It’s downstream from Washington.
Yesterday, I wrote of Texas power woes:
Central planners knew reserve dispatchable (on demand) electricity provision was a weakness for renewables’ case, even as renewables raise the importance of dispatchable power. If planners wanted more renewable energy they had to raise electricity prices to fund building the standby generators and securing the fuel supplies they might not use, or take bigger risks across the board.
Wind and solar were not to be dinged for the increased costs they impose on the grid to ensure reliable generating capacity during extreme weather events. Mustn’t have anyone question whether windmills or solar panels are doing the job you hired them for if you still have to have natural gas plants idling in case of bad weather.
Unsuprisingly, wind proponents would prefer the raise rates solution, now that they can act like they’re not responsible for the lobbying that contributed to it. The WSJ notes: “The wind lobby says Texas should have required thermal (nuclear, gas, coal) plants to be weatherized to withstand single-digit temperatures.”
I wouldn’t have phrased it as if the costs might be borne by the conventional power companies. Consumers would pay. And I wouldn’t have accepted the wind lobby’s implication that the thermal power companies were the culprits, since the wind lobby persuaded the regulators to avoid price increases attributable to wind power in favor of higher risk. How do you think the new power transmission lines for windmills and solar are paid for? See also.
When wind lobbyists ask politicians to “require our competition to” it’s just another sign Texas is not a free market in electricity.
Then there are Federal regs.
In this case it seems as if they were used to give Texas a little slap. On Feb 12th, Texas Governor Greg Abbott asked the President to declare a major disaster for Texas’ 254 counties. The President approved it for 77 counties. Grants are now available for temporary housing, home repairs, and low-cost loans for most Texans. That means large population centers like Dallas, Houston, San Antonio, Austin…
You can supply your own theory about why rural Texans are considered to have been less damaged.
By Feb 14th ERCOT (Electric Reliability Council of Texas) was urging everyone to minimize electricity consumption, and had asked the Department of Energy for permission to exceed Federal restrictions (running fossil fuel plants at only about 60% capacity). The DoE approved this request with the proviso, first suggested by ERCOT, that the power would be sold at no less than $1,500 per megawatt hour, compared to $18.20 per megawatt hour in February 2020.
Note: the $1,500 figure, contrary to some reports, was SUGGESTED BY ERCOT. This doesn’t change anything regarding regulatory conditions, it simply means ERCOT knew what they had to do to get approval. DoE may not have initiated the price floor, but they still imposed it.
The letter later referred to this pricing as “a separate mechanism to help ensure this capacity is deployed only when absolutely necessary.”
Webber, the professor at the University of Texas at Austin, said that cost was a “minimum price” that would ensure plants permitted to bypass environmental restrictions were not given an unfair advantage.
“Emissions controls cost money,” he said. “It would be unfair to let some power plants turn off their emissions controls, which lowers their operational costs, and then to use that lower cost to underbid other generators who responsibly left their controls in place.”
Ted Kury, director of energy studies for the Public Utility Research Center at the University of Florida, said “when wholesale prices get high, the market operator is actually hoping that this sends a signal to folks to stop using electricity.” That works for, say, large companies — but it often ends up being punitive for residential customers.
Yes, prices are signals, but I think in this case Texans had already got the conserve power message. Soon enough they couldn’t buy it at any price. No “unfair advantage” there. And we can’t think of any way to have tiered pricing without sophisticated computer systems. And we don’t have that. Right?
Still, we must be absolutely sure that hoarders, wreckers, exploiters, and saboteurs – like some Aluminum smelter somewhere in Texas – didn’t use any of that power. They might have achieved 2 or 3 days production at the same electricity cost they’d have a week later. They might have forced their employees to drive to work under disaster conditions, and then made them sign NDAs to prevent anyone from ever finding out what evil businessmen do when old people are freezing to death. Or, some Bitcoin miner might have done the same thing, because they are really evil and they’d have comparatively few employees. Yeah, THOSE guys could get away with it.
Well, at least until the digital meter monitor reported their electricity usage.