After a four-month investigation into the root cause of February’s winter storm crisis, a committee formed by Mayor Ron Nirenberg blamed the regulatory structure of the entire Texas power market.
In a report detailing the week of snow and ice that resulted in power outages for 4.5 million Texas households and caused hundreds of deaths statewide, authors slammed the Texas Legislature for creating a structure that has “degraded the resiliency and reduced the reliability of the Electric Regulatory Council of Texas (ERCOT) grid over the last 20 years, subjecting CPS Energy customers to a greater risk of extended power outages during a crisis.”
Reed Williams, a retired oil and gas executive and former District 8 councilman, chaired the committee. At a Thursday special City Council meeting to present the report, Williams hammered the Legislature for deregulation in 2002 that handed more control of the state’s energy systems to power generation companies.
“Deregulation, in my mind, has been a failure for the folks of Texas,” Williams said. “This winter, if we have the same kind of situation, we’re right back in the same problem.”
Williams also blasted the Public Utility Commission of Texas (PUC) for intervening in the ERCOT market to keep the price of power on the grid at the maximum — $9,000 per megawatt-hour. PUC officials said they meant to create an incentive for power generators to produce as much as possible, but as one set of researchers put it, the plants were breaking down, lacking natural gas supplies, and “were not available at any price.”
What the intervention did instead is run up the wholesale power bills of CPS Energy and other utilities. CPS Energy is now locked in lawsuits with ERCOT and 17 natural gas suppliers in an attempt to lower more than $1 billion in storm-related charges, including more than $300 million for wholesale power. Rate increases for CPS Energy customers could come as soon as this fall.
“This was extremely damaging to our community,” Williams said of the PUC’s intervention. “It’s like instead of them chucking you off a stool, they take you up five stories in a building and say, ‘Now jump.’ You’ve elevated the problem really high.”
During its regular session that ended last month, the Texas Legislature passed bills overhauling ERCOT’s governance structure and requiring extreme weather upgrades for power plants and transmission lines. Requirements are looser for natural gas systems, which will only need to be weatherized if regulators decide they count as “critical.”
San Antonio officials say that’s far short of what’s needed. Many worry about the coming summer heat, which follows a period of tight conditions on the grid two weeks ago with an unusually large number of power plants breaking down.
“They did a lousy job,” said San Antonio Water System CEO Robert Puente, a former Texas House member, of the Legislature. “A lot of talk about weatherization, but as you know, as we all know, it happened again” last week.
The cold-weather failure of power plants across the state during the week of Feb. 14-20 led to blackouts that left hundreds of thousands of CPS Energy customers without power, sometimes for days, in below-freezing temperatures. As forecasted, wind and solar energy didn’t provide enough electricity generation to bridge the gap.
CPS Energy was among the utilities that saw its coal, nuclear, and natural gas plants shut down or operate at lower levels during the storm. The report includes detailed figures on the failure of CPS Energy’s Spruce 1 coal unit and its South Texas Project (STP) 1 nuclear unit.
At Spruce 1, workers lost control of a fan forcing air into the chamber where coal is incinerated. STP had to be shut down after a line froze on a sensor that monitors the pressure of the water flowing into the area where heat from the reactor generators makes steam used to generate electricity.
CPS Energy CEO Paula Gold-Williams said the utility had invested in weatherizing its plants after similar cold-weather blackouts in 2011, but it wasn’t enough for the length of freezing weather that hit in February.
“We did invest in weatherization, but we didn’t make it so the long duration is what we were defending against,” Gold-Williams said. “If it had been the same experience as in 2011 or 2018, we wouldn’t have had the failures that we had.”
With the price of power stuck at the cap of $9,000 per megawatt-hour (it typically trades at less than $30), losing its power plants meant CPS Energy at times had to buy more power on the ERCOT market than it was selling. The failure of Spruce 1 cost CPS Energy an estimated $500 million in missed opportunity, with an estimated loss of $850 million for STP 1, the report states.
Natural gas shortages also dropped the output from CPS Energy’s plants to around half their typical capacity during the height of the storm. CPS Energy’s wind and solar output also was below its three-year average for most of that week.
The report includes more than 50 recommendations for CPS Energy, SAWS, and the City to help prepare and better communicate during similar power grid failures in the future. But, as committee member Councilwoman Ana Sandoval (D7) said, the risk persists under the current Texas regulatory scheme.
“As long as we are within that regulatory structure, that may happen again,” Sandoval said of widespread blackouts. “But there are still many things we can do locally to be prepared so that it’s not so rough when the dominoes do fall.”
Forced outages and water woes
All Texas utilities faced mandatory calls for blackouts from ERCOT — which was struggling to balance demand with meager supply to stop a grid collapse that would have left most of Texas in the dark for days, at least.
The report includes a map of how CPS Energy implemented those blackouts across San Antonio. Some areas saw no shutoffs, while others were without power for more than two days.
One of the most consequential local decisions of the storm was the one CPS Energy officials made to cut power to SAWS pumps to give more power to residential areas. That led to a widespread drop in pressure across the SAWS system.
Thursday’s council meeting included a small but tense debate over whether poorer neighborhoods had more widespread or longer outages than wealthier areas.
The report includes map of power outages that shows no strong relationship between a neighborhood’s income level and its length of outages. Councilman Manny Pelaez (D8), a third-term Northside councilman who served on the committee, to ask Gold-Williams whether “Northside neighborhoods and the more affluent neighborhoods were given preferential treatment by the utilities and they got their power back on, true or false?”
“False,” Gold-Williams said.
Councilwoman Phyllis Viagran (D3), elected in June to the Southside district formerly represented by her sister Rebecca Viagran, later challenged Pelaez.
“We can get into a discussion later, Councilman Pelaez, about perception and North and South, but right now we’re going to focus on the recommendations,” Viagran said.
Later, a visibly irritated Pelaez called the storm “the great equalizer,” cutting power and water to rich and poor alike, all over the city.
“Every single San Antonian, for one week, was vulnerable,” Pelaez said. “I don’t accept that the pain is felt on one side more than another.”
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.