to bring legislators back to finish off and what was not. Whether what was actually done will make a difference or not likely won’t be known until the next big freeze, at which point we’ll see if we can add 2021 to the years we look back on as squandered opportunities to take meaningful action. Better hope it’s not next year if you’re a Republican.
$18,000 TO FILL ER UP
Re: “The state’s gas production fell more than 20 percent over five days during the storm.”
One might respond “So what?” – That wouldn’t be a problem at all with on-site minimum storage requirements. Think underound gas tank at your favorite gas station. That’s not linked to no pipeline for continuing replenishment. Or your own gas tank, for that matter. Fill er up and be good for several days (for most people and average usage).
Here are a few items that are missing from the discussion agenda:
BUFFER FOR SHORT-TERM FUEL SUPPLY INTERRUPTION
Why was there no on-site fuel storage requirement so power plants can operate for a few days even if the feeder pipeline is blocked/shut off? — Texas PUC’s inane answer would be: But it costs money (like weatherization).
FATHER FROST FUND FOR AN ICY DAY
Why does the State of Texas not have a strategic underground reserve of natural gas that can be tapped in a scarcity emergency, whatever the cause, to (1) mitigate the supply shortfall, and (2) bring the market price down?
Surely that would be a good investment of surplus capital/Rainy Day Fund and could even make the State a financial profit if natural gas is bought and stored-in when cheap, and sold-out at a multiple of the normal market price when supply gets tight for whatever reason. Instead, the producers and the associated market players and speculators get to make billions from rampant price gouging even though their industry caused the scarcity in the first place.
PRICE FIXING TO MAXIMIZE PROFITEERING VS. PRICE CONTROL TO PROTECT CAPTIVE CONSUMERS
Why did the Governor not use Texas Disaster Act powers to stop the obscene price gauging by the gas sellers? – Instead of capping the price at a reasonable level, Governor Abbott’s appointees took the wholesale electricity price to the max: From $25 to $9,000 per MWh, signaling to the gas sellers that it was bonanza time: time to take gas offer prices to the hilt thanks to the government-decreed surge price fixing on the wholesale electricity end of the market, which provided assurance to them that the exorbitant bills would get paid.
San Antonio’s CPS is fighting such bills in court, albeit with uncertain prospects since DTPA does not appear to apply to the transactions in question. Price gouging at the neighborhood store during disaster BAD, price gouging in grand style on the statewide scale, GOOD for business.
HYPER INFLATION
To again use the private automobile analogy: How would you like to pay $18,000.00 for a full tank of super instead of $50.00?
And here we are worrying about inflation in the single percentage range in the pandemic recovery times.
No one even mentioned inflation when the PUC raised the price from $25 and fixed it at $9,000, finding that the scarcity price resulting from the supply crush due to generator failure ($1,200, up from $25.00) wasn’t good enough for the industry.
Wolf,
First, I’m glad that we can agree that inflation, in all its insidious forms, is bad for Americans, and it’s something we should work to prevent, not to bring about. Please keep that in mind when discussing government policies that will necessarily cause the price of energy to skyrocket. Inflation = bad. Simple, easy to remember.
As to the on site storage of natural gas, that’s a yuge undertaking….costly, and not exactly practical in many cases. I think you underestimate just how much gas is required to run a power plant. You’d be looking at having the equivalent of huge LNG tankers onsite at power plants, and we haven’t even considered the amount of energy it will take to compress all that natural gas into a liquid, and hold it at temperature and pressure. We’ll spend big dollars and lots of energy on storage, just on the off chance that once every 10 years we could use it. It’s not like coal, where we can just dump it in a pile, with no ongoing fuel required to preserve it.
It would be easier and cheaper to do things like make sure the gas compressor stations and gas production wells have power, so they don’t go down in our time of need. Texas has a robust pipeline network, and most gas fired plants are served by multiple pipelines, multiple options to get fuel.
And reading the article, it sounds like the lege did the best, cheapest, and most self evident thing it could do…..codify that natural gas production facilities and PPL compressor stations be designated critical, and prohibit power grid operators from shutting off their power.
I do agree with both you and Kuff, that the lege could have done more, specifically to prohibit the PUC from self imposing the maximum capped price for electricity. That should never be allowed to happen again. Probably more could have been done to insist that these critical facilities weatherize, but I’m OK with what passed.
WE GOT ABUNDANT GAS, AND SALT DOMES
Bill: If the Europeans can use gas storage as a buffer to balance out supply and demand fluctuations – and dampen the associated price swings — why not we in Texas? And then, there is obviously the matter of sensible regulation to prevent prices from going into the stratosphere.
In Germany, to use a gas-import-dependent cold-winter country as an example …
quote commence —
… gas storage facilities play an important role in security of supply and price stability. They compensate for fluctuations in the consumption of gas and relieve the gas networks – especially if customers demand a lot of gas for heating at the same time in winter.
Gas storage thus acts as a kind of buffer system for the gas market, in order to compensate for daily and seasonal consumption peaks. Gas storage facilities ensure a reliable supply even in the case of extreme gas demand or supply bottlenecks.
On cold winter days, up to 60 percent of gas consumption in Germany is covered by German storage. In the particularly cold February 2018, an average of 2,300 gigawatt hours of gas per day was taken from the storage facilities. In the top, gas storage even with 2,700 gigawatt hours per day secured the supply.
— quote end
Source: https://erdgasspeicher.de/en/gas-storage/gas-storage-capacities/
—
For cross-national comparative data, including details on Germany’s 28 gas storage facilities (albeit not fully up to date), see “Study on Underground Gas Storage in Europe and Central Asia” UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE in close cooperation with INTERNATIONAL GAS UNION (2013). [163 page PDF]
Note that in Texas the problem isn’t the lack of natural gas in the ground. Quite to the contrary. Gas even gets wasted by flaring it off at wellheads because producers have no profitable use for it.
And we are blessed with natural salt domes for storage on the Gulf coast. As you can see in the UN report cited above, other countries have to use other types of underground cavities, including abandoned mines and depleted oil or gas reservoirs.
What is lacking, much rather, is a sensible energy policy at the state level.
Current policy favors the producing side of the market by rewarding scarcity caused by failures to assure reliable supply.
Adverse consequences in the form of imposed blackouts — euphemistically called “loadshed” in industry parlance — and deaths of retail customers are mere externalities.
Wolf,
That’s a pretty well laid out argument. Yes, we are blessed with salt domes on the Gulf Coast, and yes, they can be used to sequester oil and gas, among other things. That still leaves you with the same issues we faced this February. The gas needs to get from the salt dome to the power plant, and since there isn’t a salt dome under every power plant, that requires pipelines. The 36 storage facilities in Germany? I bet there are more than 36 power plants in Germany, so they use pipelines, too.
That brings us to the same issue. If our natural gas wells and pipelines were better weatherized, as well as our power plants themselves, we wouldn’t have had a problem. In your solution, we’d have to create new salt dome storage, build new pipelines, and weatherize both so that sequestered gas would be guaranteed to be available.
As to the “hey, we’ll make money on natural gas by buying low and selling high,” that’s not a bad strategy, but consider that there are carrying costs involved with that, just like with the SPR. Again, it’s not like we just dump some coal on the ground then come back later when we need it. It would be a nice jobs and infrastructure program. I’m pro pipeline, myself. I do wonder how your suggestion will go with your fellow Biden voters who hate pipelines,though.
And if Texas elects a slate of Democrats for governor, lt. gov, AG, RRC commisioner, etc., what do you think the likelihood of building out this new infrastructure will be? I remember your RRC candidate last go round, wanting to stop oil drilling because they were flaring off the natural gas. Well, you could avoid that problem by building pipelines, but you guys don’t like pipelines, either. How long do you think it would take a Democrat controlled Texas to put the kibosh on new drilling or pipelines on state land, just like Biden has done with offshore and other federal lands?
YES, GAS NEEDS PIPING – HYDROGEN TOO
Re: There ain’t a salt dome under every power plant
Obviously true, but you can either connect the salt dome (or other fossil fuel storage facilty) to the power plant via pipes or set up the power plant above or near the salt dome. The high-voltage electricity is easier to transmit than the liquid stuff, but there are a lot of factors that go into the respective site-selection and infrastructure investment decisions, and above-ground lines are exposed to the elements, which implicates different kinds of risks, compared to underground pipelines.
In any event, to argue for increased gas storage capacity (incl. the question of a state-owned and -controlled strategic reserve) is not at all to argue against pipelines. Quite to the contrary. Nor is it incompatible with mandated weatherization.
And opposition to thousands of miles of new plumbing to pump Canadian tar-sludge to the Gulf Coast doesn’t equate to opposition to all pipelines. Lousy argumentation. Not to mention that the merit’s of Biden’s policy wasn’t the topic.
DIFFERENT KIND’A GAS
Indeed, pipelines may yet prove critical to the transition from fossile gas (carbon) to hydrogen.
If interested, check out this:
Jonathan Tirone, ‘One of Europe’s Greenest Utilities Is Buying Gas Pipelines.’
BLOOMBERG (Dec. 18, 2020)
https://www.bloomberg.com/news/articles/2020-12-18/austria-s-most-valuable-company-gets-second-life-in-gas-industry
Well Wolf, it’s not just the KeystoneXL, remember the vociferous opposition to the DAPL? That was nice American oil….not sludge, not from Canada, that the left refused to approve. So it seems that it’s not just evil Canadian oil your side doesn’t like, it’s ALL oil, unless it’s coming from America’s enemies, like the Nordstream II. Biden finally found oil and gas he supports….in Russia. Let’s remember that one of Biden’s other accomplishments has been to default on contracts let by the US government. Oh, gee, you bought a lease to drill for oil offshore, or in Alaska? Sorry, we’re gonna renege on that. Your argument that the left is OK with pipelines, EXCEPT for the KeystoneXL, isn’t supported by the facts.
https://biologicaldiversity.org/w/news/press-releases/biden-administration-cancels-offshore-oil-lease-sale-in-gulf-of-mexico-2021-02-12/
But bottom line, I could support your plan to build out new gas storage, and build new pipelines to get that gas to power plants. I’m pro oil and gas, after all. I just need to know what it’s going to cost me to do so.
Currently, I’m under contract for my electricity….I’m paying about 10 cents all in during the non air conditioning months when my usage is less than 500kWh per month, and 9 cents or less during the hot Summer months when the air conditioners are doing their thing. How much is your proposed new infrastructure going to cost me on my bill? Put it in cents/kWh.
And then, compare that increase to the increase I’ll pay if we just insist that our current plants, pipelines, and gas producers weatherize what’s there now. Keep in mind, we’ll still need to weatherize the power plants….lots of them went down whether they had gas or not.
White men like Bill are so smart; Nah, they can’t even figure out how to wear their pants. Unless the orange buffoon has decided to become a woman?
https://twitter.com/CamJunior1972/status/1401335287582801920
Manny, what’s wrong with the man’s leggins? Do you have a BIG BULGE theory? Faux enhancement? Adult diaper (full-fill status)? Or Just Plain Backwardness?
2.3 mil vid views so far. — Now that’s Trib.-worthy. What are *they* thinkin?
Genre: satire