A relative informed me in the middle of the Texas electricity grid failure that a number of ERCOT board members weren't Texans. It was our third day without power and we'd gone to their house to warm up, get a hot meal and a shower. That tidbit planted a seed.
I searched ERCOT's CEO and the five outside board members for private equity connections. I found ERCOT CEO Bill Magness had an affinity for private equity underwriters (PEU) earlier in his professional career:
"We are in the middle of beginning to attract capital, but we want to attract institutional capital -- private equity funds as opposed to individuals," says Bill Magness, general counsel and vice president of business development. "The company has been currently capitalized by individuals. The maturity of the company needs to progress."
This was 1999 before private equity had it's massive growth spurt.
ERCOT Vice Chairman and independent board member Peter Cramton wants to serve the PEU boys. Crampton is a:
Member of Advisory Board, CartaX, a company creating a market for trading private equity and other financial securities.
Fellow ERCOT Board member Ray Hepper served as VP/General Counsel for a New England utility, thus Hepper knows what is required to provide power in bitter cold temperatures. Board President Sally Talberg lives in Michigan and has similar experience with providing electricity in arctic-like environments.
When ERCOT's board met on February 9th they knew a deep arctic blast was headed our way:
“One thing I want to say before I really get into the presentation is it’s actually going to be winter here pretty soon, as many of you -- those of you in Texas -- know. We do have a cold front coming this way. We’ll probably see our winter peak later this week or in the very early part of next week. And operations has issued an operating condition notice just to make sure everyone is up to speed with their winterization and we’re ready for the several days of pretty frigid temperatures to come our way. So more on that in the next few days, but it does look like we’ll have a little bit of winter weather to contend with during the course of the rest of this week,” Magness said during the virtual meeting.Winter weather last ten days and produced three lows of less than 10 degrees F in my area. Here's what ERCOT preliminarily planned for this winter:
The peak demand forecast was developed using revised Moody’s economic data obtained in April 2020. The preliminary winter SARA includes a peak demand forecast of 57,699 MW, which is well below the winter peak demand record of 65,915 MW set on Jan. 17, 2018. The forecast is based on normal weather conditions during winter peak periods, from 2004 through 2018.
An additional 1,359 MW of planned winter-rated resource capacity is expected to be added between now and the start of the winter season.
The preliminary winter SARA includes a unit outage forecast of 8,617 MW based on normal winter weather conditions. For the extreme outage scenario included in the assessment, ERCOT is now using the region’s most recent cold weather event that occurred on Jan. 17, 2018 along with a three-year outage history to calculate the amount of potential outages.
Due to the increased amount of renewables on the ERCOT system, the grid operator has also included a low wind output scenario in the preliminary winter SARA. Moving forward, ERCOT will begin including a low wind output scenario in all of its seasonal assessments.
The final winter SARA for 2020-21 will be released in early November.
There is no reference to the 2011 winter storm that resulted in recommendations to winterize the state's various sources of energy for a prolonged arctic front or series of fronts. Texas Public Utility Commission did not fine ERCOT for allowing inaction on winterizing critical energy infrastructure.
The Public Utility Commission (PUC) of Texas has directed the state's main grid operators to raise energy prices, as millions of people are enduring below-freezing weather without power in their homes.
The PUC met in an emergency open meeting on Monday evening to address concerns that "certain pricing mechanisms were not generating an optimal response" to the electricity crisis sparked by the extreme winter weather in the state, according to a news release issued on Monday.
Saving lives wasn't motivational enough. Abandonment turned to abuse, a common PEU operational move.
We lost power Sunday afternoon, had it Sunday evening, then got dropped, like millions of others at 1:30 am Monday. I called AEP the first two outages and neither of the people I spoke with informed me of the situation. The third time I called I heard a recording about ERCOT and the need to reduce the power load and rotate power. We did not participate in the rotation until Wednesday afternoon, getting less than 3 hours.
The Sheriff's Office encouraged me to look at the AEP outages webpage. It still showed our outage as "under assessment", even after power came back on Thursday around 10:30 am. When our house was 41 degrees I asked the dispatcher if our County Emergency Manager had any information for us about power restoration. They said no but invited us to the local emergency shelter. I said "I need to keep the fire going to have any chance of making it through without broken pipes and we have animals that need food and water to survive."
Our fireplace insert burned for six straight days, as did my anger at leaders who'd abandoned us. I'd like to tell you that anger warmed me when I went outside in below zero wind chills to get firewood, feed and water the animals. It didn't.
The order also directed the Electricity Reliability Council of Texas (ERCOT), which monitors the state's power grid, to adjust past prices to reflect the current shortage of energy.
There is a law against price gouging in an emergency. The PUC and ERCOT should be charged with numerous crimes for their negligence and malfeasance.
People died as a direct result of their ignorance, arrogance and greed. They are dishonorable PEUs in my book. A Harris County Judge said:
"This was a man-made disaster that has cut lives short. When the dust settles, people deserve answers and accountability.”
Absolutely. That said, I am grateful we survived the harrowing Texas Grid Failure of 2021, ten years after surviving the 2011 version. Let's not do this again.
Update 2-23-21: The five independent ERCOT board members resigned.
Update 2-24-21: Texas energy executives are ecstatic over their huge profits while citizens suffered mightily.
