In February 2021, a winter storm swept across Texas, leaving millions of people without power for days and causing widespread damage. The Permian Gas Supply problems have only caused more issues in the Texas electricity market.
The Electric Reliability Council of Texas (ERCOT), which manages the state’s electric grid, came under intense scrutiny for its handling of the crisis. In the aftermath of the storm, the Legislature passed a bill restructuring ERCOT and imposing new requirements on the organization. As a result, ERCOT now has a new board of directors, a new CEO, and new rules to follow. The changes are intended to help prevent another catastrophe like Winter Storm Uri from happening again. Only time will tell if they are successful. In the meantime, Permian gas supply is a concern as we supply the European LNG market with gas while they face serious supply issues. Texas electricity prices have been greatly affected because of the shipments of LNG we have sent across the pond.
Listen instead on our Electric Rates Customer Experience Podcast: ERCOT, LNG Exports, Renewable Texas Energy, and Texas Electricity Prices
Since early 2020, the TRRC has been focused on improving the reliability of the state’s electric grid. The massive winter storm in February that left millions without power for days, and in some cases more than a week, put a spotlight on the need for reform. And while the agency has made significant progress in increasing its oversight of natural gas suppliers, there are still vulnerabilities that could be exploited by bad actors. In particular, the TRRC is concerned about the possibility of cyberattacks on critical infrastructure.
The agency is also working to address environmental concerns, including the impact of methane emissions on climate change. At the same time, the TRRC is grappling with how to manage the transition to cleaner energy sources, such as wind and solar. With LNG exports booming and new oil and gas development taking place in the Permian Basin, there are a lot of moving parts to consider concerning Permian gas supply. But one thing is certain: The TRRC will continue to play a pivotal role in shaping the future of Texas energy.
The ERCOT system failed in multiple ways. Most fundamentally, it did not have enough generation capacity to meet the demand for electricity during extreme temperatures, it was not prepared to deal with the loss of generation due to frozen wind turbines and gas wells, and it did not have adequate procedures and protocols in place to maintain reliability during a extended power outage.
In addition, ERCOT did not provide clear and timely information to utilities, generators, and other market participants, which hampered their ability to take appropriate actions to maintain electric service. The FERC/NERC report identified a number of factors that contributed to the problems at ERCOT, including: inadequate planning for extreme weather conditions; inadequate operational procedures; lack of effective communication; and insufficient training and experience of key personnel. The report made a number of recommendations for corrective actions, which are currently being implemented.
As a result of the failures at ERCOT, the Texas legislature passed a law that requires utilities to increase their generation capacity and make other improvements to the electric grid. These same politicians are the ones who created the Electric Reliability Council of Texas (ERCOT), which is responsible for overseeing the electric grid and ensuring its reliability.
The ERCOT board was replaced with a new board that is charged with ensuring that ERCOT operates effectively and efficiently. Finally, the FERC/NERC report has led to a number of changes in federal and state regulations that are designed to improve the reliability of the electric grid.
TRRC has been working hard to make sure that gas-supply facilities are reliable. With the increase in Texas gas production from the Permian Basin, it is more important than ever that these standards are met. TRRC has been working to ensure that facilities meet these standards and that they are able to provide the necessary supplies to meet the demands of the growing market.
With the increased production, Texas has become a major player in the world LNG market. This is especially true in Europe, where Texas supplies have been able to replace Russian supplies that were cut off amid the Ukrainian crisis. The increased production and reliability of Texas gas supplies has been a boon for the European market and has helped to stabilize prices in the face of uncertain Russian supplies.
The United States has long been reliant on fossil fuels, but that is starting to change. A growing number of politicians and their cohorts are setting ambitious goals for renewable energy, and Texas is no exception. The Lone Star State is home to a large number of wind farms, and it is also one of the leading producers of solar power. In addition, Texas is taking steps to increase its use of natural gas and other forms of renewable energy.
These changes are happening in part because of the increasing political pressure and subsidies going to renewables, but they are also happening because of political story telling turning climate change into world catastrophe. As the world barely moves away from fossil fuels, Texas is enmeshed at the forefront of the faux energy transition.
Not everyone is convinced that renewable energy is the answer. Some skeptics point out that solar and wind power are often more expensive than traditional forms of energy, and they argue that renewable energy is nothing more than political window dressing. They also contend that renewable energy is unreliable and won’t be able to meet our future needs. While the debate continues, one thing is clear: renewable energy in Texas is a hot-button issue that isn’t going away anytime soon.
Donny has been writing about the deregulated energy markets since early 2007. His knowledge has helped consumers lower their electricity cost.