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ERCOT roundup

Just a few stories of interest that I didn’t feel like putting in their own posts…

ERCOT will argue it is immune from lawsuits.

The Electric Reliability Council of Texas will argue that it has governmental immunity that protects it from the at least 35 lawsuits that have been filed against the operator after February’s disastrous winter storm which killed dozens of people and created millions of dollars of damages.

“ERCOT has and will continue to assert that it is entitled to sovereign immunity due to its organization and function as an arm of State government,” the organization wrote in a Wednesday court filing requesting to consolidate several of the lawsuits it’s battling.

Sovereign immunity grants protections for state agencies against lawsuits, with some exceptions. And this isn’t the first time ERCOT has made the argument — with some success — that it should be shielded from lawsuits due to its role acting upon the directives of state agencies and lawmakers.

In 2018, an appeals court in Dallas ruled that ERCOT, despite the fact that it is a private nonprofit, has sovereign immunity after Dallas-based utility Panda Power sued the operator over allegations of flawed energy projections.

That immunity was challenged at the Texas Supreme Court last month. However, the high court refused to rule on the issue, claiming it lacked jurisdiction because the original case that posed the question was dismissed — a hotly contested opinion with four of the nine justices dissenting.

See here for the previous update. I don’t know what practical effect this might have if ERCOT succeeds, but as a general principle I think this kind of legal immunity needs to be carefully limited. Maybe it’s appropriate here, but there needs to be a strong argument for it.

ERCOT: Blackout primarily caused by power plants freezing up:

The massive loss in power generation during the Texas blackout in February was caused primarily by power plants freezing up under historically cold conditions, according to a new report by the Electric Reliability Council of Texas Tuesday.

The state’s grid operator reported that on the morning of Feb. 16, the most severe moment of the blackout, 54 percent of the loss of power supply stemmed from weather-related issues at power plants, while 12 percent was due to a lack of fuel such as natural gas. Some 51,000 megawatts of generation — more than half of the system’s capacity — were offline at the height of the blackouts at 8 a.m. of Feb. 16, ERCOT reported.

The findings come as state officials are debating how to fix the state’s energy system to prevent a repeat of the power outages that left millions of Texans without power for days on end.

The report Tuesday offered a fairly limited perspective on what went wrong, failing to explain why specific types of generation were unable to operate during the winter storm or what happened. But it will add questions to how well prepared ERCOT and the state’s power plants were for cold weather, despite warnings from the Federal Energy Regulatory Commission to winterize following a less severe cold snap in 2011.

[…]

After weather-related problems, the second biggest loss of generation on Feb. 16 was caused by planned or unexpected outages prior to the cold snap that began sweeping Texas earlier in the week, accounting for 15 percent of lost power supply.

Another 14 percent of lost generation came from equipment failures unrelated to the weather. Only four percent of outages were due to transmission problems or a short drop in the frequency of the power grid that occurred early Monday morning.

I don’t know enough to say what this means in terms of figuring out the best path forward, but I sure hope that the Legislature has some people who know how to read a report like this available to explain it to them. We screwed this kind of response up last time. We have no excuse for screwing it up again.

Faulting ERCOT, insurer says it shouldn’t have to cover storm damages:

ERCOT’s insurance company is seeking a court ruling excusing it from defending Texas’ electric grid manager from lawsuits or covering damages stemming from the catastrophic power failure in February.

The Cincinnati Insurance Co. on Tuesday sought relief from the U.S. district court in Austin, arguing it does not have to defend the Electric Reliability Council of Texas because it does not view the power outages as an accident, defined by the insurer as a “fortuitous, unexpected, and unintended event.” As a result, the company said it has no obligation under its insurance policy to cover ERCOT, which faces a flood of lawsuits after the winter storm.

“The allegations in the Underlying Lawsuits allege ERCOT either knew, should have known, expected, and/or intended, that Winter Storm Uri would cause the same power outages which occurred as a result of previous storms in Texas, including storms in 1989 and 2011,” the insurer said in court documents. “The Underlying Lawsuits allege the power outages caused by Winter Storm Uri were a result of the exact same failures including failures of the same generators which failed in the previous winter storms, and therefore, the power outages were foreseeable, expected, and/or intended.”

[…]

ERCOT’s insurance policy with Cincinnati Insurance, effective until June 2022, states that the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.’

The policy, however, says Cincinnati Insurance has no duty to defend ERCOT in cases in which the insurance policy does not apply, and retains the discretion to investigate any “occurance” and settle any claim or lawsuit that results from it. The insurer defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

In case you were wondering why ERCOT really doesn’t want to be sued. Also, when was the last time that an insurance company paid a claim without fighting it?

An open Texas power grid would boost reliability and renewables, experts say.

Since the February power outages, Texas legislators have been busy weighing a host of improvements for the state’s grid, from weatherizing equipment to shaking up oversight to partnering with the billionaire investor Warren Buffett on new emergency-use power plants.

But hardly any of them have focused on what some believe could be a more widespread fix: plugging into other U.S. power supplies.

While Texas has long opposed opening its grid to avoid federal oversight, and ostensibly to keep prices low, energy experts say the calculus is not what it once was and that the benefits of connecting to the outside world are at least worth examining, especially as renewable energy is poised for a major expansion under the Biden administration.

Not only is the state missing out on a potential lifeline in future blackouts, they warn, it also risks passing up billions of dollars in new investments for clean, marketable electricity.

“We export every form of energy you could imagine except electrons,” Michael Webber, a professor at the University of Texas at Austin, told reporters recently. “This is ridiculous,” he said. “Let’s at least study the option.”

There are some good arguments for this, and some reasonable ones for maintaining the independence of the Texas grid. Just because our setup is dumb and expensive and unreliable doesn’t mean it has to be that way, after all. But this is all an academic point, because there’s a zero percent chance this happens. Go ahead and write a report, but don’t ever expect Greg Abbott or Dan Patrick to read it.

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One Comment

  1. Kibitzer says:

    It was the Arctic Vortex, Stupids!

    ERCOT’S POST-MORTEM SURVEY TO GENERATORS (slightly paraphrased):

    Question: To what do you attribute the outage of your power plant during the Extreme Cold Weather Event?

    Response: The extreme cold weather.

    NOTA BENE: ERCOT had no real-time monitoring system in place that allowed for assessment of the nature of the generator outage, the specific malfunction if technical, or the estimated time to restart or ramp up to full performance level. Therefore, they had no idea how long the power production shortfall would last, and no ability to message to the public accordingly regarding the duration of mandated blackouts (“load shed”).

    That’s why they cut us off to artificially suppress demand and keep the system in balance, and told the PUC to raise the wholesale price to the $9,000 cap because they didn’t know what else to do.

    ERCOT ordered the local transmission/distribution utilities to “shed load” so massively that the latter couldn’t even rotate the blackout from neighborhood to neighborhood unless they were to include the critical infrastructure circuits in the rotation (hospitals and such). There was testimony that one local distribution company was ordered to cut more than their current load, with the result that they couldn’t meet their assigned quota even by cutting off everybody.

    Under pressure post-crisis, ERCOT pretended to obtain comprehensive information on what went wrong by asking the generators for retrospective *attributions* of causes, i.e. soliciting excuses why they had failed at the time they were most urgently needed.

    INDUSTRY PROTECTION FROM PRYING EYES

    But they won’t even release unit-level data. Because, you see, that’s confidential. (A prior disclosure of unit-specific outage *timing* data was voluntary and unsurprisingly not complete because not all agreed to provide such data).

    ERCOT then aggregated the “attribution of causes” survey responses in a way that allows no inferences about specific power generating companies, not to mention plants and units within plants.

    The whole “report” is a nothing more than a slide show. As in: for show.

    And as far as the quality of the data goes, it’s garbage. Come on! Inviting the industry respondents to blame the weather for their failure to weatherize?

    And ERCOT won’t even reveals the wording of the questions, not to mention whether the responses were in narrative form, and — if so — how they were coded into a limited set of mutually exclusive categories. They should have outsourced the survey to a reputable polling outfit. The UH Hobby School perhaps.

    BOTTOM LINE

    ERCOT’s Investigation of “Causes” of the failures on the generation side is a farce, and its Preliminary Report is a bad joke.

    Meanwhile, ERCOT reminds us that we are still being held hostage, and that they could cut us off again at any time, even if the ambient temperature is in the 80s with neither heat nor A/C running to cause a surge in demand. Be forewarned.

    ERCOT @ERCOT_ISO
    ·
    Apr 13
    Alert: Due to a combination of high gen outages typical in April & higher-than-forecasted demand caused by a stalled cold front over TX, ERCOT may enter emergency conditions. We do not expect customer outages. Declaring an emergency would allow us to access additional resources.

    —-

    ERCOT, Preliminary Report on Causes of Generator Outages and Derates For Operating Days February 14 – 19, 2021 Extreme Cold Weather Event. (April 6, 2021) (” this aggregated presentation provides a view of why the generators believe their units experienced outages or derates.”)

    http://www.ercot.com/content/wcm/lists/226521/51878_ERCOT_Letter_re_Preliminary_Report_on_Outage_Causes.pdf
    —-