As Texas senators grilled members of the Public Utility Commission last month on its plans to avoid rolling blackouts, several thousand Texans were without electricity because of a pre-Thanksgiving winter storm.
While we accept storm-related outages as an inconvenience, what we won’t accept, it has been argued, is a lack of planning for system-wide, rolling shortages that might occur frequently with a repeat of the summer of 2011.
The problem is that wholesale electricity prices have been too low for several years to encourage the construction of many new power plants. In response, owners of power plants want extra capacity payments — a proposal that has customers and politicians worried about higher electricity bills.
It’s an argument that has split the utility commission, pitted power plant owners against some of its largest business customers, and stirred lawmakers to push back against regulators who are considering changing how we buy and sell wholesale electricity.
It’s an argument that has been going on for more than two years. Long enough that it’s easy to forget why we are squabbling.
In fact, we haven’t answered the basic question: What bogeyman are we trying to avoid?
The issue is a kind of chicken-and-egg question: The decision makers are debating the level of electricity reserves the state needs — and the cost of those reserves — but they haven’t concluded how often Texans would accept a rolling blackout as a reasonable risk.
Never is not an answer. You wouldn’t want to pay the price of a 100 percent guarantee.
Traditionally, the industry standard — its origin appears to be lost to time — is one day in 10 years.
For the state’s primary electricity grid, managed by the Electric Reliability Council of Texas, that industry standard translates as “one event in 10 years,” according to the state’s consultants, The Brattle Group.
But 19 months ago, The Brattle Group pointed out the problems with such an unexamined translation of a supposed truism.
Some grid managers outside ERCOT consider the “one-in-10-years” standard to refer to 24 hours of outages over 10 years. That requires a lot fewer megawatts in reserve than ERCOT’s one-event translation.
Plus, no “event” is the same.
Neither the utility commission nor ERCOT have assigned a size or duration to the standard.
Two 2-megawatt events in 10 years lasting one hour would not be considered acceptable, The Brattle Group noted, while a 3,000-megawatt rolling outage lasting 10 hours would meet the standard.
Which would you rather suffer through?
The Brattle Group wrote that ERCOT’s standard “implies” average outages of less than 1 minute per year per customer. We suffer 100 times that many outages, the consultants wrote, due to storms and equipment failure.
No one is arguing that those storm-related outages are crimping the economy.
The difference is that officials worry that a rolling blackout — unlike a storm outage — is viewed as a lack of planning on their part.
Also, a storm outage is localized, while a rolling outage at ERCOT can cover three-fourths of the state. One is a big local story, while the other can become national or even international news.
When a blackout occurs, you can cue the blame game. Endure several during a repeat of 2011’s historical weather and the public suddenly would become engaged in the debate.
On the flip side, politicians worry that changing the electricity market to include capacity payments would lead to higher prices.
Truth is, the current system already has given us both rolling blackouts and higher prices.
We had a rolling blackout in the spring of 2006 and the winter of 2011. The first happened because too many power plants were down for annual maintenance to respond to August-like temperatures on an April day. The other happened because some owners had not insulated their power plants enough to survive a freak February storm.
Likewise, five years ago, electricity customers were complaining about high prices because the price of natural gas — a generating fuel — was high. Now the opposite is true because “fracking” has greatly expanded the supply of natural gas, depressing prices.
No system is perfect.
However we change it, the lights someday will go off despite our best efforts. And wholesale electricity prices could rise even if we do nothing more to change the wholesale market.
Last month’s committee hearing was interesting political theater, but it got us no closer to a state policy on what’s the acceptable risk of having a rolling blackout.
Sen. Troy Fraser, R-Horseshoe Bay, did extract a promise from Utility Commission Chair Donna Nelson to conduct a cost-benefit analysis before enacting any change in the current wholesale market.
I hope that gets us closer to answering for what “event” we are buying insurance.