February 4, 2011
by Michael Giberson
February 4, 2011
[Editor note: Dr. Giberson is an instructor and research associate at the Center for Energy Commerce at Texas Tech University's Rawls College of Business. He blogs on energy economics and other topics at Knowledge Problem.]
On Wednesday morning, The Electric Reliability Council of Texas (ERCOT), operating the power grid for much of the state, called upon local distribution companies to cut power to blocks of consumers on a rotating basis.
The rolling outages produced hardship for millions, and even isolated instances of severe harm. Consumers and policymakers are dissecting what went wrong and what should be done about it. The following is a preliminary analysis based on public data and news reports. A subsequent post will present more details once more complete information becomes available.
In brief, extreme cold weather pushed power demand to very high winter levels. At the same time, fifty of the state’s power plants were offline due to the effects of the cold, and several others were undergoing planned maintenance. The combination of very high demand and reduced supply left the ERCOT grid perilously short of reserves. Rolling consumer outages were employed to protect the system from failing completely.
Some wondered whether wind power was at fault, but wind contributed about seven percent of ERCOT’s power during the emergency – about the same as this time last year.
No power system is immune to hazards. But policy decisions that increase the likelihood of hazards or multiply the resulting damages ought to be given careful reconsideration. In this case, the choice by Texas policymakers to keep ERCOT isolated from surrounding power systems prevented power companies within ERCOT from accessing excess power capacity elsewhere in the state and in neighboring states. Other policy issues also are raised by the emergency, but few solutions are likely to be as cost-effective and technically simple to implement as linking ERCOT to its neighbors.
ERCOT reported that severe weather led to the loss of 50 generation units amounting to 7,000 MW of capacity on Wednesday morning. From news accounts it looks like a few large coal plants failed after water pipes burst. Some natural gas generators found insufficient fuel supplies due to heavy demand for natural gas. Other natural gas generators found their access to fuel curtailed by state rules that give priorities to other customer classes when supplies run short. In addition, a larger than usual amount of generation was off-line for scheduled maintenance – one estimate put this quantity at about 12,000 MW.
Demand for power was sharply higher on Wednesday morning compared to earlier in the week, reaching over 53,000 MW between 9 AM and 10 AM. The rolling outages eliminated about 3,000 MW of demand during that period, so the true demand for power was nearer 56,000 MW. By comparison, the same hour on Monday saw demand of just 33,500 MW. ERCOT has seen demand at this level in the winter before –last winter the system handled demand of 57,000 MW without incident. The high demand was only a problem because so much generation was offline.
Rolling power outages are a way to limit power demand during emergencies in an attempt to prevent an uncontrolled cascading blackout. While the rolling outages were controlled, they still impose heavy costs on consumers. Hospitals and other priorities locations are protected from rolling outages, but schools are not. Several San Antonio-area schools losing power resorted to busing students to school buildings that continued to have power. Traffic accidents in Austin were attributed to traffic signals being out due to the rolling outages.
ERCOT’s Electrical Isolation
Texas has pursued a policy of isolation for the ERCOT power grid so as to keep the state’s largest utilities subject primarily to state, rather than federal, regulation. Two minor links connect ERCOT and utilities in Oklahoma, but they are of little commercial significance. A small interconnection with Mexico was activated to send power into Texas for a few hours, but cold conditions in Mexico required it to suspend the assistance.
The policy of isolation is questioned from time to time, but remains popular with the industry and many state policymakers. While the policy has important benefits, the costs are particularly visible at times of system stress.
In the Southeastern corner of the state, Beaumont was not experiencing outages. The local electric utility, Entergy Texas Inc., is not connected to the ERCOT power grid. If Entergy Texas had excess power capacity on Wednesday morning, they could have sold it east into Louisiana or elsewhere as far as Florida or even Maine. However, even thought the utility borders against ERCOT near Houston, no power could flow to help out the rest of the state. Nearby CenterPoint Energy had to blackout an average of about 330,000 customers at a time during the emergency.
Amarillo’s Xcel Energy reported operations were running smoothly despite temperatures falling below zero overnight in the region. If the utility had excess power, however, none of it would have been able to reach ERCOT. Like Entergy Texas, Xcel and other utilities in the Panhandle and South Plains are connected into the Eastern Interconnection, which stretches to the Atlantic coast in the east and to Canada in the north. (On Thursday Xcel called upon consumers in the Panhandle to conserve power and natural gas, as heavy demand for gas was temporarily making the fuel harder to obtain.)
El Paso Electric Co. in the western tip of Texas is not connected to the ERCOT grid, but it also implemented rolling outages Wednesday morning after two of its power plants suffered partial shut downs due to the cold. In the case of El Paso, connected by power lines running throughout the western United States, while it worked to bring the generators back online it could seek out supplies from neighboring states of Arizona and New Mexico, or from as far away as Washington or British Columbia.
Other Single-State Power Systems
Two other regional power grids are contained wholly within a single state – the New York ISO and the California ISO. The California ISO relies on imports for about a quarter of its annual energy consumption. The New York ISO similarly imports and exports high quantities of power. Only Texas pursues a policy of isolation.
The inter-system trade in power surely lowers the overall cost of electricity for consumers in New York and California. And, despite some high profile exceptions like the August 2003 blackout that spread from Ohio to New York, these interconnections tend to improve the reliability of power systems, too. More relevant for the current discussion, when emergency conditions arise, neighboring power systems can cooperate to help solve the problem.
How Did Wind Power Do?
A few rumors bounced around the radio waves and Internet forums on Wednesday linking the rolling blackouts to ERCOT’s wind capacity, one rumor even claiming that wind power had dropped to zero. The rumors were false. News reports indicate that some wind turbines were out of service due to the cold, but the problems appeared not to be widespread. ERCOT spokesperson Dottie Roark said that wind power plants from between 3,500 to 4,000 MW of power during the worst parts of the emergency, about normal for this time of year.
Wind power may have had an indirect effect. The significant investment in wind power capacity may have discouraged some added investment in natural gas or coal powered plants. But given conditions Wednesday mornings, a few additional new thermal plants may not have made much difference. Some existing natural gas generating plants saw their access to fuel curtailed by rules giving higher priorities to other customer categories when supplies become short, other plants were confronted by low pressure in gas pipelines. Additional natural gas plants may have just added to the number of plants without access to fuel. A few of the new coal plants built in recent years were among the plants that were forced out of service yesterday by the cold, key contributors to the problem.
The system needed all of the power it could get. Had more thermal plants been built, at least some of them would have been in service and helpful. Outages would have been moderated a little. Wind generated power was used and useful, but couldn’t be dialed up to produce more during a time of need. Wind power was neither the cause of the problem, nor of any special value in reaching a solution.
Infrastructure Interdependencies a Problem
Emergency actions by ERCOT prevented the generation outages from causing the entire system from failing. ERCOT’s emergency operations seemed to work okay, given the difficult situation. The primary problem on Wednesday was a lack of generator preparation for the extreme cold and the hazards that the weather brought with it. Given those problems, ERCOT probably did as well as it could.
Potential policy problems mostly lay elsewhere. In some cases there were interdependences between the power system and other infrastructure systems that magnified the costs of the rolling consumer outages. For example, some of the controlled outages idled natural gas pipeline compressor stations, reducing pipeline pressure and hampering the ability of natural gas generation plants to get fuel they needed. Other power plants found their fuel supplies curtailed under natural gas priority rules that were last updated in the early 1970s. While the linkages between the electric power system and the natural gas pipeline system can’t be severed, actions can be taken to make each system a little more robust to problems with the other.
Another example, the power outage left many traffic signals out, so a power system problem added to an already difficult roadway congestion problem. Reports from Austin attributed at least one traffic accident to the loss of power to a traffic signal. Battery backup systems are widely available for traffic signals, and the City of Austin was already planning to begin installing the systems later this year. Other cities should take note.
Perhaps most or all cell phone towers have battery backup power, helping to assure continued lines of communication when power goes out. But one cable company served by El Paso Electric reported intermittent loss of service after its battery backup system was drained from repeated loss of power from the grid. While the loss of mid-day movies and soap operas may not be a serious public policy concern, it isn’t too hard to imagine conditions under which timely dissemination of information about health issues could be critical. Companies in the communications business should consider whether further steps are necessary to make their communication systems robust to failures in supporting infrastructure systems.
It is entirely likely that, had power companies in ERCOT been linked more substantially to other utilities in the state and utilities in neighboring states, Wednesday’s rolling blackouts could have been completely averted. This conclusion is obviously not enough of an argument by itself to justify reforming the state’s policy of isolating ERCOT. But it may be sufficient to rekindle discussions about the costs and benefits of ERCOT’s electrical isolation.
Connections from ERCOT into to the southeast corner of the state would be valuable, in case of another emergency. It seems a shame for excess power capacity in various corners of the state to be unavailable at times of stress.
But possibly it is the case that Texas can, as the saying goes, have its cake and eat it too. The Tres Amigas project has proposed building a high-tech transmission link that would simultaneously link up the Eastern, Western, and ERCOT interconnections. At full capacity, the project would be capable of supplying up to 5,000 MW of power to the ERCOT grid – more than sufficient to cover Wednesday’s shortfall (assuming sufficient in-state transmission to carry the power).
State regulators and many power industry players in the state are reluctant to support the project, citing a desire to protect the current regulatory status quo. But the Federal Energy Regulatory Commission too has acted to protect the status quo in the past, and has signaled a willingness to continue to protect it should ERCOT link up to Tres Amigas. Texas policymakers should explore the opportunities available.
Accidents happen, and no power system will be resistant to all challenges. It would be too expensive to build a power system that would never fail. Yet, when failures come, we ought to do our best to learn from them.
No doubt coal and gas-fueled generators across the state are reexamining their readiness for extreme coal weather. I suspect we could survive another severe storm as early as next week if one comes about. By this time next year, ERCOT and the industry will be well prepared to weather another storm like we’ve had this week. Our problems can make us better, as the late Julian Simon emphasized.
At the same time, we have to consider the ability to respond to the next surprise. Not another storm like we’ve had this year, but something new that Mother Nature will surely toss our way. Linking up with neighboring power systems would give ERCOT additional resources to draw upon during an emergency.
When policymakers in Austin next reconsider ERCOT’s current electrical isolation, the Tres Amigas plan ought to get the hearing it deserves.