Texas Power Grid Collapse 2021

[malchior]

To dig in a little here. That the rates were $9000/MWh is another layer of indication that this is a flawed market design. They didn't spike up to $9000 because that is what the market demanded. It got there because the price was essentially infinite - it just hit a price cap. There was no supply for the demand. Once generation started to come back online it was able to take advantage of this rate. However, there is no real 'fundamental' reason why the price needed to be $9000/MWh other than whatever model had them set that top rate to begin with. The same goes for the natural gas price underneath the whole model. It essentially hit a price circuit breaker as well. I doubt they had once-in-130 year storms in mind when they set the price caps. If you squinted hard enough, I imagine you could argue the untethered from any fundamentals price might provide some incentives to come back online "faster" (more on this below). However considering the outages were mostly source supply and temperature based makes that a disconnected idea.

Just as a comparison, this summer ERCOT saw rates just below $2000/MWh at peak load though they did have moments where it hit the $9000/MWh cap. An indicator of lack of supply again at the high end. FWIW that $2000/MWh would be considered fairly normal in the United States. At that load range, you are usually seeing 'peakers' come on-line to add short-term grid capacity. They often are just jet engine turbines fed with JetA fuel that can come up very quickly in anticipation of loads and catch the best prices at the top. My former employer made a killing on those. You'll see them near refineries often since you can pipe over JetA directly and keep the cost down. In NJ, several are across the NJ Turnpike from the Conoco refinery near Newark airport for instance.

At $9000 per MWh? If the average natural gas plant was able to run that for a single day they'd pay off about 30% of the construction cost of the entire plant. The math here? ($9000 per MWh / hour) * (24 hours / day) = $216K / day per MWh. A typical nat gas plant is between 500 and 700 MWh built at about $700k/MWh for a typical combined cycle natural gas generator. For a smaller 500 MWh plant, the cost would be $350M to build it. If they ran a day at $216K / day prt MWh * 500 MWh that'd be $108M dollars. So you can be sure everyone was scrambling to figure out how to bring *anything* online to take advantage of it but it still is completely disconnected from reality. But the circumstances of the failure state precluded it unless they were spin up the Conan 'Wheel of Pain' to generate electricity.. That's an intetionally absurd example but there actually may be a couple of winners in the mix who were able to win the race to get generation up a day or two early to make a killing off the consumers' backs.

In the end, the consumer had very weak protection in the form of the 'semi-arbitrary' price cap but that's about it. Some of them were exposed to market rates that were disconnected from fundamentals. If they had protection, their generation provider had to soak it up potentially out of their reserves. In fact, there were early reports that customers received offers to be paid to switch early in the crisis as some companies realized their financial exposure. I expect there will be turbulence as some of these power companies have to digest how much impact to their financials this crisis was.

[Daehawk]

https://twitter.com/kerryeleveld/status ... 7429229571

[Smoove_B]

And to think the NE expected empathy after Hurricane Sandy. Between Cruz and Abbot, they don't even care about their own constituents.

[malchior]

And to think the NE expected empathy after Hurricane Sandy. Between Cruz and Abbot, they don't even care about their own constituents.

Yep. I'm not surprised. Most of those mayors are specifically calling on *Texas* to pay for the high bills. There has been some chatter that FEMA money might help but that feels like moral hazard to me. It'd be a bailout to generators and utilities who'd be essentially be hitting the poor preparedness lottery.

[$iljanus]

Oh Ted...

In photos Cruz posted of himself with the caption #TexasStrong, he is wearing a face mask with the Texas flag on it and distributing water bottles to people, shaking a maskless woman’s hand in one picture. He appeared to be in Harris County, posting more photos the next day in close contact with first responders, serving them barbecue. Immediately after his initial posts, responses flooded in, condemning Cruz for disregarding federal guidance, which not only advises against traveling to Mexico because of the number of coronavirus cases there, but also recommends that travelers stay home for seven days once they’ve returned to reduce the spread of the virus.

From https://www.washingtonpost.com/politics ... -response/

[Zarathud]

If you're shaking the hand of Ted Cruz, you're in danger of more than exposure to COVID-19.

[Kraken]

He's a senator. You don't blame your senator when disaster strikes. He has no role in disaster relief. Texans were not looking to Cruz. All he had to do was not be a dick. He was a dick nonetheless so now they're all looking at Cruz, and he has to do two hours of community service to atone.

[Grifman]

I think Ted is back home. He'll fix it.

LOL - that to me is the most hilarious part of "CaboGate". What the F is Ted F'ing Cruz going to do to help ANYbody or anything regarding this issue? At best he'll just get on a Fox news segment and blast the windmills again, and how going green is killing the country, one snowstorm at a time.

Seems to be a lot that he could do:

https://www.washingtonpost.com/politics ... cy-anyway/

https://www.cnn.com/2021/02/21/politics ... index.html

https://news.yahoo.com/cruz-headed-canc ... 58306.html

[$iljanus]

Federal aid for damages I understand but for your electric bill? That’s...Socialism! Are you sure you want to be tainted with those dirty blue state rubles?

Rep. Michael McCaul (R-Tex.) offered hope that the cost for people will be alleviated by federal assistance provided by President Biden’s emergency disaster declaration and the Federal Emergency Management Agency.
“The current plan is with the federal assistance to be able to help homeowners both repair — we have a lot of water leaks, a lot of water damage, pipes bursting — but also their electricity bills, as well,” McCaul said Sunday in an interview on CNN’s “State of the Union.”

https://www.washingtonpost.com/nation/2 ... ric-bills/

[malchior]

Federal aid for damages I understand but for your electric bill? That’s...Socialism!

It's socialism for the right people in the form of a passthrough bailout of the utilities. Continuing the great American tradition of privatizing profits and socializing losses.

[Octavious]

Why should we have to pay batshit crazy electrical bills because they want FREEDOMMMMMMM?!?!? I mean if there were only rules you could put in place so that you couldn't charge so much... Crazy idea...

[Carpet_pissr]

This sounds too simplistic, so please correct me if wrong:

Texas (citizens and leaders I guess) knowingly chose/voted to have a system that kept their their power bills low, at the expense of risk that a Bad Event (like this one) would blow their shit up, as it were (like it has).

Inevitable car analogy: like making a conscious decision to never bring your car in for maintenance or oil changes, hoping nothing bad ever happens, bc you don’t want to pay for said maintenance.

And now, the federal govt is basically going to bail them out, essentially condoning the behavior? I’m sure that rubs many Texans the wrong way.

Returning to car analogy, that’s like the car insurance company offering to pay for the inevitable super expensive repairs your car is going to need as a result of 12 years without maintenance.

I assume not everyone in Texas supports or voted for the way things are with ECOT, but it smacks of rewarding super bad, short term behavior and thinking.

Withholding aid from fellow citizens that need it is not what I’m suggesting, but perhaps some form of accountability for a seemingly horrible, conscious choice just to save money, is in order? Who were the primary proponents of the system?

[malchior]

This sounds too simplistic, so please correct me if wrong:

Texas (citizens and leaders I guess) knowingly chose/voted to have a system that kept their their power bills low, at the expense of risk that a Bad Event (like this one) would blow their shit up, as it were (like it has).

More like they were sold a deregulation scheme that was supposed to provide reliability by pairing a regulator with the power of markets. Now that scheme isn't that unusual. Many of the ISOs actually do this but with far more emphasis on reliability than ERCOT does. Mostly due to a difference in philosophy. If there was an imaginary dial, ERCOT might be set very close to libertarian/market liberal.

In 2011 for instance they had a less severe scare of the same type (extreme cold forcing generation off-line). They saw high prices. FERC told them that btw we believe this will happen again if you don't change. Texas essentially said...hey we saw high prices...that'll be the incentive to build more winter generation. Except it didn't because events that happen every 10 years don't often play well with capital lending or thin power margins. It wasn't a super strong business case.

Inevitable car analogy: like making a conscious decision to never bring your car in for maintenance or oil changes, hoping nothing bad ever happens, bc you don’t want to pay for said maintenance.

Sort of. More like they told Uber drivers that your car will work most of the time without an oil change. Meanwhile the market offered them surge rates if lots of cars broke down. It incentivized a lottery in a way. If your car didn't break down, you make a killing.

And now, the federal govt is basically going to bail them out, essentially condoning the behavior? I’m sure that rubs many Texans the wrong way.

Yes - it's moral hazard. Basically they went off and experimented in a way that many experts said would fail. When it inevitably failed they said...oh woe is me. And its largely the same guys who dunked on California when they had wild fires. And voted against aid when Sandy hit saying NJ should have been prepared for freak hurricanes. It's moral hazard and with a helping of hypocrisy in one tidy package.

Returning to car analogy, that’s like the car insurance company offering to pay for the inevitable super expensive repairs your car is going to need as a result of 12 years without maintenance.

Yup even though the insurer was saying we can't make you change...but you should change because you are courting disaster. That engine sounds bad. It is going to seize. "Oh well...in the long-term everyone dies. In the short-term I might make a killing".

Withholding aid from fellow citizens that need it is not what I’m suggesting, but perhaps some form of accountability for a seemingly horrible, conscious choice just to save money, is in order? Who were the primary proponents of the system?

There were several architects but W. signed much of the current scheme into law in '99. To put it in context, the modern grid was re-worked in that time nationwide. Many of the ISOs were stood up between 97 and mid-2000s. They took a different road than everyone else though. And again were told it was risky.

[LordMortis]

And now, the federal govt is basically going to bail them out, essentially condoning encouraging the behavior? I’m sure that rubs many Texans the wrong way.

Still if I were the PTB, I would accept the bailing Texas out but it would come with strings. Regulation and oversight and not temporary. If that's not good then no aid. You can move forward with independence our you can accept that sometimes you have to be part of a team. I would imagine home insurers are updating their actuarial tables based on the same premise.

[Smoove_B]

There's a theme here, but I can't quite get my hands around it...

According to a campaign spokesman, Texas Attorney General Ken Paxton left the state during the middle of the power outage crisis to meet with a fellow attorney general in Utah for a “previously planned meeting.” Hs wife, state Sen. Angela Paxton, was also on the trip, reported the Dallas Morning News, which first broke the story.

[Skinypupy]

I know I shouldn't be surprised at the depths to which Fox sinks, but I still kinda am sometimes.

https://twitter.com/LisPower1/status/13 ... 1208845326

Ted Cruz fled Texas during its power crisis to *fly his family to Cancun*

AOC raised $5 million for Texas and *flew to Texas* to help volunteer at relief efforts

Fox News:

Cruz spends weekend helping Texans

vs.

AOC capitalizes off of storm devastation

[Isgrimnur]

https://www.kxan.com/news/texas-politic ... rson-says/

[malchior]

The first in what will probably be a wave of bankruptcy's in the ERCOT power sector has begun. The last paragraph I snipped out is a doozy. I was unaware that was a possibility.

The largest power generation and transmission cooperative in Texas filed for bankruptcy in the wake of power outages that caused an energy crisis during the winter freeze last month.

Brazos Electric Power Cooperative filed for Chapter 11 in the Texas after racking up an estimated $2.1 billion in charges over seven days of the freeze. Last year, it cost cooperative members $774 million for power for all of 2020.

The magnitude of the charges “could not have been reasonably anticipated or modeled” and far exceeds Brazos highest liquidity levels in recent years, Executive Vice President Clifton Karnei said in a bankruptcy court declaration. The cooperative on Feb. 25 told state grid operator the Electric Reliability Council of Texas that it wouldn’t pay the $2.1 billion sum, and Karnei resigned from Ercot’s board of directors, court papers show.

Brazos had “no choice” but to file for bankruptcy, Karnei said. Chapter 11 protection lets Brazos keep operating while it works out a plan to repay creditors. The cooperative listed assets and liabilities of as much as $10 billion each.

“Brazos Electric suddenly finds itself caught in a liquidity trap that it cannot solve with its current balance sheet,” Karnei wrote in the declaration.

Aside from its power bills, the cooperative has more than $2 billion of debt outstanding, spread across $1.56 billion of secured notes and about $480 million under a credit line administered by Bank of America Corp., court papers show. Brazos had A+ credit grade from Fitch Ratings and an A from S&P Global Ratings prior to the bankruptcy.

Brazos, a member-owned power provider serves customers across 68 Texas counties, stretching from just north of Houston to near the Texas panhandle, court papers show.

The bankruptcy is likely to be one of many after four million homes and businesses went without heat, light and water during the deep winter freeze last month, causing as much as $129 billion in economic losses. The state’s broader market set a record for the most expensive week of power in U.S. history. The impact on individual companies is only starting to emerge, with some racking up huge losses while oil and gas producers saw their output halted.

Companies that failed to produce electricity were forced to buy power as prices soared. Ercot says it’s $1.3 billion short of what it needs to pay generators for what was produced. This puts huge financial pressure on utilities that managed to keep producing power, as well as those that failed.

Ercot has stopped payments to some utilities as it tries to manage defaults. If the grid operator fails to completely cover defaults, the resulting costs would be passed onto all market participants.

[Isgrimnur]

NBC DFW

The city of Denton on Thursday filed a lawsuit against ERCOT to prevent what it calls "an illegal and unconstitutional" raid on cities that run their own utility companies.

The city owns and operates its own energy provider -- Denton Municipal Electric -- and says it sued to prevent ERCOT from shifting the cost of electricity not paid by some market participants to others, including cities.

The lawsuit says the city is prepared to pay its bills, but not those of others. The suit says cities cannot make those payments under the Texas constitution.

[Carpet_pissr]

I know what that feels like, kinda. Or what it’s about to feel like for Texans.

If you’ve lived in SC for say the past decade, you’ve paid higher than average electrical rates for at least that long. Why? Why to pay for one hell of a boondoggle in the form of a $14B failed nuclear power plant project.

They artificially raised rates while they built it to pay for it. Then when it failed, we all got a tiny bit back in the form of rebates on our bills for about...6 months I think. :/

The company that took over (Dominion) has already raised rates from the previously artificially high rates.

Gotta love the good ol boy network.

[malchior]

There was a wave of failed nuclear power plant projects over the last 10 years. The SCANA one was probably the worst. They blamed it on ballooning costs but every project was kiboshed. For example, the South Texas Project tried to add a 3rd and 4th unit starting in 2011 after seeing the SCANA project get spun up. The main reason all of these projects fell apart was that capital investors who hated nuclear anyway - too much risk for the long reward timeline - got spooked by Fukushima.

Edit: As a side note, STP Unit 1 was the Texas nuclear plant that went offline. This is a huge, huge deal because nuclear is what is considered base load and pretty much never should have forced outages.

[LordMortis]

So are Paxton, Cruz, and Abbott in favor of shutting down all of the utility companies because they don't know to run a business and the free market should let them fall so a better utility company will quickly take their place to fill the void... and the utliity companies should have all their equipment seized and liquidated including their grid to pay their debt.

Quite frankly I think the other 49 states and northern states of Mexico should sue Abbott and Paxton personally for allowing these companies interrupt the flow trade and hold the US economy hostage to "force the US to change how we regulate energy production through an unprecedented lack of oversight of state responsibility." and "disastrous effects to the Texas economy."

[Smoove_B]

Revised death toll is 111, nearly double what was originally reported. This is incomprehensible to me.

Victims came from 47 counties and included an 11-year-old boy who died of hypothermia and was found on Feb 16. The storm caused many other kinds of deaths as well, including accidents on unsafe roads, falls and fires. Some people's medical equipment stopped working without power, cutting them off from lifesaving treatments. Others died of carbon monoxide poisoning as they desperately tried to heat their homes or cars.

[Smoove_B]

Since today's theme is apparently the GOVERNMENT taking your FREEDOM, here's an interesting observation about the Texas power grid collapse:

After the power flicked off in millions of homes across Texas during the state’s historic freeze in mid-February, families like Bekele’s faced an impossible choice: risk hypothermia or improvise to keep warm. Many brought charcoal grills inside or ran cars in enclosed spaces, either unaware of the dangers or too cold to think rationally.

In their desperation, thousands of Texans unwittingly unleashed deadly gases into homes and apartments that, in many cases, were not equipped with potentially lifesaving carbon monoxide alarms, resulting in the country’s “biggest epidemic of CO poisoning in recent history,” according to Dr. Neil Hampson, a retired doctor who has spent more than 30 years researching carbon monoxide poisoning and prevention. Two other experts agreed.

In the aftermath of the unprecedented wave of poisonings two months ago, Texas lawmakers have taken few steps to protect residents from future carbon monoxide catastrophes. That choice caps more than a decade of ignored warnings and inaction that resulted in Texas being one of just six states with no statewide requirement for carbon monoxide alarms in homes, ProPublica, The Texas Tribune and NBC News found.

(emphasis added)

What are the numbers:

At least 11 deaths have been confirmed and more than 1,400 people sought care at emergency rooms and urgent care clinics for carbon monoxide poisoning during the weeklong Texas outage, just 400 shy of the total for 2020. Children made up 42 percent of the cases. The totals don’t include residents who were poisoned but did not seek care or those who were treated at hospitals and urgent care clinics that do not voluntarily report data to the state.

Black, Hispanic and Asian Texans suffered a disproportionate share of the carbon monoxide poisonings, ProPublica, The Texas Tribune and NBC News found based on a review of statewide hospital data. Those groups accounted for 72 percent of the poisonings, far more than their 57 percent share of the state’s population.

But I guess laws and regulations that could have prevented those 11 deaths and 1400+ visits to ER wouldn't be justified, because freedom.

[malchior]

https://twitter.com/SawyerHackett/statu ... 2350682113

[coopasonic]

We have the freedom to choose death!

Oh, no, not like if we are very sick and going to die anyway, no, not then.

[Pyperkub]

There's also this bit of Bad Faith on the part of Gov. Abbott:

Texas Governor Greg Abbott’s office knew of looming natural gas shortages on February 10, days before a deep freeze plunged much of the state into blackouts, according to documents obtained by E&E News and reviewed by Ars.

Abbott’s office first learned of the likely shortfall in a phone call from then-chair of the Public Utility Commission of Texas DeAnne Walker. In the days leading up to the power outages that began on February 15, Walker and the governor’s office spoke 31 more times.

Walker also spoke with regulators, politicians, and utilities dozens of times about the gas curtailments that threatened the state’s electrical grid. The PUC chair’s diary for the days before the outage shows her schedule dominated by concerns over gas curtailments and the impact they would have on electricity generation. Before and during the disaster, she was on more than 100 phone calls with various agencies and utilities regarding gas shortages.

After the blackouts began, Abbott appeared on Fox News to falsely assert that wind turbines were the driving force behind the outages.

[malchior]

https://twitter.com/mattlargey/status/1 ... 5795828746

https://twitter.com/blaireerskine/statu ... 3376071681

[Isgrimnur]

I totally fell for it for a couple minutes.

[Combustible Lemur]

I totally fell for it for a couple minutes.

Which is for real serious when the video is only 1:06

Sent from my SM-N975U using Tapatalk

[malchior]

She is usually solid. But boy oh boy did she absolutely land this one.

[Unagi]

I totally fell for it for a couple minutes.

I still think it went over my head, but because you said there was something - I guess I get it ???

[malchior]

I totally fell for it for a couple minutes.

I still think it went over my head, but because you said there was something - I guess I get it ???

Spoiler:

She isn't an actual ERCOT spokesperson - she is just speaking Texan

[Unagi]

I totally fell for it for a couple minutes.

I still think it went over my head, but because you said there was something - I guess I get it ???

Spoiler:

She isn't an actual ERCOT spokesperson - she is just speaking Texan

Spoiler:

Right, well that's what I gathered when Issy made his comment, but really - it sounds almost exactly what ERCOT would perhaps like to say to their customers. Which is the joke, but I guess I am saying I think ERCOT still would like to use it.

if that makes sense.

clearly this a (IMO) victim of "Satire is Dead" moment...

[malchior]

I totally fell for it for a couple minutes.

I still think it went over my head, but because you said there was something - I guess I get it ???

Spoiler:

She isn't an actual ERCOT spokesperson - she is just speaking Texan

Spoiler:

Right, well that's what I gathered when Issy made his comment, but really - it sounds almost exactly what ERCOT would perhaps like to say to their customers. Which is the joke, but I guess I am saying I think ERCOT still would like to use it.

if that makes sense.

clearly this a (IMO) victim of "Satire is Dead" moment...

FWIW that is exactly what people said because the actual ERCOT statement was even more condescending.

[stessier]

https://twitter.com/blaireerskine/statu ... 8088580098

[Unagi]

Oh blaire...

[Isgrimnur]

https://twitter.com/blaireerskine/statu ... 2452073473

[Smoove_B]

https://twitter.com/AriBerman/status/14 ... 5892870147

It’s 97 degrees in Texas today. You can’t turn on AC but you can carry a gun without a permit

[Isgrimnur]

Not until September 1st.