An official at the North American Electric Reliability Corporation (NERC) believes that the failure of the electric grid in February may actually have been profit-driven by gas companies.
Since Winter Storm Uri devastated Texas and left millions without power in freezing conditions, there has been a rotating blame game as to what happened and little done to prevent a future catastrophe. Oil and gas companies, and their allies in the Texas Railroad Commission, scrambled to put the blame on renewable energy sources not being able to handle the load. That claim has been thoroughly debunked, and the new talking point has been that the gas power generators that failed have not been properly winterized.
Even that may not be true according to Thomas Coleman, the Chief Technical Advisor at NERC. He gave a presentation to the Electric Reliability Council of Texas on December 17 that claimed “price majeur” may have played a much bigger part in the loss of power.
“We did see a lot of anecdotal evidence… We all know what force majeure is, and that’s an act of God that prevents somebody to perform,” said Coleman in the question and answer period. “But where the term price majeure comes from now is if you’ve got an underlying commodity price of four dollars a decatherm, let’s say, and you’ve got that price fixed on a thirty-day supply contract, and now spot prices go through the roof, and they’re thousand dollars a decatherm, then you do have scenarios where producers/suppliers have incentives to cut that four dollar transaction and claim that they can’t perform.”
Coleman’s analysis is apparently compelling enough that the Federal Energy Regulatory Commission is investigating whether or not gas companies were using the pretense of lost capacity to make more money on the back of Texans’ misery.
There is no doubt that the freeze was very good business for Texas power generators. Spikes in pricing were national news as some Texans were hit with five-figure electric bills.
In reporting from Justin Miller and congressman Joaquin Castro, it was shown that Energy Transfer made $2.4 billion during the winter storm. Part of that massive influx of cash came from ERCOT rising wholesale energy prices during the freeze. The CEO of Energy Transfer also made a massive campaign donation to the campaign of Governor Greg Abbott.
Abbott has long opposed any measures that would more deeply regulate Texas’ power grid, and the Railroad Commission and ERCOT have done little that would get in the way of the power generators from making more money at the expense of Texas lives. It may take an investigation at the federal level to show just how willing power companies were to line their pockets during a natural disaster. Even then, it would take a complete overhaul to the way Texas handles electricity for any significant fixes to be implemented. Until then, the money is likely to continue rolling in.
