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Last chance to file Winter Storm Uri lawsuits

Feb 17th, 2023
by Charles Kuffner.
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The two year anniversary of the big freeze of 2021 is upon us, and the statute of limitations for civil actions in this sort of thing is two years, so you know what that means.

When Cherrilyn Nedd left her uncomfortably cold Summerwood home during the February 2021 winter storm to stay with her in-laws — who had a generator — she never expected that she would return to find the house ruined. She left the faucets dripping and her cabinets open. Hurricanes worried her, not freezes.

But a hissing noise greeted Nedd, 53, when she and her husband came back the next day to check on their house. Water spewed from a broken pipe in the collapsed ceiling, flooding every room on the first floor — their bedroom, the kitchen, the dining room and the living room.

“What is going on?” Nedd asked herself, in shock, stepping through the water.

The couple shut off the water to the house and swept out as much as they could. They would spend nearly a year and some $90,000 fixing the home, but they would never get back the ruined photos of a family cruise and their nephew as a baby; the computer equipment Nedd used for her consulting work was destroyed.

Lawyers representing storm victims like Nedd are working to file the final lawsuits related to the disaster as its two-year anniversary arrives this week — and the two-year statute of limitations for filing suit begins to expire. Thousands are accusing power companies, distribution companies, electric grid operators and others of failing to prepare properly for it, creating a catastrophe that caused property damage, countless injuries and hundreds of deaths. One expert estimated the cost of the freeze was as high as $300 billion.

[…]

Nedd and others see the lawsuits as another way to force change. The defendants would likely need to see that it costs more to fail than to do what’s needed to keep the power on, said Greg Cox, a plaintiffs’ liaison counsel. The various lawsuits are being directed to one judge in Harris County who will handle all of them.

The plaintiffs include a person whose house caught fire when power was restored, another who had both feet amputated after getting frostbite and a disabled person whose ceiling collapsed on him while he was in bed, Cox said.

“This catastrophe was not caused by an act of God, but instead was caused by intentional decisions by individual Defendants made both before and during Winter Storm Uri that were known to other Defendants and caused multiple operational failures which combined to cause the failure of the ERCOT grid,” one lawsuit states.

The story notes the so-far feeble efforts to enact reform and the big legal question of whether ERCOT can be sued. Some number of lawsuits will not survive if the answer to that is no. More from the Chron:

This week’s anniversary of the crippling storm — blamed in the deaths of more than 200 and which left millions of Texans without power, heat and in some cases water — means that the two-year legal deadline for filing related lawsuits is about to take effect.

The result is that lawyers representing more than 1,500 Texans and businesses have filed more than 80 wrongful death, personal injury and property damage lawsuits against more than 360 energy companies, insurance companies and the Electric Reliability Council of Texas, the state’s grid manager, since Thursday. Dozens more lawsuits are expected to be filed in Texas courts this week. The deadline depends on the date of the injury to the plaintiff.

The new lawsuits will be combined with the 230 cases lodged in 20 counties across Texas. Those cases, which include more than 1,500 individuals and businesses, have been consolidated into one multidistrict litigation docket in Harris County for the purpose of case management. The plaintiffs seek billions of dollars in damages.

[…]

But the individual cases represent just a slice of the legal disputes involving Texas energy companies. A couple dozen power companies have sued ERCOT and the Texas Public Utility Commission challenging their decision to increase the wholesale price of electricity by 650 percent to $9,000 per megawatt-hour. A decision could come this week.

Two other cases pending before the Texas Supreme Court challenge ERCOT’s claim that it is immune from civil lawsuits. A decision on that point is expected this spring.

Meanwhile, three energy companies — Brazos Electric Coop, Just Energy and Griddy — filed for corporate bankruptcy and restructuring.

“This litigation is massive, unlike anything we have ever experienced in Texas,” CenterPoint Energy Executive Vice President Jason Ryan said. CenterPoint is one of the companies being sued.

“What happened during those four to five days in February 2021 was the largest transfer of wealth in Texas energy history,” Ryan said. “The legal issues surrounding Winter Storm Uri are incredibly complex. Billions and billions of dollars are at stake.”

Scores of Texas electric companies asked a Houston appeals court Friday to dismiss the cases against them, saying the claims against them are without legal merit, would “upend the state’s electricity markets” and would “allow for ‘ruinous’ liability for entities that don’t contract with or deliver electricity to consumers.”

“This litigation is as unprecedented as the 2021 winter storm that spawned it,” lawyers for the power generators, such as Dallas-based Luminant and Houston-based NRG, argued in legal documents filed last week. “The stakes are exceedingly high. If permitted to proceed, this litigation will upend the state’s electricity markets, stretch Texas negligence and nuisance law beyond recognition, and make the state a national outlier.”

See here, here, and here for some background on the bankruptcies and the lawsuits related to them. The expectation is that the cases before the appeals court will be allowed to proceed, according to the story. We’re going to have this litigation for a long time. I don’t know how much of that wealth will be transferred back, but it sure needs to be a lot.

More on the PUC’s attempt to fix the grid

Jan 28th, 2023
by Charles Kuffner.
1 comment

From TPR:

After the last big blackout, state lawmakers passed Senate Bill 3, telling the commission to improve grid reliability. So, commissioners have been working on changing the state’s electricity market. They want to reform how energy is bought and sold on the power grid to create a market that makes sure power is there when people need it.

To do that, the commission hired a consulting firm that came up with a plan called a Performance Credit Mechanism, PCM for short.

Basically, this plan would create reliability credits that electricity providers (the companies most Texans pay their power bills to) have to buy from power generators (the companies that own the power plants). The credits represent a commitment from those power generators to deliver electricity when the grid is most stressed.

“I believe that PCM is the right solution because it’s a comprehensive solution that sets a clear reliability standard as required by [Senate Bill] 3,” Peter Lake, chair of the Public Utility Commission, said earlier this month.

The consulting firm that came up with the plan says it will cost $5.7 billion more a year. Supporters say power generators will use that money to invest in new power plants and to keep the energy supply humming in extreme weather. They also argue that not all that extra money will be shouldered by consumers. But, in Texas, consumers typically end up eating extra costs.

The plan is supported by power plant owners, who stand to earn money from the credits. The Electric Reliability Council of Texas, the state’s grid operator, is in favor of it. Gov. Greg Abbott and Public Utility Commissioners, including Lake, who are appointed by Abbott, also support the PCM.

The list of opponents appears to be significantly longer.

The independent market monitor, a position that serves kind of as a third-party auditor for the Texas grid, does not think it is a good plan. Consumer and environmental groups oppose it or are skeptical. The Texas Association of Manufacturers, a group that represents big industrial energy users in the state, is against it. The oil and gas lobby is not convinced it will work, and many state politicians also oppose it.

This group of opponents represent diverse interests, so their reasons for opposing the PCM vary.

Environmentalists point out that the plan is designed to bring more natural gas power plants to Texas, which is bad for climate change and air pollution.

Others, who want more natural gas plants built, argue that the PCM may not accomplish that goal. Some would prefer more direct subsidizing of new plants instead of the addition of a new layer of rules into the already complex Texas energy market.

And others say a big overhaul of the energy market is not even necessary, and that the grid can be improved without investing billions in building more power plants.

“I think we have an operational flexibility problem,” Carrie Bivens, the PUC’s independent market monitor, told a state Senate Committee late last year. “I do not believe we have [an energy] capacity problem.”

One thing all opponents agree on is that the plan is untested. It will cost billions, but there’s no real-world example to show it will work.

See here for the background. At this point, it’s not about whether this plan works or not. The issue is with going forward with an untested plan when there was a lot of disagreement about what that plan was and even a lack of consensus that this was the right kind of plan. It’s also not clear to me what the definition of success is for this plan. If new plants are built, which is the goal of this plan, but big outages still occur, is that a “success” because the new plants were built? If the capacity issues that Carries Bivens identifies are fixed before any new plants get built and the outages go away, is that a success for the plan? This is a basic thing that happens in the business world. If we can’t be sure that the plan worked, how will we know if it’s a good idea to do again if the same problems arise later? We’re just rolling dice and hoping for the best here.

PUC makes an attempt to fix the grid

Jan 21st, 2023
by Charles Kuffner.
1 comment

People are skeptical.

The Public Utility Commission voted Thursday to make a substantial change to the state’s electricity market in a controversial effort to get the whole system to be more reliable. The agency said it will let the Legislature review its plan before moving forward with putting it in place.

The idea, known as the “performance credit mechanism,” is a first-of-its-kind proposal. It’s meant to help produce enough power when extreme heat or cold drives up demand and electricity production drops for various reasons — such as a lack of sun or wind to produce renewable energy or equipment breakdowns at gas- or coal-fired power plants.

Under the new concept, which still has many details to work out, companies such as NRG would commit to being available to produce more energy during those tight times. The companies would sell credits to electricity retailers such as Gexa Energy, municipal utilities and co-ops that sell power to homes and businesses.

The credits are designed to give power generators an added income stream and make building new power plants worthwhile.

Theoretically, the credits help retailers and customers by smoothing out volatile price spikes when demand is high — but there’s wide disagreement over whether this will happen in practice. Some electricity providers filed for bankruptcy after the 2021 winter storm because they had to pay so much for power.

Critics of the plan say the idea is risky because it wasn’t properly analyzed and has never been tested in another place. Members of the Senate Committee on Business and Commerce wrote to the PUC in December that they had “significant concern” about whether the proposal would work.

[…]

Experts disagree on whether the performance credits will actually convince power companies to build more natural gas plants, which are dirtier than wind and solar energy but can be turned on at any time. Some say new plants will be built anyway. Others say companies can simply use the credits to make more money from their existing plants without building more.

Michele Richmond, executive director of Texas Competitive Power Advocates, wrote in her comments to the commission that the group’s members were “ready to bring more than 4,500 [megawatts] of additional generation” to the state grid if the new system were adopted. That would be enough to power 900,000 homes. The group’s members include Calpine, Luminant and NRG.

If the PUC doesn’t change the market, there won’t be enough reason to invest in building new power generation facilities and keep operating existing facilities, she wrote.

The Lone Star Chapter of the Sierra Club was among groups that asked the PUC to spend more time considering whether the new credits are the best solution “before making fundamental changes to our market that would increase costs to consumers,” as Conservation Director Cyrus Reed wrote.

The independent market monitor, Potomac Economics, which is paid by the PUC to watch the market for manipulation and look for potential improvements, does not support the idea. The group believes enough corrections have been made already to make sure the grid is reliable.

Still others, such as Alison Silverstein, a former senior adviser at the PUC and the Texas Public Power Association, which is made up of municipal-owned utilities, cautioned that there wasn’t enough reliable information and analysis about the proposed credits to make such a significant decision.

The grid’s reliability must improve, Silverstein wrote to the PUC, but “we cannot do so at any cost, and we cannot do so using poorly understood, poorly-analyzed, or unproven market mechanisms to address unclear problem definitions and goals.”

Silverstein added: “If the commission makes a bad decision on … market reform due to haste, erroneous problem definition, sloppy analysis or misguided rationalizations, all Texans will bear the consequences for years through higher electric costs, lower reliability, and a slower economy, and millions of lower income Texans will suffer degraded health and comfort as they sacrifice to pay their electric bills.”

See here for some background. The PUC unanimously approved the plan, which was spearheaded by Greg Abbott’s appointed Chair. I sure don’t know enough to say whether this will work or not. It sounds like it could, but there’s more than enough uncertainty to make it a risky proposition. I get the argument against waiting for more data, but I have to wonder if there were some other ideas with greater certainty that could have been used in the meantime. Not much to do but hope for the best now, and maybe take the idea of “accountability” more seriously in the next election. The Chron, whose headline says that electricity prices are likely to rise under this plan, has more.

SCOTx to decide if ERCOT can be sued

Jan 11th, 2023
by Charles Kuffner.
1 comment

Big decision to come.

Lawyers argued before the Texas Supreme Court on Monday over whether the state’s power grid operator should be protected from lawsuits, a question that has become especially important after the deadly February 2021 freeze.

Individuals and insurance companies have filed lawsuits against the Electric Reliability Council of Texas and power generators since the storm, which left millions of Texans without power in bitterly cold temperatures and hundreds of people dead after electricity was cut in large portions of the state. How those cases proceed will depend on what the Supreme Court decides in the coming weeks or months.

Lawyers for the ERCOT — the nonprofit that manages the state grid — argued Monday that it should receive the same “sovereign immunity” that largely shields government agencies from civil suits.

Because ERCOT is empowered by the state to fulfill a public function and is overseen by a state agency — the Public Utility Commission of Texas — ERCOT should not be held liable, they argued, saying legal claims against ERCOT should instead be the responsibility of the PUC.

ERCOT “has no function other than what the state assigned,” attorney Wallace Jefferson said. “It has no autonomy from the state. … It has no private interest. Its interest is in furthering the public’s interest in a reliable grid. The state controls its bylaws. And the state sets the fee that funds the organization.”

The opposing argument from attorneys in two separate cases was that giving ERCOT such immunity was inappropriate.

Attorneys for Panda Power Funds, a Dallas-area private equity firm that develops and operates power facilities, and CPS Energy, San Antonio’s energy utility, argued that just because ERCOT is regulated by a government entity doesn’t make it part of Texas government.

CPS Energy attorney Harriet O’Neill said the state Legislature has the power to make ERCOT explicitly part of the government, “but despite many opportunities, including after the winter storm, the Legislature has never conferred government status on ERCOT, which it knows how to do.”

Supreme Court Justice Jeff Boyd offered an analogy to explain the lawyers’ arguments: Imagine the state Legislature decided that all the yellow stripes on highways needed to be repainted red. If the Texas Department of Transportation did the work and was accused of doing it wrong, it would be protected from lawsuits.

But if the Legislature instead told TxDOT to authorize another entity to do the work and TxDOT set the prices and dictated how to paint the stripes, would the contractor then be considered a government entity?

See here, here, and here for some background. Note that the original Panda Power lawsuit was filed in 2019, well before the infamous freeze, and is over their claim that ERCOT intentionally manipulated projections of energy demand to encourage new power plant construction. I think Justice Boyd’s analogy is a good one and I can see the merit in either side. On balance, though, I think we overextend the principle of sovereign immunity in this state, and as such I’m rooting for the plaintiffs. But this could go either way. We ought to know in a few months.

ERCOT makes it through, with an assist from the feds

Dec 26th, 2022
by Charles Kuffner.
2 comments

In case you were wondering.

A day after ERCOT asked the U.S. Department of Energy for an emergency order allowing its generators to bypass emissions standards to stave off potential outages, Texas’ electric grid met demand with ease on Saturday.

The grid operator’s worst-case-scenario did not come to pass, and with weather continuing to warm over the weekend, it seems unlikely the system will experience issues.

Temperatures rose to 39 degrees in Houston on Saturday, nearly 10 degrees higher than Friday. Demand reached a high of about 65,753 megawatts at 7:50 a.m., and at the same time, about 74,252 megawatts of power were available. One megawatt is enough to power about 200 homes during severe temperature events.

By 4 p.m. ERCOT officials said there was 27,876 more megawatts committed by generators than the forecasted demand.

The forecasted demand was much more accurate Saturday than it was Thursday night and Friday, when ERCOT’s demand forecast was at times more than 10,000 megawatts — or 2 million homes’ worth of power — less than what actual demand came onto the grid. Friday morning, demand reached 74,000 megawatts, a new winter record.

That unexpected and record-seasonal-high demand, along with a series of generation failures, led ERCOT officials to ask the U.S. Department of Energy on Friday to issue an emergency order that would allow natural-gas and coal-powered generators to bypass federal emissions standards in order to generate as much power as possible.

ERCOT CEO Pablo Vegas wrote to the agency that there were about 11,000 megawatts of outages among thermal generators that use coal and natural gas as fuel, 4,000 megawatts among wind generators and 1,700 megawatts of solar units that were “outaged or derated” due to the freezing weather. One megawatt is

“Most of these units are expected to return to service over the next 24 hours. However, if these units do not return to service, or if ERCOT experiences additional generating unit outages, it is possible that ERCOT may need to curtail some amount of firm load this evening, tomorrow morning, or possibly tomorrow evening or Sunday morning, in order to maintain the security of the ERCOT system,” Vegas wrote.

In plainer language, that meant if those units stay offline, and if other units trip offline, ERCOT might have ordered local utility providers to rotate power outages Friday evening, Saturday morning, Saturday evening or Sunday morning.

[…]

In a statement, ERCOT officials said the request for emergency powers was taken as a precautionary measure and “would allow generators to promptly respond if conditions warranted.”

“ERCOT has sufficient generation to meet demand. Every available on-demand generation resource is contributing electricity to the grid during this extreme cold weather event,” ERCOT officials wrote.

However, thanks to warming weather and seemingly stable generation, those emergency measures will likely be avoided this weekend.

The issue was not of insufficient power being generated or power suppliers being knocked offline because of the cold, but that the electricity retailers underestimated the demand for power, and would have had to buy more at much higher prices. Reporter Shelby Webb explained that in this Twitter thread from December 23. It’s great that we made it through without widespread power outages, and it’s even better that we made it through without having to pollute more to do it, but this was not a success of the current setup. It was luck. Anyone who points at this freeze and claims a victory for “fixing the grid” is at best misinformed.

No, really, are we emotionally prepared for this freeze?

Dec 22nd, 2022
by Charles Kuffner.
Comments are off for this post

Ready or not, here it comes.

State officials warned residents Wednesday to prepare their homes and vehicles for the coming freeze while trying to reassure on-edge Texans that the electric grid will stay online.

Temperatures are expected to plummet Thursday into single digits — with even lower wind chills. Leaders urged residents to check their car tires and batteries to be sure no one gets stranded on the road, to burn wood or gas inside only if there’s proper ventilation, and to insulate pipes.

“This is a dangerous storm coming our way,” said Nim Kidd, chief of the Texas Division of Emergency Management. “The temperatures will be extremely cold and the winds will be high, which will generate some very dangerous wind chills.”

Forecasters predicted life-threatening minus-10-degree wind chills in the Dallas-Fort Worth area and wind chills as low as minus 30 degrees in the Panhandle, Kidd said. Aside from light precipitation in the Panhandle, the state was expected to stay dry.

The lack of concerns over icy roads and infrastructure makes this a different threat than the 2021 Winter Storm Uri, which overwhelmed the state’s main electric grid and killed hundreds of people. Officials are promising that, this time, the power will stay on.

The Electric Reliability Council of Texas, which manages the grid that powers most of Texas, and the Public Utility Council made improvements after Uri, such as ensuring natural gas-fired plants have additional sources of fuel on site and improving communications among electricity regulators, oil and gas regulators, and the Texas Division of Emergency Management.

“The grid is ready and reliable,” said Peter Lake, chair of the Public Utility Commission, which regulates grid operators, on Wednesday. “We expect to have sufficient generation to meet demand throughout this entire winter weather event.”

ERCOT officials expected power demand to be highest from Thursday night through Saturday morning. The peak — near 70,000 megawatts — was predicted Friday morning, when grid operators expected to have nearly 85,000 megawatts of supply if all goes as planned.

“We do expect to have sufficient generation supply to meet the forecasted demands,” said Pablo Vegas, ERCOT’s president and CEO.

Of course, in an extreme scenario, the grid could still face rolling blackouts or tight conditions, and ERCOT could still issue a conservation notice. There may also be local power outages that have nothing to do with the viability of the power grid, caused by things such as wind knocking trees onto power lines.

See here for the background. We’ll find out soon enough. You’ll forgive me, and millions of other Texans, if we remain skeptical. I hope you all stay warm and safe, and that we have a good long time before we have to worry like this again.

Are we emotionally prepared for the oncoming freeze?

Dec 20th, 2022
by Charles Kuffner.
3 comments

That’s the real question at this point.

ERCOT on Friday notified power generators in Texas that they need to be online and ready to provide power during an expected wave of cold air that could drop overnight temperatures into the 20s late next week.

The Electric Reliability Council of Texas, the state’s nonprofit grid operator, issued the notice effective Dec. 22-26, though officials said they expect there will be enough power to meet demand.

The state’s power grid has been bolstered since a February 2021 winter storm knocked out power to large parts of Texas for several days and was linked to about 200 deaths. During that storm, demand for power soared while power generation equipment froze, knocking several producers offline.

“As we monitor weather conditions, we want to assure Texans that the grid is resilient and reliable,” said Pablo Vegas, ERCOT President and CEO. “We will keep the public informed as weather conditions change throughout the coming week.”

The coming burst of cold isn’t expected to be as strong as what was seen during the 2021 freeze, according to Space City Weather.

“While we will continue to watch this forecast very closely, we do not believe that the intensity, duration, or impacts of the cold will rival what we saw in 2021, which saw mid or low teens for lows,” wrote Space City Weather meteorologist Matt Lanza.

In the wake of the historic storm almost two years ago, state officials forced ERCOT to improve the power grid and make it less likely to falter in severe weather.

[…]

Ed Hirs, an energy fellow with the University of Houston, said those changes still fall short of larger market concepts he said could strengthen the grid’s reliability. The Public Utility Commission, which oversees ERCOT, is reviewing proposals for doing that and is expected to vote on a proposal recommendation at its Jan. 12 meeting. The Texas Legislature will debate the recommendation and other options during the 2023 legislative session.

“It takes more than 20 months to fix something broken over 12 years of underinvestment,” he said. “We’ll find out if the Band-Aids the PUC put in place will hold.”

That’s where I am right now, as I remember the forty-plus hours that we went without power in February of 2021. My family was pretty well equipped to handle the cold – not “fuck off to Cancun” privileged, but we were never in any real danger. Even with that, it was very unpleasant. We had our pipes bust in 13 places – thankfully, we were able to get a plumber out quickly to fix that – we lost a Meyer lemon tree that had produced a lot of fruit over the years, and it was just damn traumatic on the girls. I’m a little in denial about this freeze coming in, for reasons I can’t quite grasp other than I’m an idiot and this is how I cope with stuff like this. If the grid does fail in spectacular fashion again, the one thing we have learned is that there won’t be any political consequences for it. There’s never an election around when you really need one. Anyway, I hope we all manage to stay warm this time, with the exception of Greg Abbott and everyone on his campaign staff. The rest of you, bundle up and hope for the best. TPR, Reform Austin, and the Trib have more.

More battery power coming

Dec 20th, 2022
by Charles Kuffner.
Comments are off for this post

Now here is something that might actually help the grid.

Robert Conrad approves

A surge of new battery projects is expected to come online on Texas and California’s power grids, as developers seek to store the excess electricity produced by those state’s sprawling wind and solar farms.

The Department of Energy estimates 21 gigawatts of batteries will be hooked into U.S. power grids before 2026, more than two and half times what is currently in operation. In Texas they are expecting 7.9 gigawatts of batteries to be built.

The boom in battery development comes as weather dependent wind and solar energy become an increasingly large part of the U.S. power grid, requiring a power source to step in quickly when the wind isn’t blowing and the sun isn’t shining.

Since the rise of renewables over the past decade, natural gas turbines have shouldered a lot of that load. But as lithium ion battery prices have come down in recent years – at the same time natural gas prices have increased – power utilities are increasingly looking to that technology to fill the gaps.

“What you’re seeing here is a technology starting to reach its inflection point,” said Ryan Katofsy, managing director at the trade group Advanced Energy Economy. “Costs are down, performance is improved. There’s more awareness of the qualities (batteries) provide.”

The boom coincides with increasing concern around the reliability of the U.S. power grid amid changing weather patterns linked to climate change. Texas suffered a days long blackout in 2021 after a  historic winter storm caused power plants and natural gas wells to freeze up. Batteries could theoretically help fill the gap when power plants go down, said Michael Webber, an energy professor at the University of Texas.

But driving investor interest is a Texas power market where wind energy in the panhandle and West Texas frequently exceeds the capacity of transmission lines running east to the state’s population centers, he said. If a power company can store electricity in off peak hours and then deploy it when power demand is at its highest, there is profit to be made.

“You get these opportunities for big swings in price from low to high,” Webber said. “We’re going to build batteries all over, quite frankly.”

[…]

And many more projects could be coming, with 79 gigawatts worth of projects listed as pending by the grid operator’s Electric Reliability Council of Texas. Many of those projects have yet to secure financing or other milestones but they represent one third of all the generation in development on ERCOT’s grid right now.

You can thank the Inflation Reduction Act, also known as the bipartisan infrastructure bill, for that last item. There are still other issues to be solved but this is a good starting point. I don’t expect much from the Legislature, but as long as they stay out of the way it ought to be all right.

Beto tries again to get ridiculous defamation lawsuit dismissed

Dec 8th, 2022
by Charles Kuffner.
Comments are off for this post

Hope he has better luck here.

The gubernatorial election is over, but Kelcy Warren’s defamation lawsuit against Beto O’Rourke lives on.

Warren, the Dallas pipeline tycoon, sued O’Rourke in February over accusations he made on the campaign trail that Warren effectively bribed Gov. Greg Abbott with a $1 million contribution following the 2021 power grid collapse. The lawsuit has since been working its way through the legal system, and a state appeals court heard oral arguments Wednesday on O’Rourke’s motion to dismiss it.

Addressing a three-judge panel at the Third Court of Appeals, O’Rourke lawyer Chad Dunn argued that O’Rourke’s scrutiny of the donation was protected by the First Amendment and involved someone who had become a public figure.

“The minute you give $1 million to a gubernatorial candidate in one of the largest states, in Texas, you can expect attention,” Dunn said. “Mr. O’Rourke’s attention was not libel or slander.”

Warren’s lawyer, Dean Pamphilis, maintained his client is a private citizen.

“What they’re asking you to do here is to conclude that a million-dollar — or any — campaign contribution makes you a public figure, opens you up to attack that you can’t defend against unless you prove actual malice, and there is no precedent for that whatsoever,” Pamphilis said.

[…]

Both lawyers suggested the case has broader stakes for freedom of speech and electoral politics.

“Do we wanna live in a world where after political campaigns, we’re gonna have jury trials about what candidates said along the way?” Dunn said.

See here for the last update. I maintain this is a nuisance suit being brought by a fabulously wealthy dude who wants to have big influence over politics and lawmaking but doesn’t want to be held accountable for it. He absolutely does not deserve this level of protection from his own actions.

Do we actually know how to fix the grid?

Nov 23rd, 2022
by Charles Kuffner.
Comments are off for this post

The evidence is unclear.

Texas lawmakers and experts who study the state’s power grid aren’t thrilled with a proposal by state energy officials aimed at preventing future widespread outages such as the one during the 2021 winter storm.

The Public Utility Commission of Texas last week unveiled a proposal, backed by Chair Peter Lake, that would essentially pay power generators to make sure they have enough reserve electricity to feed the state’s electrical grid in times of extremely high demand. Generators would receive “performance credits” after proving their ability to keep the lights on during those periods — a system that doesn’t exist anywhere else in the world, according to the commission’s consultant.

In the days since, state legislators and energy experts have cast doubts on the proposal, which would cost power customers an additional $460 million yearly, according to the PUC’s estimate. They also questioned the plan’s complexity and the time it would take to implement such a novel system.

“There are huge reliability stakes and huge dollar stakes,” said Alison Silverstein, a former senior adviser at the PUC, which regulates the Electric Reliability Council of Texas, the state’s grid operator. “We need certainty. But there are ways to create certainty without making potentially billion-dollar errors.”

The Texas Legislature last year ordered the commission to overhaul the state’s energy market, which functions mostly off of supply and demand, in the wake of the winter storm. Texas’ electrical grid nearly collapsed as ice and snow blanketed the state. Below-freezing temperatures caused the demand for electricity to surge, triggering widespread power outages that left millions of Texans in the dark without heat for several days. Hundreds of people died as a result.

Power suppliers were allowed to charge sky-high prices for energy as demand spiked during the storm — but frozen equipment meant that they couldn’t meet that demand.

During their first chance to weigh in on potential reforms to the market, lawmakers on a key Senate panel this week made it clear they’re not impressed with the commission’s main proposal.

“This plan is so convoluted, has a long timeline to be put into place, that it’s a set-up for failure for everybody,” state Sen. Donna Campbell, R-New Braunfels, said during a Thursday hearing of the Senate Business and Commerce Committee, adding that the additional costs of the plan will ultimately be paid by power customers.

“The end loser is the end user,” Campbell said.

Senators expressed concerns about making the state’s power customers pay more for an untested system on top of paying off billions of dollars in costs incurred during the storm — costs that energy experts have said Texans will be paying off for decades.

“There was already a wealth transfer that we saw happen [during Uri], probably the largest in the state’s history,” state Sen. Lois Kolkhorst, R-Brenham, said.

I’ve read this story and the Chron story about the same hearing a couple of times, and I’m still not really sure what was on the table here. Part of the reason for this is that PUC Chair Lake rejected the recommendations of the consulting firm they hired, which among other things called for requiring electric providers to buy “reliability credits” from power generators, the idea being that generators would commit in advance to provide enough power during periods of high demand. Given that this kind of robustness was cited as a key problem from last February it at least sounds like a decent starting point. If that’s not the plan, and we don’t care what FERC has to say, then where exactly are we? I don’t know, and it sounds like the Lege doesn’t either. Maybe we should do better about that? Just a thought. TPR has more.

The cryptomining surge in rural counties

Nov 22nd, 2022
by Charles Kuffner.
2 comments

Here’s one possible answer to that question I posed the other day.

Jacob Rodriguez was driving a John Deere tractor in a West Texas cotton field when he received a phone call that would change his life.

“I was pulling a 59-foot air seeder … and at the same time I was on the phone having my interview,” Rodriguez, 29, said.

On the other end of the phone early this year were representatives from a new business that was coming to Dickens County, a community of around 2,000 people an hour east of Lubbock.

By March, Rodriguez had quit farming cotton — something he called “just another job” — and began training to work in a cryptocurrency mine.

The county had exactly what London-based Argo Blockchain was looking for: plenty of open land and easy access to affordable power, thanks to a large wind farm built there more than a decade ago.

Texas political leaders have been promoting the state as a destination for companies producing bitcoin and other digital currencies, touting the state’s reputation for low taxes and cheap power. Around 30 have come in the past decade, and dozens more have expressed interest in moving to Texas.

But instead of moving to the state’s large urban areas — which have the extensive infrastructure and large workforce that attracts most relocating companies — cryptocurrency companies have largely done the opposite and located in rural areas, according to Lee Bratcher, president of the Texas Blockchain Council, a group promoting crypto growth and innovation.

Crypto companies have been welcomed by many small towns hungry for an economic boost. Argo Blockchain opened its 125,000-square-foot Helios facility in Dickens County in May and hired a couple dozen locals, including Rodriguez. It has also added $17 million to the local tax base, according to Kevin Brendle, the county judge. The county’s overall assessed property tax value is $283 million, he said.

That economic infusion has allowed Dickens County to cut county property taxes by around 1.5%, give small raises to county staff, and purchase new equipment for the sheriff’s office and for road and bridge improvements.

“The end result is enhanced services to the community,” Brendle said. “We’re going to be able to do a better job of serving them, and we’ll be able to be competitive in our wages.”

In Milam County, northeast of Austin, a large crypto facility owned by Riot Blockchain that opened in 2020 has added hundreds of new jobs and millions of dollars for the local tax base, according to County Judge Steve Young. He said the boost in taxes has allowed the county government to pay for basic services such as road improvements. When the crypto company needed to employ contractors for various projects, it hired locally, he added.

See here for my question. The article notes that the recent crackdown on crypto mining in China has led to opportunities in places like Texas to pick up the slack. The Republican obsession with cryptocurrency and the fact that these places are locating in rural areas makes a lot of sense politically. And of course, as always, there’s this:

Many rural counties are offering crypto companies tax breaks to lure them to their communities. Milam County, which lost its biggest employer — an Alcoa aluminum plant that employed nearly 1,000 people at its peak and closed in 2008 — offered Riot Blockchain a 45% discount on local taxes for 10 years, said Young, the county judge.

“Businesses are typically not going to come to your county unless you’re willing to give them a tax abatement,” Young said.

Crypto companies still add millions of dollars to the local tax base, Young said, and in Milam County, Riot Blockchain also helped rebuild the local animal shelter and installed new lights at local sports fields.

On the other side of the state, Brendle said Argo Blockchain has committed to refurbishing the county-owned public pool, which closed more than a decade ago.

Brendle and Young both said local residents didn’t oppose the new businesses but had lots of questions about cryptocurrency and whether outsiders would flock to their rural counties.

“When they first came here, people had no idea what it was — neither did I,” Young said. “As it’s gone forward, the county as a whole has started to get a grasp of what’s going on and clearly appreciates the fact that they’re out there providing jobs, enhancing county services, hiring local contractors for the most part and spending a ton of money here. It’s a huge benefit to the county.”

Dig down far enough, there’s always a tax break. Look, I hope this works out well for these communities. Rural Texas has been losing population for a variety of reasons, and they could use the economic boost. I remain skeptical of cryptocurrency as a long-term endeavor, and I remain very worried about the demand it puts on our power grid, but there’s not much I can do about that. All I can say is that the last Big Economic Thing that happened in rural Texas was the private prison industry, and I really hope this turns out better all around than that. You’ll forgive me, I hope, if I will need to see it to believe it.

NOTE: This is the time of year when I clear out some posts that have been sitting in my Drafts while other more important news items got blogged about. This one was from early October, well before the crash of FTX. I’ll have a separate post about that shortly; the news hook for that is what prompted me to finally publish this one.

By the way, the grid is still not fixed

Nov 3rd, 2022
by Charles Kuffner.
Comments are off for this post

In case you were wondering.

A federal assessment indicates the Texas electricity grid remains almost as vulnerable to extreme winter weather as it was when it nearly collapsed during a prolonged deep freeze in February 2021 — although state utility regulators contend the analysis is flawed.

“The (Federal Energy Regulatory Commission) report contained inaccuracies and ERCOT has called on the agency to correct the report,” said Rich Parsons, a spokesperson for the Public Utility Commission of Texas.

The Public Utility Commission oversees the Electric Reliability Council of Texas, which manages the state’s power grid.

Mary O’Driscoll, a spokesperson for the Federal Energy Regulatory Commission, released an updated version of the agency’s assessment late Tuesday, but it drew the same conclusion as the original version dated Oct. 20 in terms of a potential shortfall during extreme winter conditions.

According to the document, the ability of the ERCOT grid to handle extreme winter weather along the lines of what hit the state in February 2021 appears to be only marginally better, despite more than 18 months of effort to make the grid more dependable — as well as assurances from state regulators, and from Gov. Greg Abbott, that it is significantly improved.

Consumer demand for electricity on the Texas grid could exceed available generation capacity by 18,100 megawatts under a winter scenario similar to what triggered the 2021 disaster, the report says.

[…]

The federal assessment indicates the ERCOT grid will have more than enough generating capacity this winter under typical weather conditions.

“Basically, what (the federal energy commission) is saying is if we get weather conditions like in February ’21, we would have close to a repeat of what happened,” said Doug Lewin, president of Austin-based energy consulting company Stoic Energy.

The federal agency “is sounding the alarm very clearly,” Lewin said. “The risk that existed (in February 2021), for all intents and purposes, is about the same heading into this winter.”

FERC had issued an initial report last November that criticized the lack of weatherization in the grid. I was unable to locate a copy of this report, but I’m sure it will turn up online. To be sure, we don’t expect weather conditions this winter to be like what we got in February 2021. But we didn’t really expect that either – at least, I’d say that while most of us knew it was going to be colder than usual, we were blithely unaware of the disaster potential – and we know from recent history that sooner or later another storm like that is going to pass through. As was the case following the 1989 and 2011 storms, it’s just a matter of whether we did anything about it. So far, not so much.

Tell me again why we’re encouraging all these crypto-miners to come to Texas

Oct 4th, 2022
by Charles Kuffner.
1 comment

Seriously, what are we doing here?

Cryptocurrency miners are accelerating their push to expand in Texas far beyond what authorities had initially expected, threatening to send the state’s electricity use skyrocketing.

Enough miners have applied to connect to Texas’s power grid to use up to 33 gigawatts of electricity, the Electric Reliability Council of Texas, which runs the system, said in an email Friday. That’s a third more than what the grid operator’s chief executive officer said in April that officials were preparing to handle over the next decade. It’s also enough to power all of New York State.

A spokeswoman for the grid operator, known as ERCOT, said officials expect to have enough power plants available to meet any rise in demand. The miners will need approval from ERCOT before connecting to the grid.

The surging interest underscores how appealing Texas remains to crypto miners, even as the value of Bitcoin has plunged more than 50% in the past year. And while many of those miners may never actually set up shop, the sheer number applying raises questions over whether the state’s grid, which collapsed during a deadly 2021 winter storm, will be able to meet the demand for electricity.

Crypto miners currently account for about 1.2 gigawatts of electricity demand in Texas, according to the Texas Blockchain Council, which represents miners. That’s enough to power about 240,000 homes. Over the past four months, the number of miners applying to plug into the grid has doubled.

The state has aggressively recruited miners, touting its cheap power, abundant renewable energy and business-friendly regulatory environment. Texas has some of the cheapest electricity rates for big consumers, averaging about 7.57 cents per kilowatt-hour in June, a third lower than the national average, according to the U.S. Energy Information Administration. It also has more wind power than any other state, which is appealing to miners pushing to appear more environmentally friendly.

In April, ERCOT’s interim CEO Brad Jones said he was working with miners to prepare the grid to handle about 25 gigawatts of crypto demand over the next decade. When asked if Texas aims to be the world’s largest mining center, he replied: “Yeah, that’s what we are planning.”

See here for some background. This story is from about a month ago, and it was the publication of another crypto story in the Trib that spurred me to finally hit publish on it. My main question is simply “Why?” What are we getting out of this? I’ll come back to that in the next crypto post. Yahoo News has more.

Beto still seeking to dismiss oligarch’s lawsuit against him

Aug 23rd, 2022
by Charles Kuffner.
4 comments

Might have better luck this time around.

Remember last year when Gov. Greg Abbott’s biggest donor sued gubernatorial candidate Beto O’Rourke for defamation, slander, and libel? Well, that’s still going on.

The legal fight has moved into a state appeals court, where O’Rourke is seeking to dismiss Kelcy Warren’s defamation lawsuit or remove the case from the energy executive’s county of choice.

Warren sued the Democrat in February, alleging that O’Rourke is trying to “publicly humiliate him and discourage others from contributing to Gov. Abbott’s campaign.”

[…]

Last month, a judge in San Saba County rejected O’Rourke’s request to dismiss the lawsuit.This week, O’Rourke made the same request to the Austin-based 3rd Court of Appeals, arguing that he exercised his free speech rights protected by the Texas Citizens Participation Act.

The state law protects against retaliatory lawsuits that seek to intimidate or silence speakers on matters of public concern.

“This is a frivolous abuse of the judicial system to silence political debate,” O’Rourke’s appeal said. “O’Rourke’s colloquial use of sharp words to describe a gas industry billionaire making a $1 million contribution days after the governor signed legislation containing a loophole favoring the gas industry is protected political speech and is not defamatory.”

On Wednesday, O’Rourke filed a second appeal at the 3rd Court, which argues that if the lawsuit was allowed to continue, it should be moved from San Saba County.

See here, here, and here for the background. I saw a story about the initial rejection of the motion to dismiss last month, but it was a super busy news time and I didn’t get around to noting it. I still think there could be political value in just going straight to discovery and depositions on this, but I also think Beto will win on his motions, and that that is the more prudent course of action. I will continue to watch this space. The Statesman has more.

We’re going to have a “colder than normal” winter

Aug 20th, 2022
by Charles Kuffner.
Comments are off for this post

What could possibly go wrong?

Make your Cancun plans now

Savor the rest of the sweltering summer because this winter in Texas is going to be “colder than normal,” according to Farmers’ Almanac.

The Almanac, which has been predicting the weather outlook for farmers and gardeners for over 200 years, says to expect a “chilly” winter with “normal precipitation.” Cold temperatures are expected to arrive in the South in mid-to-late November, mid-to-late December, and early and late January.

The Farmers’ Almanac previously predicted Texas’ deadly winter storm in 2021, in which heavy snowfall, ice storms and bitter temperatures put an enormous strain on the state’s power grid, leaving millions without electricity. Over 200 people died.

For this year, North Texas could see the most potential for snow and ice storms throughout the season. The Almanac says that heavy snowfall is expected to reach North Texas by the first week of January, followed by “significant snows” from North and Central Texas by the second week.

While this winter “will be filled with plenty of shaking, shivering and shoveling,” most of the cold weather is expected to “rattle warm weather seekers in the Southeast and South Central states, but the real shivers might send people in the Great Lakes area, Northeast, and North Central regions hibernating.”

There are a lot of qualifiers to this: The Farmers Almanac forecasts are not necessarily accurate. Other forecasters have not yet made their predictions, so this one might be an outlier. That 2021 storm really was an unusual event. But look, we know that basically nothing was done to address the power grid failures from that year, and at this point we know how bad it can get. There’s every reason to feel anxiety about this, no matter what ends up happening. That’s as much a failure as the inaction on the grid itself is. And it’s on Greg Abbott.

When we say “fix the grid”…

Aug 8th, 2022
by Charles Kuffner.
Comments are off for this post

This is one of the obvious ways we could attempt to do that.

Photo from Wikimedia Commons

The state’s High Plains region, which covers 41 counties in the Texas Panhandle and West Texas, is home to more than 11,000 wind turbines — the most in any area of the state.

The region could generate enough wind energy to power at least 9 million homes. Experts say the additional energy could help provide much-needed stability to the electric grid during high energy-demand summers like this one, and even lower the power bills of Texans in other parts of the state.

But a significant portion of the electricity produced in the High Plains stays there for a simple reason: It can’t be moved elsewhere. Despite the growing development of wind energy production in Texas, the state’s transmission network would need significant infrastructure upgrades to ship out the energy produced in the region.

“We’re at a moment when wind is at its peak production profile, but we see a lot of wind energy being curtailed or congested and not able to flow through to some of the higher-population areas,” said John Hensley, vice president for research and analytics at the American Clean Power Association. “Which is a loss for ratepayers and a loss for those energy consumers that now have to either face conserving energy or paying more for the energy they do use because they don’t have access to that lower-cost wind resource.”

And when the rest of the state is asked to conserve energy to help stabilize the grid, the High Plains has to turn off turbines to limit wind production it doesn’t need.

“Because there’s not enough transmission to move it where it’s needed, ERCOT has to throttle back the [wind] generators,” energy lawyer Michael Jewell said. “They actually tell the wind generators to stop generating electricity. It gets to the point where [wind farm operators] literally have to disengage the generators entirely and stop them from doing anything.”

[…]

Wind energy is one of the lowest-priced energy sources because it is sold at fixed prices, turbines do not need fuel to run and the federal government provides subsidies. Texans who get their energy from wind farms in the High Plains region usually pay less for electricity than people in other areas of the state. But with the price of natural gas increasing from inflation, Jewell said areas where wind energy is not accessible have to depend on electricity that costs more.

“Other generation resources are more expensive than what [customers] would have gotten from the wind generators if they could move it,” Jewell said. “That is the definition of transmission congestion. Because you can’t move the cheaper electricity through the grid.”

A 2021 ERCOT report shows there have been increases in stability constraints for wind energy in recent years in both West and South Texas that have limited the long-distance transfer of power.

“The transmission constraints are such that energy can’t make it to the load centers. [High Plains wind power] might be able to make it to Lubbock, but it may not be able to make it to Dallas, Fort Worth, Houston or Austin,” Jewell said. “This is not an insignificant problem — it is costing Texans a lot of money.”

Some wind farms in the High Plains foresaw there would be a need for transmission. The Trent Wind Farm was one of the first in the region. Beginning operations in 2001, the wind farm is between Abilene and Sweetwater in West Texas and has about 100 wind turbines, which can supply power to 35,000 homes. Energy company American Electric Power built the site near a power transmission network and built a short transmission line, so the power generated there does go into the ERCOT system.

But Jewell said high energy demand and costs this summer show there’s a need to build additional transmission lines to move more wind energy produced in the High Plains to other areas of the state.

Jewell said the Public Utility Commission, which oversees the grid, is conducting tests to determine the economic benefits of adding transmission lines from the High Plains to the more than 52,000 miles of lines that already connect to the grid across the state. As of now, however, there is no official proposal to build new lines.

Sure would be nice to have such a proposal, wouldn’t it? That’s a thing that the Governor and the Legislature could make happen if they wanted to. Unfortunately, a lot of them don’t want to, and of course Greg Abbott is incapable of taking any positive action. So here we are, with those of us too far away from the existing turbines to benefit from them looking longingly at the Gulf of Mexico for some future relief. I don’t know how much it might cost to build out the transmission network (the story doesn’t say), or to invest in battery storage for solar energy (another thing we’re good at generating in this state, as noted in the story), but I’m sure we could find the money if we wanted to. First, though, we have to want to. And that means electing people who want to. Because we don’t have that now.

Offshore wind farm proposed

Jul 25th, 2022
by Charles Kuffner.
2 comments

Let’s do it.

The Gulf of Mexico’s first offshore wind farms will be developed off the coasts of Texas and Louisiana, the Biden administration announced Wednesday, and together they’re projected to produce enough energy to power around 3 million homes.

The wind farms likely will not be up and running for years, energy analysts and the state’s grid operator said, but the announcement from the U.S. Interior Department is the first step in ramping up offshore wind energy in the United States, which has lagged behind that of Europe and China. The only two operating offshore wind energy farms in the U.S. are off the coasts of Rhode Island and Virginia, which together produce 42 megawatts of electricity — enough to power fewer than 2,500 homes.

One of the new wind projects announced Wednesday will be developed 24 nautical miles off the coast of Galveston, covering a total of 546,645 acres — bigger than the city of Houston — with the potential to power 2.3 million homes, according to the U.S. Interior Department’s Bureau of Ocean Energy Management. The other project will be developed near Port Arthur, about 56 nautical miles off the coast of Lake Charles, Louisiana, covering 188,023 acres with the potential to power 799,000 homes.

“It’s exciting to see offshore wind in the Gulf getting closer to reality,” said Luke Metzger, executive director of Environment Texas, an environmental protection group. “With strong winds in the evenings when we need energy the most, offshore wind in the Gulf of Mexico would greatly complement Texas’ onshore renewable energy resources, help bolster our shaky electric grid and help our environment.”

[…]

“Offshore wind has a great potential in Texas,” Brad Jones, president of the Electric Reliability Council of Texas, which manages Texas’ main power grid, told The Texas Tribune on Thursday. “It will take some time to develop, and that time will be based on how quickly we can put together port facilities, the specialized ships that are necessary and train our labor force to achieve this type of development. It is new for the U.S.”

I suppose it’s a sign of the times that when I read stories like this I go looking for the bit where Ken Paxton threatens to file a lawsuit to stop it. I may need therapy. No mention of any such action in this story, or in the Chron story that has a few more details.

The wind energy area proposal is still just a draft, the bureau said. Visitors to its website can comment on the plans, and the bureau will hold online public meetings Aug. 9 and 11 to discuss the proposals.

“Once the final wind energy area or areas have been identified, the next step is to propose a lease sale for public comment either later this year or early next year,” said John Filostrat, a spokesman for BOEM’s Gulf of Mexico office.

The bureau said state officials and wind developers would determine if electricity generated in the areas’ boundaries would flow to the Texas power grid or the neighboring East Coast grid system. The Coast Guard would determine if commercial or recreational boats — including commercial fishing and shrimping operations — could enter the waters near the wind turbines, bureau officials said, adding that they have held several meetings with fishing groups and associations this year.

As a result, they said they have already carved out parcels from the lease area to leave bare for shrimping operations to continue.

[…]

Wind power along the Gulf Coast tends to be strongest south of Corpus Christi, tapering off by the time it reaches Florida, according to a bureau study.

Even so, the Gulf of Mexico has a leg up on the competition, said Josh Kaplowitz, vice president of offshore wind for the American Clean Power Association. The region is home to an entire supply chain dedicated to offshore energy and a trained workforce. Already, he said, a massive wind turbine installation vessel is being built in Brownsville.

“The Gulf of Mexico has a head start, and we should be leveraging that,” he said. “Wind turbine technology is getting better. They’re getting larger, and as they get larger they can be built in a more economical way at lower wind speeds.”

One issue more pressing for Gulf turbines than those in other offshore areas is the potential for strong hurricanes. Kaplowitz said the turbines off Rhode Island and those designed for off the coast of North Carolina have been engineered to withstand hurricane-force winds. He said those built off the Texas coast would likely be designed to withstand winds of the strongest storms projected to hit that part of the coast.

Offshore wind turbines have yet to be tested in such a ferocious storm, Andy Swift, associate director of education with Texas Tech’s National Wind Institute, told the Chronicle in October. Turbines onshore have suffered catastrophic damage in tornadoes, he said, requiring companies to take out large insurance policies on them. That could also be the case in the Gulf, he said.

“The storm issue — it’s a big one. I think people are looking at building more hurricane-resistant turbines as much as they can to stand against the high winds continually buffering of equipment, with waves and winds gusting against it,” Swift said in October. “I think that’s a challenge for offshore.”

The BOEM’s press release about this is here, and it points you to this page for info about public meetings and providing feedback. This is likely the start of a ten-year process, so settle in and make yourself comfortable. Assuming there isn’t already a national injunction against it issued by some cretinous Trump judge in Lubbock or something. Did I mention that I need help?

I’m sure they’ll evaluate themselves objectively

Jun 6th, 2022
by Charles Kuffner.
2 comments

What could possibly go wrong?

In October, Colorado-based E3 Consulting offered a plan for how the Public Utility Commission should redesign Texas’ deregulated power market. It produced a 44-page proposal, paid for by energy giants NRG and Chicago-based Exelon.

Now the PUC — saying it wants an impartial review of the proposals — has hired E3 to analyze the plans, including its own.

A PUC contract signed May 10 shows the consulting firm will receive up to $364,000 for its review. The contract notes that E3 would create an “internal firewall” to protect against bias in the report, but the contract’s administrator for E3 is first among four authors listed on its market redesign plan.

E3 didn’t respond to a voice message or email requesting comment. The PUC, in a statement from spokesman Rich Parsons, said E3 was selected through a competitive bidding process “open to any qualified respondents and in full compliance with the state’s procurement laws and procedures.”

“Through this competitive process, it was determined E3 presents the best value to Texans for this project,” he wrote.

But energy experts said the contract casts a shadow of bias over the market redesign process.

“Can you spell conflict of interest?” said Alison Silverstein, an Austin-based energy consultant who worked for the PUC from 1995 to 2001 and with the Federal Energy Regulatory Commission from 2001 to 2004. “Just on the surface, apart form evaluating their own project, you’re not supposed to have the appearance of bias, if not the reality of possible bias. Most of us citizens think if you take money from someone like a generator, you are likely to favor that party’s point of view.”

[…]

When the PUC, which regulates public utilities in Texas and oversees ERCOT, sought companies to provide an independent analysis of the market proposals, only two responded: E3 and Potomac Economics, an independent market monitoring service out of Fairfax, Va.

Potomac monitors ERCOT to ensure companies don’t cheat in the wholesale power market, where power producers compete to supply the cheapest electricity.

Silverstein, the energy consultant, said unlike E3, Potomac cannot receive money from power generators or retailers because of its independent status.

Ed Hirs, an energy fellow with the University of Houston, said the requests for proposals for the independent analysis was written in a way that may have worried some analysis firms. He said it looked like the PUC was looking for a rubber stamp, a concern he said is also reflected in its contract with E3.

E3 told the PUC about its work with NRG and Exelon during the solicitation process, according to the contract, but noted that the relationship had “been terminated prior to signing this contract.”

I feel like if someone wanted to do a modern-day version of The Best Little Whorehouse in Texas, you could quite reasonably work the entire ERCOT/PUC freeze-and-post-freeze saga in as a subplot for the Governor, though you might have to tone it down a bit so it doesn’t come off as too ridiculous. Jokes aside, the obvious solution to this particular situation is to simply disqualify E3’s proposal from consideration. There’s no conflict of interest problem if E3 isn’t being asked to judge themselves. It’s so simple that of course we’ll never do it. But since I brought up TBLWiT, here’s the video of the song you now have in your head:

You’re welcome, and may God forgive me.

Sure hope our grid can handle a bunch of crypto

May 18th, 2022
by Charles Kuffner.
Comments are off for this post

I have three things to say about this.

With interest surging in digital currencies and the blockchain technology behind them, more and more investors and operators are turning to Texas, lured by its cheap energy and hands-off regulatory approach. The rush, like those underway in Wyoming, South Dakota and other states, has been welcomed by energy executives and some elected officials who see it as a catalyst for job growth and tax revenue.

But it is also adding massive new demand to the state’s fragile electricity grid and putting pressure on legislators to harness the growth in ways that are sustainable — and that don’t price out residential consumers.

The Energy Reliability Council of Texas, which manages the state’s grid, is projecting that the explosion in cryptocurrency and other “large load” operators could bring as many as 16 gigawatts of new electricity demand by 2026. That’s about a quarter of the grid’s current capacity and enough to power over 3 million homes on a summer day.

“I don’t think anybody thinks all of that will be built, but it’s still a tremendous amount,” said Cyrus Reed, conservation director for the Lone Star Chapter of the Sierra Club.

For a state that failed so spectacularly to secure the power supply during last year’s winter blackouts, piling on more demand will be a critical new test, especially in the face of climate change. Last week alone, unseasonably high temperatures drove electricity demand to midsummer levels. Late Friday, the state asked Texans to conserve power after six natural gas-fired power plants tripped offline.

Leaders in the crypto industry say their entrance will improve reliability by bringing uniquely flexible loads — often sprawling, power-hungry data warehouses — that can shut down within minutes and put electricity back on the grid when demand peaks.

[…]

Joshua Rhodes, a researcher at the University of Texas at Austin who has consulted for a crypto mining company, said the same hallmarks of the state’s deregulated electricity market that helped lead to such growth in wind and solar over the past two decades could make it hard for leaders to rein in bad actors.

“They have the ability to be part of the energy transition that we need, but I’m becoming less convinced that the majority of them care enough to do it,” Rhodes said of the industry.

Any new regulation will have to wait until next year’s legislative session. Last cycle, the House and Senate set up a study group that includes two Republican members and the president of the Texas Blockchain Council, a trade group whose lobbyist is a former top aide to Republican Gov. Greg Abbott. The group will meet to take public testimony this month.

Rep. Tan Parker, R-Flower Mound, has been leading the crypto push in the House. He said his focus is on helping the industry grow with minimal restrictions and on ensuring there is enough power to meet demand, including new generation from fossil fuels and possibly nuclear power.

“It’s all about creating a level playing field so that folks know what the rules of engagement are, and therefore can be successful,” Parker said.

If new rules are on the way, many in the industry aren’t worried that they’ll stifle growth.

“We just had a gubernatorial race where we had three candidates tripping over each other to be the most bitcoin candidate there was, so I don’t see regulation coming now,” Griffin Haby, co-founder of Limpia Creek Technologies, told attendees at a crypto conference last month in Houston, referring to the Republican Party primary. “But you never know.”

1. This story weirdly does not mention the utter mess that the crypto market is in right now. I’m hardly a crypto expert, and things change quickly over there, so one might simply say that it’s all a bit of minor turbulence that will have no effect on the longer term projections. Fair enough, but the volatility of the market, the zeroing out of some entire currencies, the huge loss of investors’ capital, you’d think it would have at least merited a sentence or two.

2. We all know that the Republicans will do absolutely nothing to bolster or protect the grid as they roll out the red carpet for coinminers. They did nothing after the freeze last year, so it would be delusional to think they’ll do anything here. Maybe those “large load” operators will come swarming in, and maybe the coinminers themselves will have a bit of civic responsibility. That’s about the best you can hope for as long as the Republicans are in charge.

3. It’s going to be a long, hot summer. Forget the future projections, hope that the grid doesn’t crap out on us tomorrow or next week or (God forbid) in August.

How much is Greg Abbott sweating right now?

May 15th, 2022
by Charles Kuffner.
1 comment

I hope it’s a lot. It should be a lot.

With temperatures soaring statewide, Gov. Greg Abbott is scrambling to reassure Texans he’s closely monitoring the state’s shaky electric grid as other GOP officials vow to get back to work fixing a system many, including Abbott, declared they had repaired after deadly outages during last year’s winter storms.

An hour after high-level meetings with Abbott, the state’s electricity monitor warned the public that six power plants had failed, forcing the state to call on Texans to reduce air conditioning usage and watch their energy consumption through the weekend. Electric Reliability Council of Texas did not disclose which units had gone offline or when they’d be back up.

ERCOT data showed demand for power in Texas was projected to be within 2,000 megawatts of the total supply by mid-afternoon on Saturday, triggering the conservation alert. Typically the state has a much bigger cushion. When operating reserves drop below 1,750 megawatts for more than 30 minutes, ERCOT can interrupt power for large industrial customers and can call for rotating blackouts if reserves drop to 1,000 megawatts. A megawatt is about enough electricity to power 200 homes on a hot day.

Peak demand on the grid was expected between 5 and 6 p.m on Saturday.

Abbott, who said last June that lawmakers did “everything that needed to be done” for the grid, released a photo of himself on Friday, meeting with officials from ERCOT and the Public Utilities Commission in his office just over an hour before the conservation warning was sent out.

“We continue to work closely to ensure Texas’ power grid remains reliable & meets the needs of Texans,” Abbott said.

[…]

Democrat Beto O’Rourke has been blistering at rallies, reminding voters that more than 700 Texans died, by some estimates, when the grid failed in 2021 during the winter storms. Lawmakers had been repeatedly warned that the power grid needed reforms, but those warnings had largely been unheeded until millions of Texans were left without power during the record freezing temperatures last winter.

O’Rourke has been campaigning on forcing more weatherization requirements on energy providers and connecting the Texas grid to the national grid to ensure the state can tap into national emergency supplies when needed, something Republicans who control the Legislature have declined to do.

On Friday, he blasted Abbott for waiting until after 5 p.m. on Friday to make ERCOT put out their conservation alert, even though he had been meeting with them well before that.

“He doesn’t want Texans to know that he STILL can’t keep the power running in the energy capital of the world,” O’Rourke said on Friday after the ERCOT alert went out.

By the time you read this, the worst is likely to be over, and maybe there haven’t been any power outages resulting from the extra demand on the grid. But you know, it’s not even halfway through May yet. There will be more opportunities for us to be told to turn the A/C down as the temperatures creep up towards 100. Maybe if Greg Abbott had spent some of that federal COVID relief money on fixing the grid instead of having the National Guard write jaywalking tickets we’d be better off now.

Here are some tweets to sum it up:

The classics always have something to say to us.

More on the oligarch suing Beto

Apr 2nd, 2022
by Charles Kuffner.
3 comments

From the Observer; I’m picking it up after the initial statements by Beto that got Kelcy Warren’s undies in such a wad:

Free-speech advocates and many legal scholars have long decried these sort frivolous lawsuits—known as SLAPPs, or Strategic Lawsuits Against Public Participation—as a blatant abuse of the country’s legal system by powerful and wealthy people and corporations in an attempt to silence outspoken activists, critical reporters, and rivals alike.

“Kelcy Warren is far from the first billionaire to file a lawsuit against someone who says something they don’t like. … And even though they’re highly unlikely to succeed on the merits, they file them anyway,” Evan Mascagni, policy director for the anti-SLAPP advocacy group Public Participation Project, told the Observer.

“SLAPP-filers don’t go to court to seek justice. Rather, they file these meritless lawsuits to silence, harass, and intimate their critics. Defending against a meritless lawsuit can cost tens or even hundreds of thousands of dollars and clog up the court system for years while at the same time having a chilling effect on the writer or speaker.”

With one of Abbott’s top donors going directly after his political ally’s opponent, Warren’s lawsuit marks an unprecedented incursion into Texas politics—one that is likely to only further elevate the mega-donor’s role in the most high-profile election this year. It seem to be an unwelcome move for Abbott, whose campaign promptly issued a statement saying that it had no involvement with the suit. O’Rourke, meanwhile, is spoiling for the fight—and has doubled-down in his rhetoric in the wake of the lawsuit. Earlier this month, O’Rourke compared Abbott to Russian President Vladimir Putin, calling him an “authoritarian” and a “thug,” and said, “he’s got his own oligarch here in the state of Texas”—an apparent reference to Warren.

The law firm—Kasowitz Benson Torres—that Warren hired to take on O’Rourke is notorious for aggressively litigating these types of suits on behalf of its powerful clients, including his company, Energy Transfer Partners. The firm’s founder, Marc Kasowitz, was also the longtime attorney for the infamously litigious former President Donald Trump.

[…]

While it’s not clear if O’Rourke will ultimately file a motion to get the suit tossed, experts say the state’s anti-SLAPP law was created for cases like these.

“My general impression of the lawsuit is that it’s very much subject to dismissal under the TCPA,” Lane Haygood, an Odessa-based lawyer who has worked on free-speech cases in the state, told the Observer.

“The statements that could survive [an anti-SLAPP dismissal] are the ones that get closest to accusing Mr. Warren of committing a specific crime,” Haygood added. “There are a couple of times that O’Rourke uses words like extortion or bribery, which are defined crimes under the Texas Penal Code. But they are also rhetorical shorthand and hyperbolic, and so in context, Texas courts are generally likely to hold that such language is not specific enough to be actionable defamation. It is the difference between saying ‘John Smith assaulted me on September 4, 2021,’ and ‘John Smith is a bully who beat me up.’ ”

O’Rourke has dismissed Warren’s claims as blatantly frivolous, saying that everything he’s said is based on publicly available facts and media reports. So far, he’s indicated that he wants to let the case play out—paying for any legal costs with campaign funds. This week, his attorneys filed motions to change the venue of the lawsuit to a court in his home of El Paso County and called for a trial by jury.

Under the state’s anti-SLAPP law, O’Rourke has 60 days from the date he was served—February 28—to file a motion to dismiss. It’s not uncommon for attorneys to wait until the deadline to do so in case the defendant files an amended petition, Haygood said.

Or O’Rourke may see the public spectacle of this lawsuit as a political gift that’s well worth going to court over—especially since his ample campaign funds should easily cover the legal costs of a drawn-out legal battle.

See here and here for the background. Beto has basically until the end of April to file a motion for dismissal, which is still the legally sound strategy. Politically, though, it likely makes more sense to say “bring it”, and start filing tons of motions for discovery. I have no idea what Beto will do, but I’d love to sit in on his next call with the lawyers.

Beto responds to oligarch’s lawsuit

Mar 23rd, 2022
by Charles Kuffner.
Comments are off for this post

Game on.

Democrat Beto O’Rourke is blasting a pipeline company executive and top donor to Greg Abbott’s re-election campaign for filing a defamation lawsuit against him as he tries to unseat the two-term Republican governor.

O’Rourke’s attorney filed a legal response to the suit in San Saba County on Monday saying it lacked any factual or legal grounds and that O’Rourke denies all the allegations made by Kelcy Warren, a major Abbott donor.

O’Rourke is also asking for a trial by jury. He calls Warren’s lawsuit an attempt to stop him from talking about the role pipeline companies like Warren’s played in causing power outages during the February 2021 freeze that killed over 200 Texans, by the state’s count.

“But no matter how much money they have, or how hard they try to silence me in the courts, I will never back down from standing up for the people of Texas,” O’Rourke said.

[…]

Since 2019, Warren has given Abbott $1.25 million, making him one of Abbott’s top four financial backers for his re-election campaign.

Warren, from Dallas, is chairman of the board at the gas pipeline company Energy Transfer Partners and its former CEO. Abbott over the years has appointed Warren to high-profile boards and commissions — Warren is a member of the University of Texas Board of Regents and was previously a member of the Texas Parks and Wildlife Commission.

Warren’s lawsuit alleges that O’Rourke is trying to “publicly humiliate Warren and discourage others from contributing to Gov. Abbott’s campaign.”

“What Mr. Warren is interested in stopping are the irresponsible, defamatory and highly offensive statements by Mr. O’Rourke related to his donation to Gov. Abbott’s campaign,” says a statement from Energy Transfer Partners.

See here for the background, and look deep in your heart for all the sympathy you can muster for this poor, maligned, misunderstood billionaire who only wanted to get an exorbitant return on his investment. Is that so much to ask?

Some details, for the lawyers:

From that first document:

The Plaintiff sued O’Rourke for defamation, and claims venue is proper (indeed, mandatory) in San Saba County because he resided here when the allegedly defamatory statements were made. Original Petition, ¶ 10 (citing Tex. Civ. Prac. & Rem. Code §15.017).

This claim is untrue. Although the Plaintiff does effectively control some real property in San Saba County, most of it is: (1) undeveloped; and (2) held in the name of an entity that the Plaintiff controls, not the name of the Plaintiff. The evidence shows the Plaintiff in fact lives in Dallas County, Texas, where his homestead is located, where he is registered to vote and where he actually, physically resides. Because the Plaintiff has Filed suit in a county other than a county of mandatory venue, the Court must grant this Motion to Transfer Venue and order the suit to be transferred to El Paso County, Texas, the county of O’Rourke’s residence.

And from the second:

Without waiving the right to plead further, Defendant specially excepts to the remainder of Plaintiff’s claims because Plaintiff has failed to assert factual and legal grounds for recovery against the Defendant under Texas law, or any other applicable law, for the remainder of his purported causes of action. The Defendant requests that Plaintiff be ordered to replead to state a legally actionable cause of action within a specified reasonable time and, upon Plaintiff’s failure to do so, that Plaintiff’s claims against the Defendant be dismissed.

I Am Not A Lawyer, but I’m pretty sure that’s fancy lawyer-speak for “This whole thing is bullshit”. You love to see it. I hope this is giving Greg Abbott indigestion. The Daily Beast has more.

One of Abbott’s billionaire patrons just sued Beto

Mar 8th, 2022
by Charles Kuffner.
6 comments

OMG, this is amazing.

The former CEO of one of the nation’s biggest pipeline companies and a major donor to Gov. Greg Abbott is suing Democrat Beto O’Rourke for defamation, slander, and libel for talking about his company’s role in the 2021 Texas winter storm and referring to the executive’s subsequent donations to Abbott’s re-election as “pretty close to a bribe.”

Kelcy Warren, who was a top executive at the gas pipeline company Energy Transfer Partners, filed suit against O’Rourke in San Saba County, seeking more than $1 million in damages from O’Rourke, claiming he is trying to “publicly humiliate Warren and discourage others from contributing to Gov. Abbott’s campaign.”

O’Rourke on Monday responded with a press conference just 5 miles from Energy Transfer Partners’ headquarters in Dallas calling the lawsuit “frivolous” and aimed at trying to stop him from telling the truth about what happened before and after the deadly storms on Abbott’s watch.

“He is trying to stop me from fighting for the people of Texas,” O’Rourke said. “And just as we did before, we are not backing down right now.”

For months, O’Rourke has been blasting Abbott for accepting a $1 million contribution from Warren after the Texas power grid failure during the storm. The Wall Street Journal has reported that Energy Transfer Partners made an additional $2.4 billion last year when the state’s grid manager pushed power prices sky-high to end rolling blackouts. The freeze killed more than 200 people by the state’s estimate and resulted in billions in property damages.

O’Rourke said all he’s done is “connect the dots” for people so they see how Abbott received generous donations from companies that profited on the winter storms.

During a campaign stop in San Antonio last month, O’Rourke said energy companies have essentially paid off Abbott for not being more aggressive and holding them accountable.

“That’s pretty close to a bribe by any definition that I’m familiar with,” O’Rourke said in San Antonio, though he did not call out Warren by name.

Warren also took issue with O’Rourke retweeting a story from Dallas ABC affiliate WFAA in January which details how another energy company, Luminant Corp., had filed a complaint against Energy Transfer Partners with the Texas Railroad Commission. Luminant says in the complaint that Energy Transfer Partners threatened to shut off gas supply to the company unless it paid $22 million in fees connected to the 2021 storms. O’Rourke retweeted the story, with a comment: “That’s extortion.”

In the court filing, Warren’s attorneys argue that O’Rourke’s heated rhetoric has been damaging to “Warren’s reputation and exposed him to public hatred, animus, contempt or ridicule, or financial injury.”

See here and here for some background. A copy of the complaint is here. I almost don’t know where to begin with this. Well, okay, how about what an absolute whiny crybaby snowflake? Did that mean ol’ Beto hurt your widdle fee-fees? Poor, poor, obscenely wealthy baby.

I Am Not A Lawyer, so I’m not going to pretend I know what the likelihood of success for poor downtrodden Kelcy Warren is. I do know that it’s likely months before this ever sees the inside of a courtroom, and if it somehow manages to survive a motion to dismiss it could be a couple of years before we get to the deposition and pretrial hearing stages. But suppose we were to have the lawyers on each side begin the discovery process right now. Who do you think would be more nervous about it, Beto or Abbott? I kind of don’t think Beto will have much to hide. How many emails and texts between Abbott and Warren do you think they might find?

I mean, has anyone introduced ragtag man of the people Kelcy Warren to the Streisand Effect? What better way to make sure that Beto’s main campaign theme is a topic for every local news station to cover on a regular basis? I’ve already seen tweets to this effect, but my first reaction was that Beto is going to have to list this lawsuit as an in-kind donation to his campaign on the July finance report. You literally can’t buy this kind of publicity.

I guess most of us will never understand the pain and suffering and angst and ennui of common folk like Kelcy Warren. We should be grateful to him for performing this service for us. May we come to know him and his inner turmoil much more intimately now. The Trib, who so insensitively refers to Warren as an “oil tycoon”, has more.

Create your own power grid

Mar 7th, 2022
by Charles Kuffner.
Comments are off for this post

Two words: Solar panels.

For nearly eight hours one day in late January, the power to Sam Bryan’s house blinked off after a transformer near his greater Third Ward lot blew a fuse.

The same transformer has long had issues, he said, leading to blackouts at Bryan’s house and those of his neighbors several times a year. But in January, Bryan’s lights stayed on, thanks to 43 photovolatic solar panels bolted onto his roof and a battery system stored in his garage. Instead of comforting his 4-year-old, who had grown anxious during power outages since the freeze of February 2021, they played a game.

“It was a pretty neat experience,” he said. “Part of the fun was that I don’t have to explain why we can’t turn the lamp on.”

Bryan is among thousands of Texans who have turned to solar power and battery storage, creating so-called microgrids, as a solution to blackouts. With a venture creating the same little power plants for apartment buildings, Texas has become a national leader in residential solar power installations.

From 2019 to 2020, small-scale solar capacity in Texas grew by 63 percent, to 1,093 megawatts from 670 megawatts, according to the Energy Information Administration. In the first three quarters of 2021, another 250 megawatts of residential solar were installed in the state, according to the Solar Energy Industries Association. In last year’s third quarter alone, Texas ranked second behind California in the amount of power from new installations during the period, the industry’s Washington, D.C. trade group said.

[…]

Rooftop solar systems and other residential generators like those powered by diesel or batteries can create microgrids to power an individual house or be linked to others in a neighborhood. They can operate as part of the main power grid — like the one managed by the Electric Reliability Council of Texas that almost collapsed last year — or they can disconnect and be managed autonomously during a power outage.

The flip of a switch can disconnect a microgrid from the larger utility, says Stephen Bayne, department chair of electrical and computer engineering at Texas Tech University. It can be as simple as a breaker in a garage or a computer system that automatically disconnects from the grid when there’s a disruption. More advanced microgrid systems, sometimes known as virtual power plants, can track usage, generation and battery storage across multiple buildings. It also prevents the microgrid’s power from flowing to the wider grid during emergencies.

“So let’s say the grid has to turn off for some reason, say in Houston you had flooding and part of grid is underwater, but not a certain community,” Bayne said. “That area could still lose power for days, but if the community had a microgrid, it could disconnect and use a diesel generator, battery storage, solar — it could keep grid going, or at least keep critical loads going for a while.”

Sounds pretty good, no? The main obstacle is the up-front cost, which can be in the mid-to-high five figures, though federal tax incentives can bring it down some. You do get much lower utility bills, which pays you back over time, but if you can’t spend fifty or sixty grand for the panels and the battery equipment, this won’t be for you. We need to think about some creative ways to defray those initial capital costs for homeowners, so more people can do this.

More on Abbott’s involvement in “getting the power back on”

Mar 1st, 2022
by Charles Kuffner.
Comments are off for this post

Also known as more from the Brazos Electric Power Co-op lawsuit against ERCOT, but that didn’t fit well in the title.

The former chair of the Texas Public Utility Commission testified in court Thursday that during last year’s winter storm and blackout Governor Greg Abbott had ordered her to ride out to the power grid control room in Taylor with one of his top advisers.

DeAnn Walker, who resigned in the political fallout of the blackout, said Abbott told her to, “get the power back on” and keep it on and had a state game warden drive her out to the control room.

“He told me to go out to the Taylor facility and to figure out a way to get the power back on to all the customers and to not go back into rolling outages,” she said in federal bankruptcy court in Houston.

[…]

The utility commission originally ordered power prices to the $9,000 cap on Feb. 16, as power plants began freezing up and dropping off the grid at a fast rate. The next day, as generators were beginning to come back online, there was pressure from some power companies to let the power market resume normal operations.

But Magness and Walker resisted, testifying the grid was still unstable and at risk of falling into a total blackout that could take weeks to recover from.

On Thursday Walker, a former adviser to Abbott who was appointed to the utility commission in 2017, faced questions about why she didn’t call a meeting of the utility commission to consult with other commissioners about keeping power prices at the $9,000 cap.

She replied that she believed the commission’s order from Feb. 16, “was still in place.”

“That was an independent decision I made,” she said. “It wasn’t something as a commission we discussed.”

Asked if she discussed it with anyone else, Walker said, “I don’t remember.”

Walker struggled to remember details of the blackout at numerous times during her testimony Thursday, at times drawing criticism from U.S. Bankruptcy Judge David Jones.

At the end of her testimony, Jones commented, “I see no purpose in simply highlighting the areas of your unreliability.”

“I am disappointed in your conduct and your lack of candor this morning.”

See here for the previous day’s testimony from former ERCOT head Bill Magness. While it may sound like Abbott was ordering Walker to do something good, it contradicts his previous claims that he was not involved in the decisions being made by ERCOT and the PUC. In addition, the crux of this lawsuit is that ERCOT and the PUC mandated that the price cap for energy remain at the maximum level of $9,000 per kilowatt hour for days after the grid began coming back up, which put many millions of dollars into the pockets of some power generators at the expense of companies like Brazos Electric and their customers, which is to say people like all of us. The lawsuit, part of Brazos’ bankruptcy filing, is over how much they actually owe their suppliers. The plaintiff’s argument, which is backed up by a lot of outside experts, is that the max price cap, which ostensibly was to coax offline generators back online, did nothing of the sort. It was just a huge windfall for the providers that were already producing.

Anyway. A favorable decision for Brazos Electric would obviously be good for them, and I would hope good for their customers. It would also cause other power retailers to follow suit, and who knows how chaotic that might get. Not that it would be a bad thing, just a big uncertainty. And if there are a bunch more lawsuits of this nature, ERCOT is going to be very busy defending itself.

The Electric Reliability Council of Texas does not have sovereign immunity from all lawsuits and the Texas Public Utility Commission does not have exclusive jurisdiction over all claims against ERCOT, according to a ruling by an appeals court ruling this week.

The 12-to-1 decision Wednesday by the Fifth District Court of Appeals in Dallas was widely anticipated because it could have ramifications in hundreds of lawsuits pending in Houston courts stemming from the deadly winter storm in 2021 in which ERCOT is a defendant.

In the ruling, judges cleared the path for Panda Power Funds to pursue hundreds of millions of dollars in damage claims in state court against ERCOT. Panda claims that ERCOT committed fraud, negligent misrepresentation and breach of fiduciary duty when it published intentionally inaccurate reports in 2011 and 2012 that projected a “serious and long-term scarcity of power supply.”

As a result of ERCOT’s allegedly false market data, Panda invested $2.2 billion to build three new power plants — operations that have not generated the revenue that ERCOT predicted.

[…]

The Fifth Court opinion, authored by Justice Erin Nowell, also reverses a decision the same court made in 2018 that ERCOT has sovereign immunity.

“To date, the supreme court has not extended sovereign immunity to a purely private entity neither chartered nor created by the state, and this court will not create new precedent by extending sovereign immunity to ERCOT,” Nowell wrote. “ERCOT is not entitled to sovereign immunity and the legislature did not grant exclusive jurisdiction over Panda’s claims to the PUC. To the extent we previously held otherwise, that holding is in error.”

“Although ERCOT argues it has the power to make binding law, which it calls the ‘quintessential sovereign power,’ the applicable statutes do not support this argument,” the court ruled.

Justice David Schenck dissented, but there is no record of a written dissent.

Lawyers on both sides say the case is now headed to the Texas Supreme Court.

The issue of ERCOT’s sovereign immunity is critical in more than 200 individual wrongful death, personal injury and property damage lawsuits brought by victims of the winter storm that name ERCOT among defendants. Those cases have been consolidated before a judge in Houston.

“This is a huge win for both Texas consumers and businesses whose lives and livelihoods were so drastically impacted by the actions and inactions of ERCOT,” said Houston trial lawyer Derek Potts, who represents dozens of victims of the storm. “It is safe to say that more litigation against ERCOT is coming.”

See here, here, and here for more on the Panda Power case, which originated in 2019 and thus has nothing to do with the freeze lawsuits. Well, it didn’t at the time, which was of course before the freeze, but it sure does now. Justice Nowell is now a candidate for State Supreme Court, by the way. Just passing that along.

Go ahead and blame Greg Abbott for your high electricity bills

Feb 24th, 2022
by Charles Kuffner.
Comments are off for this post

They really are his fault.

The former head of the Texas power grid testified in court Wednesday that when he ordered power prices to stay at the maximum price cap for days on end during last year’s frigid winter storm and blackout, running up billions of dollars in bills for power companies, he was following the direction of Governor Greg Abbott.

Bill Magness, the former CEO of the Electric Reliability Council of Texas, said even as power plants were starting come back online former Public Utility Commission Chairman DeAnn Walker had told him that Abbott wanted them to do whatever necessary to prevent further rotating blackouts that left millions of Texans without power.

“She told me the governor had conveyed to her if we emerged from rotating outages it was imperative they not resume,” Magness testified. “We needed to do what we needed to do to make it happen.”

Abbott’s office did not immediately respond to a request for comment.

Last year the governor’s spokesman, Mark Miner said the governor was not “involved in any way” in the decision to keep prices at the maximum of $9,000 per megawatt hour – more than 150 times normal prices. He described a decision to send an aide to ERCOT’s operations center in the middle of the crisis as based on the feeling the grid operator was spewing “disinformation.”

Magness’s decision to keep power prices at the maximum cap for more than 24 hours after conditions on the power grid began to improve is now at the center of a bankruptcy trial waged by the Waco-based electric co-op Brazos Electric.

Brazos contends that decision was made recklessly, adding up to a $1.9 billion power bill from ERCOT that forced them into bankruptcy.

“It did nothing at all to cause more generation to come online,” said Lino Mendiola, one of the attorneys representing Brazos. “It was an attempted remedy that didn’t solve any of the problems caused by the winter storm.”

The original order to raise power prices to the cap was made by the Public Utility Commission on Feb. 15, to try to get power plants back online and encourage large power users like factories and petrochemical plants to stay offline. ERCOT elected to keep prices at the cap until Feb. 19, a decision that the Texas Independent Market Monitor criticized in a report last year as having, “exceeded the mandate of the Commission.”

“This decision resulted in $16 billion in additional costs to ERCOT’s market,” wrote Carrie Bivens, director of ERCOT’s Independent Market Monitor.

See here, here, and here for some background. Seems like kind of a big deal, doesn’t it? Maybe also puts some recent pronouncements by Abbott in a different context, too. Abbott, through a spokesperson, has now denied the claims of the testimony, which of course he would. I can’t wait to hear what else comes out of this lawsuit.

Winter storm litigation about to get busy

Feb 19th, 2022
by Charles Kuffner.
1 comment

Some test cases will be underway soon.

During the past year, the wrongful-death, personal injury and property damage lawsuits — nearly all consolidated before one judge in Houston — moved at a snail’s pace. Hardly any court hearings were conducted. No witnesses were deposed. Settlement discussions never took place.

The next two months, however, are pivotal to the survival of the lawsuits.

On orders of a judge, plaintiffs’ attorneys have spent recent weeks updating their cases, adding dozens of corporations as defendants and presenting new theories about why the power grid nearly collapsed in the brutal cold, leaving millions without power and contributing to the deaths of hundreds.

Key defendants in most of the earliest lawsuits were the Electric Reliability Council of Texas, which manages the state’s electricity grid, and large generators and transmission companies such as CenterPoint Energy, TXU Energy, Reliant and NRG Energy.

Now the suits have added the power providers’ parent companies, subsidiaries and business partners, such as power producers and retailers such as Vistra, Duke Energy, NextEra and Talen Energy.

Judge Sylvia Matthews has given attorneys until Feb. 28 to choose five individual suits from the 174 brought by more than 400 plaintiffs to be so-called test cases.

“By all accounts, this is a judge who wants these cases to move forward and doesn’t allow grass to grow under her feet,” said Mikal Watts, a Houston lawyer who represents 65 people in the cases.

[…]

Not all the legal disputes are part of the multidistrict litigation.

For example, nearly all the energy companies named in the wrongful-death, personal injury and property lawsuits also are battling each other and ERCOT over issues such as wholesale power pricing that reached $9,000 per kilowatt-hour.

“Lawyers on both sides agree that the financial ramifications of Winter Storm Uri caused the biggest transfer of wealth in Texas history,” said Houston lawyer Derek Potts, who is involved in several of the pending lawsuits. “The question is, ‘Was it legal?’”

“Actual discovery has not even started, and that is when we will pinpoint what links in the chain are to be held responsible,” he added. “The pipeline companies, for example, reaped a tremendous windfall from Winter Storm Uri and the outrageous prices. Is that legal?”

See here for some background on the cases before Judge Matthews and our new best friend, the Texas Multidistrict Litigation Panel, for which I still want someone to write me a long background story. I’m very interested both in those five initial test cases and in the fight over the ridiculous price level that power was allowed to reach last year. I’d sure like for the answer to those questions posed to be “No”, but I have no idea what it would mean if a court were to make that decision. Not that I wouldn’t want to find out, just that it would be more chaotic than if the Legislature took action. But chaos may be the only way forward, so here we are. Original story is from Texas Lawbook, but it’s behind a paywall. The above is taken from the Chron excerpt.

In case you’d forgotten, we still haven’t fixed the power grid

Feb 16th, 2022
by Charles Kuffner.
Comments are off for this post

It has other problems too, which we also haven’t addressed.

Millions of Texans lost power in February 2021. Hundreds died as a result. Tens of billions of dollars in damages were lost. Billions were just transferred from consumers by government action, and now consumers are paying billions to bail out corporations. What went wrong?

Stripping away everything else, the system operated by the Electric Reliability Council of Texas, ERCOT, failed because generator companies did not invest in weatherization practices after a similar failure in 2011. For eight of the 10 years prior to 2021, the average wholesale price of electricity in ERCOT was too low for generator companies to earn returns on capital. Consequently, they had every incentive not to invest in weatherization. The ERCOT market rewarded volatility at the expense of reliability, despite a decade of warning.

[…]

We identified that the ERCOT market rewards gaming to drive up prices in times of tight supply — driven by the weather or contrivance. Recall the 2001 movie “A Beautiful Mind” about Nobel Prize-winning game theorist John Nash.

Nash showed that sellers will explicitly or tacitly collude to drive up prices if given the opportunity — as the OPEC cartel demonstrates. The ERCOT market has been subject to complaints about market manipulation since 2003. For example, suppose the ABCD Generation Company operates 10 large plants in the ERCOT service region. For much of the year, it operates seven plants, keeping three idle. Let’s have bad weather hit anytime.

Ask yourself what the payoff is to start the three idle plants if there is a chance that adding the power generated by those three plants would keep the average wholesale market price at 3 cents per kilowatt hour when not starting those plants virtually guarantees that the wholesale price jumps higher — perhaps to the price cap of $9 per kWh under the ERCOT market rules in 2021? Is there a question about what the generators would do?

The ERCOT market has trusted participants to make infrastructure investments, conduct maintenance and needed upgrades, and to maintain reserves at the generator rather than system level. But without having incentives or mandates to maintain electric reserves in case of a surge in demand, the Texas marketplace has been caught off guard when demand outpaces the supply of energy.

The ERCOT market exchanged reliability in favor of volatility and increased uncertainty for consumers and generators alike.

The common argument for the design of the ERCOT market is that it keeps electricity prices low, a key issue for energy-intensive manufacturing plants along the Gulf Coast. Proponents continue to argue that electricity rates in Texas are lower than in states with regulated utilities.

The data do not support that claim. Individual customers in the ERCOT territory paid on average $5,500 more on their electric bills over a 14-year period. Prices for consumers within the ERCOT marketplace are consistently higher than for the roughly 15 percent of Texas customers in regulated marketplaces outside the ERCOT service area.

Estimates by the Wall Street Journal show that ERCOT’s consumers paid almost $28 billion more between 2004 and 2019 than they would have in an old-fashioned regulated market.

A report by the Texas Coalition for Affordable Power found that prior to partial deregulation in 2002, Texans paid rates 6.4 percent below the national average, while in the following 10 years, they paid rates 8.5 percent above the national average.

We’ve discussed these topics before, but there’s always more to learn or be reminded about. The author of this piece is Ed Hirs, who co-produced a report about ERCOT in 2013 that detailed all of these problems, which remain in place. In other words, it’s been an issue the entire time that Greg Abbott has been Governor. Go read the rest.

A year after the freeze

Feb 14th, 2022
by Charles Kuffner.
Comments are off for this post

A sobering portrait of grief and loss from last year’s freeze, from the Chron.

A year ago, a blast of frigid weather swept across the state, paralyzing the power grid and setting off a catastrophe. Power generators went offline, leaving millions in the dark for days without heat or water. Frozen pipes ruptured, damaging tens of thousands of homes in Houston alone. The state’s overwhelmed electrical grid came within five minutes of a total collapse.

Hundreds of Texans died from a variety of freeze-related causes, including automobile wrecks, hypothermia and carbon monoxide poisoning from fires or generators brought inside their homes.

In a place all too familiar with natural disasters, many still remain shocked by the failures of the electrical grid and government leaders, who failed to heed prior warnings about the importance of ensuring power plants prepared for winter storms.

Add to that the fear that another winter storm could spell disaster once more, even as residents across Houston and Texas still are fixing property damage, awaiting the results of lawsuits and mourning those lost in last year’s freeze.

“I think about her every day,” William said of his mother. “If it weren’t for that freeze, I feel like she would still be alive.”

This is a more focused and intimate look at people who lost loved ones last February, rather than a broader look at the numbers. (*) It’s about the people, not the policies and the ways that they failed us, and it’s tough to read because you can feel the sadness and guilt and despair. It’s worth your time.

(*) If you want to read a story about the numbers, it’s here.

How the grid held up

Feb 8th, 2022
by Charles Kuffner.
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Basically, this cold front wasn’t anything like last year’s cold front.

Texas’s power grid passed its biggest test since last year’s deadly blackouts, keeping most lights on during a wintry blast. This storm, however, was far less severe than last year’s monstrous one, leaving questions whether the state is really ready for another deep freeze.

While reforms politicians enacted in the past year did help keep power plants running, analysts and power-market experts say the biggest reason things went so smoothly was it simply wasn’t as cold for as long. That meant natural gas kept flowing and wind turbines worked far better, helping the grid meet the increased power demand as millions of Texans cranked up electric heaters.

“The grid held up fine for a couple of reasons: the weather wasn’t as bad as we thought, and wind overperformed,” said Michael Webber, an energy professor at the University of Texas. “The demand wasn’t as high, and the supply wasn’t as low.”

[…]

Gas flowed freely during this week’s storm, but that’s largely because it didn’t get cold enough.

“The state still remains vulnerable because we have not set requirements for winterization of the gas system,” said Webber, who’s also chief technology officer at venture fund Energy Impact Partners. “As such, the reliability of gas production is still flimsy.”

In Dallas, last year’s temperatures fell as low as -2 Fahrenheit (-19 Celsius), and there were 11 straight days with highs below 40 degrees. This year, forecast lows are around 10 degrees, and meteorologists expect just three consecutive days with highs below 40.

In Midland, the hub of the oil- and natural gas-rich Permian Basin, last year saw eight consecutive days when temperatures never rose above freezing, which crippled the flow of gas and starved power plants of fuel. This time, Midland didn’t have back-to-back days when the mercury stayed below 32 degrees.

“The last one was both longer and more extreme,” said Marc Chenard, a meteorologist at the U.S. Weather Prediction Center.

While Ercot didn’t ask consumers to conserve, widespread closures of schools and businesses helped cut down on consumption. Peak demand for electricity was significantly lower and a bit later than anticipated Friday morning, with consumption hitting 69 gigawatts when Ercot previously projected record demand of 75.6 gigawatts. A gigawatt is enough to power about 200,000 Texan homes.

And don’t forget the coin miners. Like Slytherin in the Battle of Hogwarts, the coin miners did their part.

In the short run at least, this is good for Greg Abbott, whose bet paid off. By the same token, though, we’ve spent the last few weeks talking about the freeze, reliving our experiences from it, and expressing a big lack of confidence in the grid, even if it did stay up this time. We still have the actual one-year anniversary of the freeze coming up in about a week, so we’re not done yet with the trauma of it all. That can’t be great for Abbott. He won his bet, which meant he didn’t get absolutely pummeled by circumstances that he had some control over but did nothing to affect, but the payoff was mostly that he broke even. That’s probably good enough for him since he’s leading in the polls, but winter isn’t over yet, and I doubt too many people are feeling better about it. The DMN has more.

The noble sacrifice of the coin miners

Feb 7th, 2022
by Charles Kuffner.
2 comments

You’re welcome.

Chad Harris got an urgent phone call during last February’s epic Texas winter storm, something he was expecting as the operator of the single largest bitcoin mining and hosting facility in North America.

“You need to shed your power now; we need it,” Harris said, recalling the conversation with his local transmission company in Central Texas. As CEO of Rockdale-based Whinstone, which later became a subsidiary of Riot Blockchain, he had a ready answer.

“I told them we already had done it two days ago,” he said.

That storm left at least 4.5 million electricity customers in Texas without power.

This time around, there’s been a year of dialogue between mining companies, the governor’s office and the state’s grid operator, the Electric Reliability Council of Texas. Miners met with Gov. Greg Abbott in October and said they would shut down in the event of another winter storm.

Earlier this week, Riot Blockchain sent a letter to Abbott with its plan to voluntarily shut down and had 99% of its operations powered off by 7 p.m. Wednesday.

“Last year, the miners turned off during [the] winter storm, but there were fewer bitcoin miners then and less megawatts to be taken offline,” said Lee Bratcher, president of the Texas Blockchain Council, an association representing the blockchain industry. “It still made an impact on thousands and thousands of homes. But this year, there are more and larger mining operations that can push back power and they’ve been proactive.”

After the 2021 storm, ERCOT contacted mining companies — drawn to Texas by lower energy costs — for help since they are heavy electricity users. ERCOT realized miners could assist in balancing supply and demand during extreme weather by shutting down operations and selling unused power back to the grid as part of an emergency response program.

Yeah, and you can save more gas by not driving a Hummer instead of not driving a Honda Civic. Any virtue you may derive from that still needs to be balanced against the gas-guzzling you had been doing before. I’m glad that the coin miners were willing to do their part to keep my lights on, but let’s not throw them a parade just yet.

Okay, so maybe there will be some blackouts

Feb 2nd, 2022
by Charles Kuffner.
1 comment

Oops.

With freezing weather expected to hit a large portion of Texas this week, Gov. Greg Abbott on Tuesday tried to assure Texans that the state is better prepared this year than last, but said there could be local power outages throughout the state.

“Either ice on power lines … could cause a power line to go down, or it could be ice on trees that causes a tree to fall on power lines,” Abbott said.

This week’s cold front could be the first significant test of the state’s main power grid since last February’s freeze left millions of Texans without power for days in subfreezing temperatures. Hundreds of people died because of that storm.

“No one can guarantee there won’t be [power outages],” Abbott said Tuesday, just over two months after he promised the lights would stay on this winter.

Coulda fooled me. It’s almost as if you can’t believe a word this guy says.

We’re all grownups here, and we all know that power outages occur all the time, for reasons that have nothing to do with the capability or robustness of the state’s electric grid. Stuff happens, and the local folks are pretty good about responding to these situations. That’s not the point here. The point is that we had an enormous systemic failure a year ago, one that came with a tremendous cost. It was the third such failure in recent years, and there were clear lessons learned and improvements to be made from the first two that just never happened. Even after that third massive and deadly failure and the lessons we re-re-learned, we got way more blather and empty promises from Greg Abbott, who raked in millions of dollars in campaign contributions from the power grid fat cats who made absolute bank off of the debacle, than action. And now Abbott is trying to hedge his bets a little and claim that when he said there would be no power outages this winter, he didn’t really mean it. You tell me what we should do about that.

Who’s worried about electricity in Texas?

Jan 23rd, 2022
by Charles Kuffner.
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The guy who writes The Watchdog for the DMN, for one. The people with real power in this state, not so much.

I was lonely.

For more than a decade, it was as if I were the only North Texas journalist regularly covering the flaws of the Texas electricity system. It’s not that I was so smart. I heard from hundreds of readers every year who complained about the confusing and unfair deregulated market.

Yet when the Texas Legislature met, nothing ever happened. An electricity activist, Carol Biedryzcki, promoted common-sense solutions that nobody listened to. Sylvester Turner, a former state representative who is now Houston’s mayor, introduced reform bills that never got voted on.

Another Houston representative, Gene Wu, introduced fix-it bills, too. Lawmakers who cared about the issue could fit in a small elevator.

It became obvious that no governor or state lawmaker wanted to tangle with what former U.S. House Speaker Sam Rayburn once said of the electricity industry: “The most powerful, dangerous lobby… that has ever been created by any organization in this country.”

[…]

Then came the horrific February freezeout, and everything changed. People died. Homes were ruined. Businesses were shuttered. The suffering was immeasurable for days. One of the worst Texas weather events ever.

The story was suddenly front and center. The Texas energy house of cards collapsed. Complete favoritism toward the industry was as obvious as the noontime sun. Right before our eyes, in real time, corruption flourished.

[…]

When the power returned, I began by pointing fingers at the governors, lawmakers, regulators and industry powerhouses who were responsible.

“Don’t count on state lawmakers to admit culpability,” I wrote. “And don’t trust their coming investigations to be unbiased.”

I released the 2021 edition of my annual electricity shopping guide. It’s a free step-by-step guide with tips that I’ve shared with tens of thousands of Texans, online, in the newspaper and as a paper flier.

DeAnn Walker, the chairperson of the (p)UC, who months before in a huff had eliminated the Enforcement Division, appeared before the state Senate. I called her the “incredible shrinking chairman.”

“You’re the commissioner!” one Republican senator chastised. “Y’all don’t have any teeth,” another scolded.

Her reply shows why she lost the P: “If you believe we have that authority, I’m open to moving forward with it,” Walker said. Believe it.

She resigned in disgrace and was replaced as chair by Arthur D’Andrea.

He lasted two weeks. In a 48-minute conference call with investors, first reported by Texas Monthly, he assured them he was doing everything within his power “to tip the scale as hard as I could” so billions of dollars in overcharges from the freezeout would not be reversed.

He laid out the strategy that would come later when lawmakers, the Texas Railroad Commission (regulating oil and gas) and the (p)UC approved the sale of $10 billion in bonds to pay back energy companies’ losses.

Unfortunately, companies that made millions of dollars during the crisis will see some of that bailout money, too.

Who repays the $10 billion? You. But don’t worry, it’s a long-term loan.

D’Andrea also told investors in that call that he didn’t “expect to see a ton” of improvements passed by lawmakers. He was correct. Although for the first time ever, many reform bills were introduced. Most died.

The Watchdog kept a scorecard for good reform bills. Most had notations of either “Stuck in committee” or “No action taken.”

Texans should not have been surprised at electric grid operator ERCOT’s failing. The non-profit was a cesspool of corruption years before. In 2005, a massive procurement scandal led to criminal convictions. Fake companies were created by ERCOT managers, and millions of dollars were siphoned from ERCOT funds.

There’s more, but you get the idea. A lot of this we’ve seen before, but there’s no harm in being reminded. Greg Abbott is counting on a normal winter and a whole lot of short attention spans to claim a victory for doing nothing. Don’t let him do it.

The cities and the freeze

Jan 15th, 2022
by Charles Kuffner.
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Well, at least some government entities are trying to learn from the February disaster, even if they’re having a rough go of it.

Ten months after the freeze, Texas cities have made some headway on storm preparedness, an oft-neglected area of local government. They have bolstered reserves of bottled water for residents in case of water outages, bought tire chains for city emergency vehicles, and implemented measures intended to shorten potential power outages for residents and keep electricity flowing to critical facilities.

But as winter approaches and the electrical grid remains vulnerable to blackouts, cities are still short on two key fronts: making sure their most vulnerable residents have the information they need to survive a similar calamity and that the water stays on. Many preparations cities are undertaking to protect residents against future disasters will take months, if not years, to put in place, city officials have said.

And worries abound that officials didn’t learn the lesson and will neglect to adopt new readiness measures — as they have after past disasters.

Austin officials failed to make emergency preparations before February that may have helped during the winter storm, despite past recommendations to do so, according to a recent report conducted by city auditors. Austin has adopted only a sliver of the recommendations made in the wake of other recent calamities, the report says.

“It’s extremely frustrating, and we need systems in place that don’t let that happen again,” Austin City Council member Alison Alter said during a meeting on the report’s findings last month.

Emergency officials say part of the reason those calls haven’t been entirely heeded is that large-scale disasters are becoming increasingly common as climate change worsens, making it more difficult to learn from the last one before the next one hits. On top of that, responding to the COVID-19 pandemic has stretched emergency responders thin.

“There hasn’t been enough time in between them to look at all those corrective actions,” Juan Ortiz, who heads Austin’s Office of Homeland Security and Emergency Management, told a council committee in November. “That really has caused the congestion in work that needed to be done.”

[…]

In San Antonio, city and utility officials are scheduled to deliver a joint emergency communications plan at the end of the month. An important question they are expected to address is how to communicate ahead of and during a storm with residents who don’t have internet access to begin with — like many residents on the city’s South Side.

Those residents can’t be left out in the cold, said council member Adriana Rocha Garcia.

“A preparation checklist should be on a door hanger for every vulnerable community to be able to just literally go out and get it from their doors so that they know exactly what to do, exactly who to call in case of an emergency during a winter storm,” Rocha Garcia said.

Now do the story about what Greg Abbott has learned from the experience and what he’s doing about it. Oh, wait…

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