Texas lawmakers blame gas suppliers, wind, solar for deadly power blackouts

2/25/2021

Texas state lawmakers started digging into the causes of deadly power blackouts that left millions shivering in the dark as frigid temperatures caught its grid operator and utilities ill-prepared for skyrocketing power demand.

Dual hearings in the state House and Senate are highlighting shortcomings by grid planners, electric utilities, natural gas suppliers and transmission operators that led to billions of dollars in damages and dozens of deaths. Consumer advocates have called for more stringent regulation of utilities and a review of retail marketing plans.

"Who's at fault?" State Representative Todd Hunter demanded of utility executives. "I want to hear who's at fault. I want the public to know who screwed up."

"The entire energy sector failed Texas," said NRG Energy Inc Chief Executive Mauricio Gutierrez, who testified.

While executives said there were broad failures, the biggest was the state's natural gas system, responsible for the largest share of Texas power generation, said Curtis Morgan, CEO of Vistra Corp. Texas is the country's biggest producer of natural gas, but without better ties between gas producers, pipelines and power plants, the state will face future cold weather outages.

"We just couldn't get the gas at the pressures we needed," said Morgan, who instructed employees to buy gas at any price but could not acquire enough to run plants.

"My faith has been shaken" in the state's power market, Morgan said. "It didn't work in this situation and in a big way."

Up to 48% of the state's power generation was offline at times last week and at least 32 people died, including an 11-year-old boy of hypothermia in an unheated mobile home.

"We owe it to them and every Texan to make sure this never happens again," said State Representative Ana Hernandez, noting that some still cannot access food and water. "The impact of this disaster was not only financial."

Utilities were ordered to cut power to prevent a larger catastrophe, Bill Magness, CEO of the Electric Reliability Council of Texas (ERCOT), the state's grid operator, said.

Six of ERCOT's 15 directors resigned this week and a nominee withdrew before taking a seat.

ERCOT did not warn residents that the state's power generation would not keep up with demand despite warnings the week prior from utilities, Morgan said.

"We did not give people a fighting chance," Morgan said.

Power providers, in turn, also did not warn customers that instead of blackouts lasting hours they would last for days, Representative Eddie Lucio said.

"We could have spoken plainly with Texans and we didn't," Lucio said.

Governor Greg Abbott on Wednesday said public anger was justified and pledged proposals to increase power supplies and to protect residents hit with enormous power bills. He blamed ERCOT, saying it should have acted faster to prevent generators from falling offline.

But Abbott "hand picks" members of the Public Utilities Commission that oversees ERCOT, Representative Rafael Anchia said.

RETAIL DEFAULTS AHEAD

Of the about 100 retail electric providers in Texas, a quarter are at risk of default on multimillion-dollar service charges levied by ERCOT. Some may sell customers to larger firms to cover costs, stifling retail competition, said Mark Foster, an attorney and former special counsel to the state's Public Utility Commission.

"They call it the blood week," Foster said. One of his clients, electricity marketer Young Energy LLC, faces a $19 million bill for services that cost $37,000 the prior month, he said. "There will be a significant decrease in competition for the consumer," he said.

Texas weekly power costs jumped to $50 billion from $5 billion because of higher electric and gas prices, even though more than 4 million people lost power, said Senator Nathan Johnson.

He asked where the money went.

ERCOT CEO Magness said he could not readily answer the question.

The "big missing money" is not at utilities, who paid historically high prices for natural gas on the open market when fixed supplies did not arrive, said Morgan.

"The gas business made a lot of money."

(Reporting by Jennifer Hiller and Gary McWilliams; Editing by Jonathan Oatis and Lisa Shumaker)