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Who watches the utility overseers?

Apparently, nobody. At least, not anymore.

Late last year, as winter approached and power companies prepared for cold weather, Gov. Greg Abbott’s hand-picked utility regulators decided they no longer wanted to work with a nonprofit organization they had hired to monitor and help Texas enforce the state’s electric reliability standards.

The multiyear contract between the Public Utility Commission and the obscure monitoring organization, the Texas Reliability Entity, was trashed. Over the next months, right up until the crippling storm that plunged millions of Texans into the dark and cold, the state agency overseeing the power industry operated without an independent monitor to make sure energy companies followed state protocols, which include weatherization guidelines.

The Public Utility Commission’s decision in November to end its contract with the Texas Reliability Entity didn’t cause the historic grid failures that this week transformed Texas into an undeveloped country, leaving large swaths of the state without power or water as temperatures dropped and stayed below freezing. A PUC spokesman said the agency still had ample protections to ensure energy companies followed state rules and guidelines.

On Thursday, Abbott called for a state law requiring power plants to be better weatherized. Yet over the past quarter-century, state leaders have refused to require the companies to prepare for severe weather, even as once-in-a-lifetime storms have arrived with increasing frequency.

Critics say the utility commission’s move to strip away a regulatory layer, especially with potentially severe weather approaching, was just the latest example of the consistently light touch Texas politicians have used to oversee the complex industry that generates and distributes power.

“It’s astonishing to me that the PUC would get rid of the independent reliability entity with no plan to replace it,” said state Rep. Rafael Anchía, D-Dallas, who sits on the Texas House Energy Resources Committee. “No staff, no oversight on reliability.”

Anchía said he would demand answers from PUC brass on the independent monitor function next week when House members will hold a hearing to investigate the factors that led to the Texas blackout.

I will admit, I had never heard of the Texas Reliability Entity before reading this story. There’s a lot of nuance in this story – it’s not clear that the Texas RE was doing an adequate job, but it’s also not clear that the mandate they had amounted to much – so read the whole thing. The main takeaway for me is that the state as a whole has basically taken the reliability of the power grid for granted, partly because of the belief that we don’t have sufficiently bad weather (non-hurricane division) to worry about, partly because we believe in the exceptionalism of our lightly-regulated system, and partly because I think we’ve just never thought about it. We’re thinking about it now, and I’d say we need a top-to-bottom review of what we want out of the power grid, what responsibilities and enforcement powers the regulators will have, and how often we inspect and audit these things and report on them to the public. We should have learned all these lessons in 2011 but we didn’t, and we really have no excuses if we don’t learn them now.

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3 Comments

  1. Bill Daniels says:

    Good find, Kuff. I hadn’t heard of this, either. Thanks for posting it.

  2. David Fagan says:

    I read in the Dallas newspaper with the headlines:

    “The Public Utility Commission has a secret: Regulator quietly dissolves its enforcement division”

  3. Lobo says:

    WHAT ENFORCEMENT?

    Chairman [sic, per PUC site] DeAnn T. Walker told lawmakers something to the effect that she merely shifted the enforcement function and personnel to the legal department. The more lawyers congregated in a single division, the merrier, apparently.

    THE WOLF IN SHEEP’S FUR HATH NO TEETH

    Be that as it may, it’s doubtful whether it makes much of a difference. The amount of the penalty that can be leveled per violation borders on a joke. And also remember that the ERCOT is not even a regulatory agency.

    See Utility Code Sec. 15.023. ADMINISTRATIVE PENALTY, DISGORGEMENT ORDER, OR MITIGATION PLAN. (a) The commission may impose an administrative penalty against a person regulated under this title who violates this title or a rule or order adopted under this title.

    (b) The penalty for a violation may be in an amount not to exceed $25,000. Each day a violation continues or occurs is a separate violation for purposes of imposing a penalty.

    $25K may be a big chunk of cash for you and me. Even under normal “market” conditions, however, it’s not even a droplet in a pipeline feeding into the power plant. The dollar amounts that move from buyers to sellers even under normal market conditions are staggering.

    As for the current (extraordinary) “surge-event” billings for the e-market, get this:

    Invoice Payout Date: February 26, 2021
    Total Amount Paid Out to Market: $12,554,389,666.81
    Net Amount Short Paid: $1,316,581,108.43 (incl. presumably nonpayment or short-payment by Griddy)

    Source: ERCOT Notice W-B022621-01 re: Short payments for failure to make Invoice payments by Market Participants
    http://www.ercot.com/services/comm/mkt_notices/archives/5254