The Unforgettable Challenges in Energy
- May 28, 2021 5:36 am GMT
Recently I read an article that stated most people outside of Texas have forgotten the February freeze that claimed 200 lives and caused $80 and $130 billion in damages. Winston Churchill’s ominous words comes to mind. “Those that fail to learn from history are doomed to repeat it.” Have we forgotten? The incident has had a ripple effect on the energy sector. Because of it, utility deregulation may become a thing of the past. In 1999, Texas decided to impose no regulations on the retail or wholesale energy markets. The state was independent of federal and regional power grids which critics now agree was a mistake. Gas and electric bills skyrocketed during the Texas storm and the debt is so high that state lawmakers have stepped in to bailout companies and institutions unable to pay. This process called “securitization” would quickly pay banks, natural gas suppliers and power generators that sold energy but haven’t been paid. Under securitization, ratepayers would slowly pay off that debt over time and with interest. Objecting to the proposal, Attorney Jim Boyle, the former Public Counsel for the Public Utility Commission of Texas commented, “The problem with securitization is you reward those who were negligent, you reward those who didn't hedge, you reward those who didn't winterize.” Boyle continued, “You reward a lot of bad actors through securitization.” University of Houston energy economist, Ed Hirs, questioned their motives when he said, ”They say they don't want the companies to go bankrupt. No, what they really don't want to have happen is these companies in bankruptcy filing federal subpoenas to go into the books to see how [energy buyers] got gamed in the situation.” Reform is inevitable but Texas might not ever re-gain its independence.
From extreme weather and wildfires to blackouts and cyberattacks, the grid is under fire and the energy sector is facing an onslaught of unforgettable challenges. The very nature of the grid makes it difficult to modernize and problematic to secure. There are thousands of power plants and miles of transmission lines, all varying in ownership and business structure. The Department of Energy (DOE) recently announced a "100-day plan to address cybersecurity risks to the U.S. electric system.” But many are concerned by the voluntary nature of the initiative and are in favor of putting more drastic measures in place.
Speaking of drastic measures, utilities in Oregon and California are both taking steps to prepare for the 2021 wildfire season already underway. Portland General Electric, PacifiCorp and Idaho Power are also adopting temporary rules to govern preemptive blackouts in an effort to prevent wildfires. State utility regulators have held workshops with utilities related to wildfire planning. Letha Tawney, a PUC Commissioner, said in a statement, that the rules “are designed to help keep Oregonians safe by establishing criteria on how the utilities communicate about and coordinate” public safety power shutoffs. Blackouts are a last resort wildfire prevention tool but Pacific Gas & Electric will continue to use them in California, whenever necessary. Recent tragedies and historical events are shaping the future of the industry. Some may have forgotten but we cannot afford to.
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