The Texas electric grid is the strongest and most reliable it’s ever been. In fact, we all saw firsthand how much stronger and more reliable earlier this month as an arctic freeze took hold of Texas. We had ample energy, with plenty to spare. This letter is to all Texans – to you – to reassure and tell you why the lights will stay on this winter and why outages like last year will never happen again.
Last year, for the first time ever, Governor Greg Abbott and the Texas Legislature have given the Public Utility Commission of Texas (PUCT) the authority to require every electricity generator in the state to winterize their operations. This means insulating pipes, installing heating equipment where necessary and putting up windbreaks to knock down the wind chill to keep gear from freezing up, among other steps.
In January, the Electric Reliability Council of Texas (ERCOT) reported to the PUCT that of the 302 generation resources they inspected for compliance with winterization requirements, just three had issues needing correction. That’s over a 99-percent compliance rate. Since then, those three resources have all corrected the issues that were identified. Of the 22 transmission facilities ERCOT inspected, all passed.
The Governor and the Legislature have also given the PUCT a big hammer with which to enforce winterization rules. The PUCT can, and will, fine companies up to $1 million per day per incident for failure to winterize their operations. In fact, in December 2021, eight companies were given notices of violation totaling $7.5 million in recommended fines for failing to file winter readiness reports with the PUCT.
We’ve also put in place major market reforms that put people and reliability first – not companies. In our new system, companies bring power to the grid earlier for greater supply to prevent emergencies. For example, during this month’s severe winter weather ERCOT had enough excess power to light three million homes. The old way of doing business meant waiting for crisis conditions before more power was brought online. To reduce electricity costs, we have slashed the price cap for power by almost 50 percent, from $9,000 per MWh down to $5,000 per MWh, even in an emergency.
We also know the wind doesn’t always blow and the sun doesn’t always shine, so natural gas and coal plants need to ensure redundancy in fuel supplies. Those are the plants that can be turned on and off, so they need back-up fuel on-hand in case of emergency. Under reforms the PUCT adopted in December, generators are incentivized to keep back up fuel supply on hand in case extreme weather disrupts their normal fuel supply. This means, even if their primary fuel source isn’t available, they can still get power to the grid. Many generators are already moving forward with this and had alternative fuel supplies in place during this month’s storm.
Any one of these reforms is significant in and of itself. Put them together, and you have a monumental transformation of our electricity market. A transformation that puts the customer first, not power companies. Our singular focus is on reliability regardless of weather conditions. And as the electricity market continues to evolve over time, our priority will remain to utilize new technologies and tools to enhance grid resiliency and ensure that customer rates stay low.
The grid’s performance during severe winter weather earlier this month proves it’s stronger and more reliable. Certainly, there is more work ahead, but I know because of the incredible work that’s already been done, the lights will stay on in Texas this winter, and beyond.