The Stakeholders' Golden Rule

Kudos to the Texas State Legislature – Senate Bill 2 and Senate Bill 3 are the Perfect Nexus to Reliable Electric Power…

by Raymond Giuliani

Legislators got it right.  Their thorough analysis of the root causes of the February 2021 electric power disaster took them to exactly the right changes needed to fix those problems.  There can never be a guarantee of avoiding weather related power outages, but Senate Bill 2 and Senate Bill 3 provide the foundation for avoiding disasters.

In short, electric power reliability is no longer solely in the hands of the ERCOT quasi-government entity.  It retains responsibility for scheduling maintenance outages and balancing supply with demand across the entire ERCOT grid.  It also retains responsibility for rolling three-year forecasts of reserve margins across the grid to highlight any need for legislative incentives to build more electric power generation.  ERCOT will also conduct inspections of facilities to determine their compliance with Public Utility Commission reliability standards.  It will initiate alerts in accordance with new alert guidelines.  ERCOT is no longer expected to provide electric power reliability enforcement.

Establishing reliability standards and enforcement across the entire supply chain now clearly fall under the Public Utility Commission, Railroad Commission, and new organizations under the Texas Emergency Management Division.  The new Texas Reliability Council will address the reliability of electric generation, transmission, and distribution facilities under emergency conditions.  In addition, the new Mapping Committee will address the reliability of the natural gas fuel supply from the wellhead to the burner tip under emergency conditions.

Of course, there are still outstanding monetary issues related to the February disaster.  I believe the legislators will continue to monitor the facts surrounding such claims and intervene where it might be appropriate for them to do so.  But a short-term focus on such monetary disputes during the compressed legislative session would have only taken away from the effort to deal with Governor Abbott’s request for legislation to ensure the disaster would not happen again.

The “Elephant in the Room” remains alive and well.  Renewable energy sources escaped scrutiny.   With more than 25% of the ERCOT generating capacity tied up in renewables and almost all new generation coming on line in the next three years tied up in renewables, reliability of the ERCOT grid will likely need more legislative focus possibly sooner rather than later.  Senate Bill 2 and Senate Bill 3 were needed before any such focus could take place.

Raymond Giuliani, former Chief of Market Operations at ERCOT, has pulled back the curtain on the inner workings of ERCOT in his new book, The Stakeholders’ Golden Rule, available now at Barnes & Noble, Amazon, and Books A Million.

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