Last Updated on June 3, 2021 – 9:00 AM CDT
This article originally appeared in The Texas Tribune: Read More
The Decker Creek Power Station, a natural gas power plant northeast of Austin. Legislation passed in response to the state’s power grid crisis in February will require power companies to upgrade plants to withstand more extreme weather.
Credit: Jordan Vonderhaar for The Texas Tribune
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The first day, Melissa Hutchins and her husband burned furniture to keep warm. Friends of theirs burned their children’s toys. A neighbor’s roof caved in.
When the Hutchins lost water because the pipes froze, they went to a hotel.
Three nights and four maxed out credit cards later, they returned to their Arlington condominium when power was restored to Texans after one of the deadliest and costliest disasters in state history.
“Texas is not prepared for weather like that,” Hutchins said. “We’re not equipped for that at all down here.”
State lawmakers responded to February’s deadly power outages during a winter storm with a few key changes to the state’s power grid that experts said will begin to address some issues exposed by the storm — such as requiring power companies to upgrade plants to withstand more extreme weather and creating a statewide emergency alert system.
But they did not provide direct relief for everyday Texans, many of whom lost jobs or loved ones during the pandemic and then went through yet another emotionally and financially taxing crisis.
The storm caused the deaths of as many as 700 people, according to a Buzzfeed analysis. Insurance costs for property damage alone are about $18 billion, Reuters reported, citing Karen Clark & Co., a Boston consulting firm. The total economic damage to the state may be $86 billion to $129 billion, according to The Perryman Group, a Texas economic firm.
Lawmakers approved a bill that will likely increase most Texans’ electricity bills by at least a few dollars each month for possibly the next two decades to bail out the state’s utility and electricity companies. Patricia Zavala, senior policy analyst at Jolt, a Latino progressive advocacy group in Texas, said even a small increase in living costs can put Texans who are “teetering on the edge” into financial jeopardy.
And Doug Lewin, an Austin-based energy and climate consultant, said that while the Legislature took positive steps in requiring power companies to prepare for future storms, nothing was done to provide direct assistance to people harmed by the power crisis or to help Texans reduce electricity use to take pressure off the grid during extreme weather.
He and others said the changes this session were not the sort of sweeping reforms necessary to completely avoid another power grid catastrophe.
“There was really no focus at all to address … the millions of Texans struggling to pay their electric bills,” Lewin said during a Friday press conference with Texas environmental advocates. “There’s two sides of the equation: supply and demand. The Legislature has stayed almost entirely focused on supply, and almost completely neglected the demand side.”
Lawmakers made the case in the final minutes of the legislative session that overhauling the board that oversees the power grid will provide the structural change necessary to prevent another grid-related disaster.
“I always get questions, ‘What have y’all done to fix the disaster that we saw in February?’” state Sen. Lois Kolkhorst, R-Brenham, said before the Senate passed Senate Bill 2, which changes the makeup of the Electric Reliability Council of Texas’ board of directors. “It starts with leadership, and it starts with the structure [of people who] make the hard calls.”
Still, both Republican and Democratic lawmakers acknowledged that they did not do enough this session to aid the people — like the Hutchins and their neighbors — who struggled financially after the winter storm caused medical emergencies, damaged property, spoiled food and sent many Texans’ utility bills soaring.
Melissa Hutchins, 37, estimates that the hotel, food, repairs to their condo and lost work cost them $5,000. Her husband, a manager at a food and beverage manufacturer, made an early withdrawal on his retirement account so they could repair broken plumbing to restore their water and fix their dishwasher. All of this, she said, after a year in which her husband was sick with COVID-19 and missed a month of work.
“It was just crazy,” Hutchins said. “It’s one thing after another. Like water, we can’t live without water. We have to have electricity.”
Lawmakers said the measure they passed to give utilities and electricity companies access to billions of dollars in bonds and loans will prevent a larger financial crisis in the state in the aftermath of the storm. Lt. Gov. Dan Patrick has called for additional legislation that would provide direct financial relief to consumers.
“The next time, for this Lieutenant Governor, that we’re going to spend billions of dollars concerning the storm, it’s going to be to help the people of Texas and the ratepayers, or I won’t call that bill up,” Patrick said. “We have to help the people of Texas and their electric bills.”
Gov. Greg Abbott is expected to call lawmakers back for a special session later this year to revive certain bills that died during the regular session; in an interview with The Texas Tribune on Tuesday, Abbott said he would likely support a proposal to aid consumers, but he hasn’t announced whether he would add the issue to lawmakers’ plates in a special session.
“Put me on the side of consumers who suffered through this storm,” Abbott said.
Little relief for everyday Texans
Senate Bills 2 and 3, the two major power grid bills that lawmakers passed on Sunday and sent to Abbott, focus on ERCOT’s board and weatherizing the power plants that serve the electrical grid.
Senate Bill 2 reduces the number of ERCOT board members from 16 to 11 and requires that instead of what lawmakers called “industry insiders” appointing the board, Abbott, Patrick and House Speaker Dade Phelan will appoint a committee to make ERCOT board selections.
Senate Bill 3 requires power companies and some natural gas companies to make upgrades so their facilities can withstand extreme weather and requires regulators to create an emergency alert system, similar to an Amber alert, for power outages and inclement weather.
The Senate did not approve a $2 billion plan, approved by the House, to help companies pay for weatherization. So companies alone will pay the costs to retroactively equip their power plants to withstand extreme weather.
The state likely won’t require companies to make weatherization upgrades until 2022 at the earliest.
Another package of bills sent to the governor would increase rates on Texans’ power bills for likely the next two decades to cover at least $7 billion of gas utilities’, electric cooperatives’ and electric companies’ debt from the storm.
Many companies, particularly rural electric cooperatives, were financially wrecked after the winter storm due to state electricity regulators’ decision to set power prices at the maximum rate of $9,000 per megawatt-hour and keep them there for an additional 32 hours after power began to return. Natural gas fuel prices also spiked during the storm; some gas utility companies said their customers’ bills would increase several times the normal amount if the companies had to finance their storm-related debt without state help.
If Abbott signs the bills into law, the legislation will prevent customers from having to pay huge bills from the storm by allowing companies to seek billions of dollars in state-approved bonds backed by the new charges on customers’ bills. The state’s plan will help the companies get cheaper, longer-term loans.
Some electric companies also owe massive debts to ERCOT; under House Bill 4492, ERCOT will receive $800 million from the state’s Economic Stabilization Fund, known as the rainy day fund, to pay off those debts — an effort to prevent most retail electric providers from passing huge bills on to their customers and to also reimburse power generation companies.
Still, some are concerned that the state’s solution will add yet another cost to already-struggling consumers. Aaron Gonzales, 27, a graduate student at the University of Texas and a volunteer for Jolt Action, said the rising cost of living has delayed his plans to purchase a home. Even a small increase on his utility bill chips away at that dream, he said.
“It’s a straw that gets put on the camel’s back, and we have to ask ourselves, how many before it breaks?” he said. “A lot of people in my family were laid off this year or on reduced wages. At a time when we don’t have jobs or money, you’re asking us to pay even more.”
The Texas Senate added an amendment in the final week of the session to House Bill 4492 that would have allowed the state comptroller to provide one-time bill payment assistance grants of $350 to residential customers. That measure was stripped from the bill in the House, and Patrick and some senators called for the proposal to be brought back up during a special session.
“It is only fair and right,” said Sen. Roland Gutierrez, D-San Antonio. “People froze in their homes. A $350 credit is the least we can do.”
The Senate stripped away House proposals to help electric customers, too. An amendment to Senate Bill 3 by Rep. Erin Zwiener, D-Driftwood, would have created a grant program for projects that add backup power generation to water treatment plants, local electric utilities, hospitals, nursing homes and dialysis centers. The amendment was taken out during the two chambers’ negotiations.
“I don’t know if we got any good consumer wins, which is disappointing to think about,” Zwiener said of the session.
What the Legislature didn’t do
Although lawmakers required electricity generators to weatherize against extreme weather, they took a more limited approach to requiring gas fuel facilities to weatherize — Senate Bill 3 requires only gas facilities that are deemed “critical” by regulators to make changes.
Dozens of natural gas companies failed to do the paperwork that would keep their facilities powered during an emergency, so utilities — under orders from ERCOT to shut down parts of the grid as demand surged — cut their electricity at the very moment that power plants most needed fuel during the storm. Some power plants were unable to operate during the storm due to natural gas fuel shortages.
Lawmakers did not set deadlines for gas companies to weatherize their equipment, which critics argue will allow companies to delay the upgrades.
Lawmakers also stopped short of ordering an energy market overhaul; some proposals would have fundamentally changed the state’s deregulated market structure, which relies on supply and demand to set power prices, but lawmakers didn’t bite.
And they rejected a pitch by billionaire Warren Buffett’s company, Berkshire Hathaway, to spend $8.3 billion for 10 new natural gas power plants across the state for emergency use only, paid for by electricity customers. Many Texas companies did not support the plan, and lawmakers didn’t even support studying the idea.
Lawmakers also didn’t pass legislation that would help Texans pay to better insulate their homes and reduce their electricity usage, which could both lower power bills and reduce demand on the grid.
“[Texas] has been kind of reluctant to do it,” said Pat Wood III, former Public Utility Commission of Texas chair, of weatherizing homes. “And I don’t know why.”
Those ideas didn’t gain traction in the Republican-dominated Legislature, but Zwiener said she’s optimistic that such proposals could later be funded by a federal infrastructure package, which President Joe Biden has pushed hard during his first months in office.
“I’m hopeful that when we return in the fall we will be able to leverage some of that for homeowners to weatherize,” Zwiener said. “It’s energy efficiency, but it’s also about survivability. If you live in a house with decent insulation, your house is going to stay warmer or cooler for a much longer period of time.”
What’s next for the power grid
The upgrades to the grid that lawmakers approved last month won’t eliminate the chance of blackouts in Texas. If the state experiences a severe heat wave or drought combined with high demand for power, outages are a possibility, according to recent ERCOT assessments.
ERCOT included three extreme scenarios in a forecast of the state’s power resources for the summer — the most extreme calculations ERCOT has ever considered for its regular seasonal assessment. Each scenario would leave the grid short a significant amount of power, which would trigger power outages.
The grid operator had previously avoided warning the public about such extreme possibilities because of their low likelihood of happening. But after February’s storm, ERCOT is changing tactics.
ERCOT interim President Brad Jones will also have to build working relationships with an entirely new board of directors, picked by a committee appointed by the state’s top politicians.
Meanwhile, ERCOT has to convince the public that its new regime can be trusted to keep the grid from collapsing again.
“[They are] starting over because there’s all these people who got introduced to the grid in February — and not in a good way,” said Caitlin Smith, an Austin energy policy adviser. “So, we’re starting their relationship with ERCOT from a really traumatic event and going from there.”
Patrick Svitek contributed to this report.