What can we learn from Texas' power grid failure?

[gmax137]

It's not the only one, but it's somewhat rare.

G**gle shows no income tax in: Alaska, Tennessee, Wyoming, Florida, New Hampshire, So Dakota, Texas, Washington, Nevada.

I remember Connecticut implemented income tax sometime in the late 1980s/early 1990s.

 

[gmax137]

The market just paid 9,000 dollars per megawatt hour for a full week, this is an odd argument to make at this point.

Exactly. Those who think this is "unfair" should be advocating for a system more like the old one. In the old days, the (regulated monopoly) power company could make money by selling bonds. Bonds to build more power plants, transmission lines, and distribution networks. The more bonds they sold, the more money they made. And the more infrastructure they built.

 

[StatGuy2000]

I'm not sure that's a real difference. Is electricity paid for via taxes or from the end user purchasing kWhs?

This isn't to say that any government, including the Canadian/US federal and state governments couldn't build their own plants or otherwise subsidize the grids via taxes. Do you know if Canada actually does that? I don't see anything in the wikipedia article on Canada's electricity about it. Just being a government-owned corporation doesn't fundamentally change the business environment as far as I know (and the US has them too; see, the Hoover Dam).

In the case of my home province (Ontario), electricity is paid for via monthly fees for purchasing kWhs. The main difference is that the provincial Crown corporation (Ontario Power Generation) has a virtual monopoly for half of the electricity generation in the province, and works in conjunction with the various local electricity distribution firms (also publically owned by the various municipalities e.g. Toronto Hydro in my home city, Hydro One elsewhere in Ontario, etc.) The private sector doesn't really enter the picture at all.

I'm less familiar with how the electricity is generated and distributed in other provinces (electricity generation, distribution, and the surrounding regulations are handled at the provincial level, similar to the US).

It's not the only one, but it's somewhat rare. Another is Alaska. The abundance of oil in both has something to do with that...

Interesting. In Canada, the province of Alberta does not have a provincial sales tax (ostensibly due to the abundance of oil) but still maintains a provincial income tax.

 

[russ_watters]

@russ_watters :
Just to answer your point about customers varying usage to control costs - it is done widely
Using pretend numbers:
1.charge for peak demand. Large customers do this routinely because they would trash the grid if they turned on a bank of several dozen 10000 kWH kilns. Example: companies that manufacture ceramic toilets. They schedule kiln warmups (off/on) to minimize kVar.

Those are all fixed in the sense that they are pre-published particulars of rate schedules that change at most annually. My dad made his living ensuring people were picking the right utility rates to match their usage and using the rates correctly. His sweet spot was light commercial and manufacturing; big enough to be profitable for him but small enough that they wouldn't have their own in-house energy team. Indeed, one of his major clients was a furnace company that monitored that exact issue. He had them install a demand monitor in their control room -- pre-internet, it was a lighted LED display, next to the clock.

I'm talking about rates that change hourly/daily. E.G., if your electricity costs $0.15 / kWh today (Monday) and costs $15 / kWh tomorrow (Tuesday), most people aren't going to realize it until they get their bill because they don't have a computer program or team of engineers watching the spot prices and deciding if/how to respond. That's what happened to Texans.

 

[gmax137]

That's what happened to Texans.

Well, to some Texans, right? They didn't all sign up for variable-rate following wholesale price, as far as I know.

When I lived in a de-regulated state, you could pick your generation from any of dozens of plans. Distribution was still all done by the original power company. The odd thing was, you couldn't sign up on-line for the generation arm of the original power company. The rules said you had to call them to sign up for their generation plan.

 

[Vanadium 50]

Out of curiosity, is Texas unique for not having a state income tax, or are there other states that are in a similar situation?

There are nine states without a personal income tax. Seven have sales taxes (often substantial ones). The other two are Alaska, which is largely funded by oil revenue, and New Hampshire, which operates state run liquor stores catering to its larger neighbors, particularly Massachusetts.

 

[gmax137]

There are nine states without a personal income tax. Seven have sales taxes (often substantial ones). The other two are Alaska, which is largely funded by oil revenue, and New Hampshire, which operates state run liquor stores catering to its larger neighbors, particularly Massachusetts.

The NH state liquor store on I-95 just north of the Mass state line has it's own exit and off ramp. I used to go by there every week on my way to & from work in Brunswick, ME.

Here in Nevada we have pretty high sales tax (near 9%) but I think most of the revenue is from taxing the casinos.

EDIT:

 

[Vanadium 50]

because they don't have a computer program or team of engineers watching the spot prices and deciding if/how to respond.

I'm not sure I agree. I have time of use metering. Every day my utility publishes its best guess for the next day's prices. In extreme events, I get an email telling me when power will be expensive the next day. They provide an IFTTT app to send alerts and to (if I let them) control my thermostat.

That said, there was a very odd excursion. One October late morning my rate rose to 16x the average. The hour before and after were normal. No warning, no explanation.

 

[russ_watters]

I'm not sure I agree. I have time of use metering. Every day my utility publishes its best guess for the next day's prices. In extreme events, I get an email telling me when power will be expensive the next day.

And you read these emails? And can/would respond to an adverse event?

They provide an IFTTT app to send alerts and to (if I let them) control my thermostat.

In my area, that sort of thing isn't common. PECO (formerly Philadelphia Electric Company) has had a peak of 82,000 customers in its "Smart Saver" program which can do a crude form of demand response using thermostat cycling. It's being discontinued in May, and I haven't heard of a replacement.
https://www.inquirer.com/business/p...ver-energy-conservation-program-20201118.html

Assuming 2/3 of its 1.6 million total customers are residential, that's about 7%.

Looks like time-of-use rates are coming in my area this year though:
https://www.spglobal.com/marketinte.../blog/essential-energy-insights-february-2021

 

[Office_Shredder]

I think many people knew their rates would be high on these variable plans. Griddy very publicly told everyone they would get destroyed and should try to switch to a flat rate plan, and the stories all have people at least claiming that they were switching off breakers and turning down their heat to save power. Maybe they're just saying that to save face for their ignorance or arrogance that this would be taken care of for them,as someone earlier in the thread said the more outrageous bills required a lot of electricity to hit.

 

[collinsmark]

After some thought, I am going to defend price-gouging.

Texas did not have enough (robust) capacity. How do I know? There were rolling blackouts. That's practically the definition of "not enough capacity".

Sure, but keep in mind that Texas' decision to isolate their electrical grid was for political reasons, not technical.

Technically speaking, it wouldn't take much trouble to more easily link their grid to other locations, even selling power when they have excess and buying when they really need it (it could have proved very helpful in this disaster).

It's not that they couldn't have done that. It's that they wouldn't.

https://slate.com/news-and-politics/2003/08/why-texas-has-its-own-power-grid.html

 

[Vanadium 50]

For many people, rates are higher on the variable plans. Their ability to shift power usage is limited. If it's hot today, turning on the air conditioning tomorrow doesn't help. I have a PHEV, so I charge it when the rates are low - sometimes negative.

 

[Vanadium 50]

Sure, but keep in mind that Texas' decision to isolate their electrical grid was for political reasons, not technical.

But many people's preferred solutions involve injecting even more politics into the mix. That may not have the intended result.

 

[Astronuc]

(Bloomberg) -- Just Energy Group Inc. filed for court protection in Canada and bankruptcy in the U.S. after suffering crushing losses in the Texas blackouts that plunged millions of people into darkness and the region’s power sector into chaos.

The unprecedented Texas outages left four million homes and businesses without heat, light and in some cases water as a rare and powerful winter storm gripped the region, causing as much as $129 billion in economic losses. Dozens of people died in the cold. The impact on individual corporations is only starting to emerge. The state’s power market faces a $2.4 billion shortfall as companies face sky-high energy bills.

https://finance.yahoo.com/news/just-energy-seeks-bankruptcy-texas-162232824.html
I don't know the origin or veracity of the $129 billion estimate, or if 'region' refers to Texas or includes Oklahoma, parts of Louisiana, or whatever.

How would that work exactly? A buys something (power in this case) from B who bought it from C who bought it from D who bought it from E... Who is left holding the bag? If it's unfair (however you define "unfairness") that A is left holding the bag, who should? B? C? D? The taxpayers of Texas? The taxpayers of the US?

I'm not sure how that would work. Apparently, enough supply came back online, they didn't need to pay the higher rates for generation. I don't know if any generator was left holding the bag, unless they went a bought fuel at an inflated price because ERCOT bid a high price to purchase the electrical output. ERCOT doesn't regulate gas price, but only wholesale price in the Texas market. The story I read, and about which I posted, was that ERCOT continued to charge high rates when the emergency had subsided.

I'd have to find a definition of 'rolling blackout' because for some it didn't roll, but stayed put for more than a day or two days, while other didn't lose power. Rolling usually refers to off (for a limited period, e.g., 4 hours) and on again for some period (e.g., 4 hours). A family member was without power for more than 24 hours (ultimately more than 36 hours), while a close friend didn't lose power, and another family member had intermittent disruption (but had a backup generator).

 

[Office_Shredder]

Just energy just emerged from bankruptcy like, three months ago also. I wonder what the record for shortest turnaround bank into bankruptcy is.

My understanding is some of the infrastructure used to roll blackouts failed, causing some areas to be stuck for a while.

 

[Astronuc]

March 15 (Reuters) - Texas power retailer Griddy Energy LLC on Monday filed for Chapter 11 bankruptcy after the state grid operator cut off the company's access to customers for unpaid bills following the Texas freeze.

The company said it is seeking court authority to release customers from outstanding bills, . . .

https://www.reuters.com/article/us-...files-for-chapter-11-bankruptcy-idUSKBN2B72FB

https://www.houstonchronicle.com/business/energy/article/Griddy-declares-bankruptcy-16027159.php
https://www.bloomberg.com/news/arti...r-griddy-bankrupted-by-high-electricity-costs

“We firmly believe in our model but, in order for it to be successful, the grid has to function properly, and prices have to be set by market forces,” Griddy co-founder Gregory Craig said in the release. “The actions of ERCOT caused our customers to unnecessarily suffer and caused irreparable harm to our business.”

 

[Astronuc]

(Bloomberg) -- NRG Energy Inc. withdrew an earlier full-year profit forecast and said it expects a $750 million loss due to the brutal cold snap that froze Texas and led to sweeping blackouts.

“Based on the new information available to us today, we are unable to provide financial guidance due to the unprecedented and unpredictable market outcomes resulting from winter storm Uri,” Chief Executive Officer Mauricio Gutierrez said Wednesday in a statement.
. . .
The company revised its estimate of the financial impact as defaults on the Texas grid surged to $3.1 billion from a previous assumption of $1.3 billion, Gutierrez said during a conference call with analysts. The grid operator passes on those defaults as charges to market participants. NRG’s share is “shy of $200 million,” he said.

Gutierrez said the estimates could be revised again as NRG has received resettlement data for 80% of its commercial and industrial load compared with 99% for residential consumers. There remains “significant uncertainty” as Texas lawmakers and regulators consider repricing or other measures to mitigate the impact of the crisis, he said.

https://www.bloomberg.com/news/arti...es-750-million-loss-following-texas-cold-snap

Vistra Corp. has indicated that blackouts could cost it between $0.9 to $1.3 billion, and Exelon Corp. indicated a first-quarter net income reduction by $560 to $710 million because of the outages.

https://www.reuters.com/article/us-...xpects-losses-from-texas-freeze-idUSKBN2AO1H3
https://www.houstonchronicle.com/bu...to-1-3-billion-loss-winter-storm-15981855.php

 

[collinsmark]

This from today, Practical Engineering:

 

[Astronuc]

Texas Utility (CPS Energy) Suing Suppliers for Gas Price-Gouging After February Storm and Outages
https://www.bloomberg.com/news/arti...suppliers-for-price-gouging-in-february-storm
https://www.houstonchronicle.com/bu...Sues-Suppliers-for-Price-Gouging-16049157.php
CPS Energy, a Texas utility, is suing energy giants including BP Energy Co., Chevron Corp. and Energy Transfer. CPS supplies over 1.1 million customers in the San Antonio area with power and gas, and is disputing charges amounting to hundreds of millions of dollars at a minimum in 13 lawsuits.

On Monday, Spire Missouri Inc., a utility company, filed a lawsuit against Symmetry Energy Solutions LLC over failed natural gas deliveries that allegedly caused over $100 million in losses. Symmetry is also being targeted by CPS.

Power suppliers including Vistra Corp., NRG Energy Inc. and Exelon Corp. have disclosed billions in losses associated with the freeze.

CPS Energy said in the Energy Transfer lawsuit that subsidiaries Houston Pipe Line Co. and Oasis Pipeline LP charged a price for natural gas that was more than 15,000% higher than normal during the climate disaster. That’s like paying more than $7,000 to fill a tank with gas that usually costs less than $50, the company said.

 

[bagasme]

I had also similar experience in 2019.

On August 4th circa 12:00, western halves of Java (Banten, Jakarta, West Java, and Western Central Java) experiences blackout. While electricity in Jakarta was restored at night of the same day, at my town (Tangerang) the electricity was restored in evening the following day (August 5th). Investigation from PLN (not Złoty but the sole giant power operator) narrowed down the culprit to failure of generators in Ungaran (near Semarang). Such failure partly due to fall of sengon tree near the transmission line in the generator.

 

[scottdave]

This from today, Practical Engineering:

I liked that video. I thought he did a decent job explaining the sequence leading up to the power failures.
We went into this expecting to have some "rolling blackouts" - off for a few hours, then back on again. That would have been manageable. Instead, it went out, then stayed out for 2 days at my house. Then in other neighborhoods a few miles away, it was off for less than 24 hours.

 

[Astronuc]

Washington Post - https://www.washingtonpost.com/business/2021/04/22/minnesota-texas-freeze-centerpoint-energy/

When Texas’ natural gas supplies froze up, prices soared, and now Minnesota’s customers are looking at an $800 million bill.

https://www.startribune.com/minn-ut...and-lose-leaving-customers-on-hook/600047124/

 

[Digcoal]

Electricity generators made something like 40 billion dollars in windfall profits. That's probably enough to justify some weather proofing? How much are they supposed to make?

A random Google search suggests texas uses 1 TWh of electricity per day. It also suggests natural gas plants cost about 800 dollars per kW of power they can produce (I picked natural gas because I believe it can turn on and off quickly, exactly what you want to respond to this type of crisis).

If I did my math right (questionable, double check me!) I think you could spend that 40 billion dollars building enough natural gas plants to produce electricity for all of Texas.

It sounds like a lucrative business MORE people should get into, don't you think? Why don't YOU build these generators and run them as YOU see fit? It is far easier to prove a point with an example rather than with things that do not exist: words and ideas.

 

[Digcoal]

I liked that video. I thought he did a decent job explaining the sequence leading up to the power failures.
We went into this expecting to have some "rolling blackouts" - off for a few hours, then back on again. That would have been manageable. Instead, it went out, then stayed out for 2 days at my house. Then in other neighborhoods a few miles away, it was off for less than 24 hours.

No. He only handled the aggregate issues which do nothing to account for all the micro issues involved in this problem.

Here is a simple question to answer regarding this whole debacle: what do you NEED to keep warm during a cold snap?

Apply that question at the individual level and work your way up.