Can We Just Talk? - Symposium Explores How Natural Gas Fits into ERCOT Reliability

As nobody in Texas will soon forget, in February of this year freezing temperatures across the southern U.S. hammered energy markets and resulted in widespread and long-lasting blackouts across the Energy Reliability Council of Texas (ERCOT) power region. Life for many Texans came to a standstill for a week until power could be restored. The resulting economic damages have been estimated in the billions. Many people, rightfully, questioned how an energy-rich state like Texas could have been so affected. And then the blame-game started. Lacking a forum of qualified experts, productive discussions took a back seat to self-serving rhetoric, special-interest advocacy, and political posturing. But if real solutions were going to be found, it would take more than finger-pointing. It would take a meeting of experts whose primary focus was a resolution, rather than a constituency. Fortunately for Texans, that’s what they got two weeks ago. In today’s blog, we take you through the symposium and its outcome, particularly regarding the role of natural gas.  

On July 15, RBN helped organize and participated in a major symposium on the February blackouts caused by a record-shattering Deep Freeze — which we discussed in Perfect Storm — and the changes needed in ERCOT. The symposium, put on by the Energy Bar Association and co-sponsored by the University of Texas Law School, was held at UT in Austin. The idea was to have a lot of informal discussions as to what happened, why it happened, what the Texas Legislature had done about it so far, and how to improve the reliability of the Texas grid in the future. We joined a really illustrious group of speakers. The roster included, either live or virtually, State Senator Charles Schertner, chairman of the Texas Senate Business and Commerce Committee; Dr. Michael Webber, well-known expert in Texas energy markets at the University of Texas; multiple ex-Public Utility Commission of Texas (PUC) chairs and commissioners; past and present ERCOT independent market monitors, and former ERCOT board members; along with a large number of legislative authorities and experts in Texas power and natural gas markets. As noted, the role of natural gas in the crisis, and what that might mean for the future, was a primary focus.

The symposium included an extensive review of legislation that’s already been enacted, Senate Bill 2 (SB2) and SB3, which change ERCOT’s governance and require the winterizing of power plants and critical fuel-supply facilities throughout the ERCOT grid. Then, in the ensuing discussions, a great deal of attention was paid to the absence of any legislative or regulatory avenue to prevent or at least mitigate upstream loss of natural gas supply during severe winter weather, particularly at producer wellheads. As gas is the dominant fuel for Texas power generators, and gas-fired generation is such a critical “load-following” resource — quickly dispatchable, easier to site than other types of generation, and fueled by the lowest-carbon fossil fuel — the lack of a clear approach to ensuring natural gas reliability for power generation was seen as a continuing, glaring weakness in ERCOT. One former ERCOT board member (who shall not be named) even said his preference was for the PUC to regulate the production of natural gas — meaning regulation of oil and gas companies and their markets. We politely pointed out that government regulation of natural gas production had already been tried at the national level, from 1954 to 1989, and had been an unmitigated disaster (see our recent blog Different Strokes for more on gas regulation’s history), and was responsible for most of the industry’s 45 years of dysfunction that is behind us now.