POWER June 2011 - 22

Reliability Challenges Cause
Texas-Size Headache
By Angela Neville, JD
E
ven though Texas is again basking in warm weather, federal
regulators are still investigating the rolling blackouts that
hit the Lone Star state during a record-breaking cold snap
in early February. The bulk power system in Texas experienced a
significant number of outages at generating facilities during that
period of high demand for electricity. The cold weather knocked
offline more than 50 gas-fired and coal-fired generating units,
which represented more than 7,000 MW of capacity. To compensate
for the loss of generation, the state had to import approximately
250 MW of capacity from Mexico.
An Independent Grid for a State with an
Independent Attitude
To put this reliability fiasco in context, it helps to understand
the regulatory framework in Texas. Not surprisingly, for a state
that was once a sovereign nation and is still known for its
maverick attitude, Texas has its own unique grid system that
sets it apart from the rest of the U.S. Under the regulation of
the Public Utility Commission of Texas, the Electric Reliability
Council of Texas (ERCOT) rides herd over the flow of electricity
to 23 million Texas customers, representing 85% of the
state's electric load and 75% of its land area. ERCOT manages
a grid that connects 40,500 miles of transmission lines and
more than 550 generation units.
When the rolling blackouts happened in February, ERCOT landed
in the hot seat. Texas state lawmakers conducted a hearing
on February 15 demanding to know what went wrong. Several
lawmakers pointed out that northern states routinely deal with
worse weather without experiencing rolling blackouts.
ERCOT CEO Trip Doggett testified about the actions his organization
planned to take to ensure that such outages don't occur
again. For example, he explained that ERCOT had launched a
new alert system that, in the event of potential outages, would
alert state officials and the state operations center, which in turn
would notify police, firefighters, and first responders.
Due to increased scrutiny of the Texas grid caused by the
blackouts, a number of long-time critics of electric deregulation
in the state are now trying to reopen the debate on that
issue. When full deregulation began in Texas in 2002 after the
passage of Texas Senate Bill 7, state officials insisted Texas
could implement a more successful system than California,
where intermittent blackouts had contributed to the failure
of deregulation a year earlier. Basically, deregulation in Texas
divided up utility monopolies, fostered competition between
companies that sell electricity to consumers, and encouraged
power generation facilities to compete against one another.
Although the recent blackouts have increased concerns about
the deregulated system, no Texas elected officials are actively
promoting new legislation to re-regulate the Lone Star power
22
industry. Therefore, it does not appear likely that Texas will
abandon electric deregulation any time soon.
FERC and NERC Launch Separate Inquiries
In an interesting regulatory twist, the Federal Energy Regulatory
Commission (FERC) currently is examining the Texas outages
even though it does not regulate ERCOT directly. The agency does
monitor electricity reliability in Texas, however, through its oversight
of the North American Electricity Reliability Corp. (NERC),
the nation's reliability watchdog. NERC's Texas regional entity,
the Texas Reliability Entity Inc. (Texas RE), is the agency that
regulates the state's electricity reliability performance.
FERC already had the Texas RE up on its radar screen before
the February outages. In November 2010, FERC issued an audit
report in which it identified concerns related to Texas RE's close
relationship with ERCOT in light of the fact that Texas RE's role
is to monitor ERCOT's reliability performance. Additionally, the
report criticized Texas RE for not effectively overseeing ERCOT's
compliance with reliability standards. " Texas RE acted promptly
to address these areas of concern, " according to the report.
FERC's current inquiry is intended to identify the causes of the
February disruptions and any appropriate actions for preventing
their recurrence. In late April, as this column was being written, a
FERC spokesperson told POWER that the inquiry was still ongoing.
Likewise, in February, NERC President and CEO Gerry Cauley
announced that, in response to the February outages, his agency
was working to examine the adequacy of preparations and identify
potential improvements and lessons learned. He stated that
" two efforts will be launched to meet these objectives. " At press
time, NERC was continuing its " lessons learned events analysis. "
A NERC spokesperson told POWER that the agency " expects to
have its report completed in an August time frame. "
Neither agency is expected to bring enforcement proceedings
in relation to the February outages.
Keeping the Lights on Deep in the Heart of Texas
Here's hoping that the FERC and NERC inquiries produce useful
information that can be passed along to the regulated community.
Going forward, utilities operating in Texas need to focus on
providing better oversight of their generation facilities in order
to enhance reliability and prevent future widespread outages.
" If you don't like the weather in Texas, just wait five minutes,
and it will change " goes a popular saying. Given the unpredictability
of Lone Star weather, Texas generating facilities would be
well advised to focus on the lessons learned from the recent outages
so they can be better prepared when the next " blue norther "
on steroids hits the state. ■
-Angela Neville, JD, is POWER's senior editor and a
fourth-generation Texan.
www.powermag.com
POWER | June 2011
http://www.powermag.com
POWER June 2011

Table of Contents for the Digital Edition of POWER June 2011
