Texas power grid

ERCOT CEO Worries $150 “Easy Out” for Gas Companies Could Threaten Grid

NBCUniversal, Inc.

The man in charge of managing the Texas power grid is adding his voice to a chorus of state officials concerned about a one-page form that would allow natural gas companies to opt-out of new rules requiring them to winterize gas equipment.

That form, proposed by the Texas Railroad Commission, the state agency which regulates natural gas companies, would allow gas suppliers to pay a $150 fee, check a box on the form, and exempt a gas well, pipeline or natural gas processing plant from winterization rules, by declaring that they are, “not prepared to operate during a weather emergency.”

The $150 fee is less than the $180 the average North Texas family is expected to pay for natural gas this winter.

In an interview with NBC 5 Investigates, ERCOT interim CEO Brad Jones said he is concerned that the plan could cause fuel supply issues for power plants that run on natural gas. But Jones said he is still but hopeful the Railroad Commission, will, “make the right choice” and not give gas companies an “easy out.”

After the February Texas power disaster, a federal report found gas supply problems were the second leading cause of the power outages. Electric plants were unable to get enough gas at high enough pressures to keep producing energy.

“There's one area that I continue to have concerns about, and that is fuel security,” Jones said.

Under the rules proposed by the Texas Railroad Commission, the one-page form does not even ask gas companies why they're unable to run in bad weather or what level of bad weather would render them unable to operate.

Lawmakers on both sides of the aisle recently slammed the proposal and took the railroad commission's executive director to task in a Senate hearing.

“This is the Achilles heel right now. Right now.,” said Texas Sen. Lois Kolkhorst (R-Brenham).

“Your rulemaking proposal sucks, and we need a different direction,” said Texas Sen. John Whitmire (D-Houston).

The potential loophole for gas companies comes from wording in a bill the legislature passed to deal with the power crisis which includes a provision for gas company exemptions. But some lawmakers said the commission is misinterpreting what they intended and are making it far too easy for gas companies to opt out.

Jones hopes the railroad commissioners have listened to those concerns.

“I'm still waiting to see how the Railroad Commission will react. And as I said, I'm very hopeful that they'll make the right choice,” Jones said.

“I would love to believe that they're going to change these rules, but I'm just not sure,” said Virginia Palacios, executive director of Commission Shift, a watchdog group that has been critical of the Railroad Commission. https://commissionshift.org/

Palacios believes the commission is doing what she said it often does, protecting the interests of gas companies that don't want to spend millions to comply with more regulations.

Palacios points out that after the winter storm in 2011, the feds recommended that Texas consider mandatory gas system winterization regulations, but the Railroad Commission didn't implement those rules.

“And they dropped the ball on it, they decided that operators could make up their own mind, and they're doing that again,” Palacios said.

A Railroad Commission spokesman told NBC 5 Investigates, "…it is not the intent of the proposed rule to give an ‘easy out’” and said that commission staff "can deny an application and ask the applicant to provide further information."

He said the commission is working on revisions that commissioners will consider in an upcoming meeting.

At a recent Railroad Commission meeting, Chairman Wayne Christian didn't talk about revisions but instead blasted the state senators who had criticized the commission's staff.

“It was inappropriate. It was rude. It was arrogant. It was everything we don't like,” Christian said. “There is a lot in the industry that are still talking about how unprofessional that entire situation was.”

A spokesperson for chairman Christian told NBC 5 Investigates the commission is "...laser-focused on making certain Texas is prepared for future severe weather events by instructing natural gas providers to prepare for this winter...", and said the commission is "...adopting rules prioritizing the delivery of natural gas during shortages..."

NBC 5 Investigates also learned Railroad Commission staff held private meetings with industry insiders as they developed the one-page opt-out form.

Email messages obtained through an open records request filed by the investigative journalism project "Documented" show commission staffers created a "working group" on the rules which included members of the state's biggest gas lobbying groups and major gas companies.

NBC 5 asked the Railroad Commission about those meetings. A spokesman responded that the agency "discusses various pieces of legislation with stakeholders and subject matter experts, but they do not write rules for the agency."

The man in charge of keeping the lights on in Texas just hopes any final rules the commission passes will come without loopholes.

“I hope that they continue to do that. I hope that this rule doesn't give them an easy out,” said Jones.

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