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Bill 3 paves the way for a more weather-resistant Texas grid

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Henry Craver's picture
Small Business Owner Self-employed

As a small business owner, I'm always trying to find ways to cut costs and boost the dependability of my services. To that end, I've become increasingly invested in learning about energy saving...

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In recent years, it’s become obvious that the 21st century’s increasingly volatile weather is too much for our 19th century grid. Perhaps nowhere is this point more clear than in Texas. In February, the state’s grid was brought to its knees by three nasty winter storms. About half of Texas residents lost power, some for more than several days. It's estimated that 151 people died because of the outages. 

After the disaster, the Lonestar State began preparations to mitigate future problems. Heading into Summer 2021, Texas boasts an on-peak reserve margin of 15.3 percent, up from 12.9 percent last year. However, it should be noted that most of that jump has come by the way of new wind generation and battery storage—not exactly the most desirable resources during an emergency. In fact, on a number of occasions in recent years, wind has failed Texas when the power was needed most. 

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This week, Texas took another important step towards building a more reliable grid. Tuesday, Gov. Greg Abbot signed Senate Bill 3 into law. The bill, which was re-worked numerous times over the holiday weekend, requires utilities to weather proof their power plants and some transmission lines, to the extent that that’s possible. Here’s how the law is described by Abbot’s public relations team:

“Under Senate Bills 2 and 3, Texas will now require the weatherization of power generation facilities, natural gas facilities, and transmission facilities to handle extreme weather. The Texas Railroad Commission and ERCOT will be required to inspect these facilities, and failure to weatherize these facilities can result in a penalty of up to one million dollars. These bills also create a "Power Outage Alert" where Texans will receive an emergency alert whenever the power supply in the state may be inadequate to meet demand. Additionally, this legislation establishes the Texas Energy Reliability Council to improve coordination between state agencies and industry during extreme weather emergencies and extended power outages. Finally, the legislation makes significant reforms to ERCOT, including having eight fully independent board members of the 11-member board, and requires board members to be residents of Texas.”

While most commentators seem to agree Bill 3 moves the needle in the right direction, there are concerns about how the upgrades will affect prices. A big part of the tragedy during the February storms were the outrageous peak prices some customers had to pay, some bills reaching into the five digits. It’s estimated that there was about $16 billion in overcharges. It’s likely that we’ll see lower peak pricing in future extreme weather events, but higher average prices to pay for these upgrades. 

This financial conundrum is not unique to Texas. Increasingly, utilities are finding it hard to come up with the money needed to modernize their grids and provide more reliable power services. The problem was eloquently described in a Bloomberg article last year:

“It’s also an aging dinosaur that sorely needs an upgrade to its more than $1 trillion in infrastructure. Improvements would make the grid more reliable, resilient and efficient, cutting the nation’s carbon emissions. But it’s not clear where the money will come from. Electricity sales have flatlined as users have become more energy-efficient. More and more power customers are bypassing their local utility, in search of cleaner energy, including some of the nation’s biggest corporations.  Every one that unplugs is another blow to the utilities that must keep the power flowing, edging them closer to what’s often described a “death spiral.”’

It will be interesting to see what happens in Texas moving forward. Just how effective will these new upgrades be from an engineering standpoint? And how will they be paid for? 


 

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