NBC 5 Investigates has uncovered new information showing, in recent years, many Texas power plants that were spot-checked by ERCOT did not meet all of the power grid manager’s recommendations to guard against winter weather.
ERCOT, which oversees the state grid, spot checks just a small percentage of power plants each year to see if they are ready for winter.
NBC 5 Investigates discovered that ERCOT reports the results of those spot checks each year in its annual winter weatherization workshop presentations.
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The documents show, among the plants that ERCOT did visit in the last couple of years, at least one out of every four had some deficiencies in their plans to protect against cold.
Last winter ERCOT only spot checked 80 out of about 600 power plants.
Of the 80 inspected, 23 agreed to improve their winter preparation after deficiencies were found. That’s more than a quarter of all plants checked.
In 2019, ERCOT checked 97 plants and found more than a third, 33 plants, had deficiencies.
ERCOT took no disciplinary action against those plants because it has no power to penalize them.
“You know we are not a regulator,” said ERCOT CEO, Bill Magness as he testified in the state senate last week, adding that it was up to plant operators to decide if they want to take up ERCOT’s weatherization recommendations or not.
So why is there no enforcement?
The Texas legislature never gave ERCOT the authority, and when the legislature deregulated the Texas electric market, the thinking was incentives for companies to make big profits would be enough to encourage plant operators to be ready for bad weather.
“It has really from day one, been a primarily a carrot driven market as opposed to a stick,” said
Marcus Pridgeon is a former member of ERCOT’s Technical Advisory Committee and a former executive at two Texas power generating companies.
Pridgeon said a power plant that normally makes about $12,000 dollars an hour could have made $2-million dollars an hour if it was able to run during the storm.
“The carrot has to do with how much money can be made during these peak seasons,” said Pridgeon.
Last week, Magness told lawmakers power plants that did not winterize enough have been penalized now because they lost so much money when they shut down.
“It's hard to imagine that you could impose an economic penalty as big as the economic losses imposed by this market - it's bracing,” said Magness.
But it was also bracing for the millions of people who suffered in freezing homes and saw their pipes burst.
Raising questions about whether the power market now needs more stick than carrot.
“I think that will be the debate that will be held in the legislature and at the public utility commission primarily in the coming months, because obviously, the carrot didn't work,” said Pridgeon.
DeAnn Walker, who chaired the state’s Public Utility Commission until her resignation said that her agency did not know if ERCOT was finding deficiencies when it spot-checked power plants for weatherization.
Walker said the commission only required ERCOT to notify them if power plants failed to submit a weatherization plan.
We do have enforcement authority over weatherization, but it is limited to the emergency operations plans we do not have an authority to require them to do weatherization,” said Walker.
NBC 5 Investigates dug into the PUC’s records and found dozens of plants did not submit weatherization plans on time in the last two years.
This winter, 42 entities did not submit a plan on-time and last year the number was the same.
But PUC Chair Walker said the agency has only issued three fines to plants for failing to submit those plans since 2014 and the fines totaled $25,000.
NBC5 Investigates asked a PUC spokesperson why the agency did not take tougher action, or ask the legislature for more authority to regulate weatherization.
The agency sent NBC 5 a statement saying, “the PUC is committed to full engagement in the legislative discovery process…discussions of the adequacy of existing laws and rules will no doubt be an essential agenda item.”
Texas lawmakers will now decide if tougher weatherization rules should be put in place.
When senators asked Magness what he thought, he declined to say.
“I really hate to give you all policy advice cause that's not my job”, Magness said.
He told state senators he first wanted to see reports from the field on what caused outages at each plant.
In its weatherization workshops, ERCOT included photos showing common failures in past winter seasons included problems what are called heat trace systems which are supposed to apply heat to cold pipes to prevent freezing.
The photos also point to outages caused by a lack of proper insulation on critical equipment or a lack of windbreaks to shield equipment from the harshest cold.
Installing tougher winter protection would cost money, which some say might not be spent, unless companies have more motivation than just potential profits.
“We're not going to see private companies go out and spend the type of money they would need to spend to winterize, to northern standards for events, they continue to consider a very low risk,” said Pridgeon.