The historic outage caused as much as $129 billion in economic losses, and the impact to individual companies is only starting to emerge. Some electricity providers wracked up huge losses, fueling a possible credit crisis. Oil and gas producers saw their output halted. And dozens of people died.
- Calpine, Vistra and NRG said natural gas shortages affected their ability to operate. Not only did freezing weather shut in some gas production, the blackouts ordered by grid operator Ercot compounded cut power to pipelines.
- The companies also said plants were forced offline after the flow of electricity on the grid — called frequency — plunged. That contradicts the version of events presented by Ercot.
- Vistra and NRG chief executive officers both said that their companies would not pass high energy prices from the event onto their customers.
- Ercot anticipated that blackouts were possible four to five days before the grid emergency occurred. Calpine’s CEO, however, said it wasn’t warned that a grid emergency was possible.
All times Eastern.
‘Enormous’ Financial Obligations May Lead to Power Bankruptcies (12 a.m.)
With sky-high wholesale power prices in place for days, power retailers and cooperatives in Texas racked up an “enormous amount of obligations” to generators, the state’s main grid operator said.
Combined payments owed to generators hit $10 billion one day during the blackouts and $9.5 billion another, Ercot Chief Executive Officer Bill Magness said in a hearing at the state House of Representatives. Participants and cooperatives that owe those bills may have trouble paying and some may file for bankruptcy, he said.
Another problem on the horizon is if some retailers aren’t able to pay, it’s unclear how the debt will be paid to the generators, Magness said. The agency is currently trying to determine how many won’t be able to pay so it can come up with an answer, he said.
“We’re running into a big issue on the financial side because magnitude of money owed is enormous,” Magness said. “If a generator doesn’t get paid, we may lose generation on system, then that becomes an operational problem.”
Texas’ $9,000 Power Price Cap ‘Didn’t Work,’ Regulator Says (11 p.m.)
Texas’ $9,000-per-megawatt-hour maximum power price didn’t work during recent blackouts, Public Utility Commission Chairwoman DeAnn Walker said during a state House of Representatives hearing.
The rate was set to entice generators to produce more power or for customers to consume less when reserves get low, and it has worked well during summer peaks, mostly because big industrial customers don’t want to pay the stiff bill, Walker said.
During the power outages, the PUC ordered Ercot to keep the price at the cap to try to maximize generation, and prices were at or above that level for seven straight days, yet millions were still in the dark for days.
“It didn’t work, and we have to fix that,” Walker said. “It’s a very complicated issue and I don’t have any ideas right now, but we need to work together to figure that out.”
Power Outages Main Cause of Oil, Gas Shut-Ins (7:38 p.m.):
The state’s top energy regulator said that power cuts were a bigger problem for oil and gas producers than ice.
While some wells were shut-in preemptively as a safety measure, “time and time again, the number one problem we heard from operators was the lack of power at their production sites,” said Christi Craddick, chair of the Texas Railroad Commission. “The oilfield simply cannot run without power.”
Neither the Public Utility Commission nor the grid operator understood how interdependent the gas and power industries were, she said.
Utility Regulator Blasted by Lawmakers (6:00 p.m.):
Texas’s utility watchdog came in for scathing criticism from senators for disavowing any responsibility for last week’s disaster.
“I would contend you are choosing not to leverage the authority we are giving you and that’s a serious problem,” Senator Creighton told Public Utility Commission Chairwoman DeAnn Walker after she declined to offer suggestions on how the state’s power market ought to be reformed.
CenterPoint Says Rotating Outages Were Impossible (5:50 p.m.):
Rotating outages became impossible within an hour of blackouts being ordered, due to supply shortfalls, CenterPoint Energy Inc. Executive Vice President Kenny Mercado said.
Going into the event, “we felt confident we could achieve a rolling approach,” he said. “By 2:24 a.m. we could no longer rotate customer outages.”
The company cut power to 1.4 million customers at the peak. Two substations tripped because of under-frequency, Mercado said.
$9,000 Energy Price Necessitated by Computer Glitch (4:40 p.m.):
The $9,000-a-megawatt-hour price cap imposed during the power crisis was necessary to ensure that all available generation was being offered to the grid, Public Utility Commission of Texas Chair DeAnn Walker told lawmakers.
That price cap is meant to be in place whenever there is a load-shed event, she said. But a computer glitch on Ercot’s system was lowering the price as the grid operator built up reserves to stabilize the grid on Feb. 15. That lower price was discouraging gas generators from bidding in.
“The signal was being sent to dispatch that there was sufficient generation on the system,” Walker said. “When those signals were being sent, generation was backing down.
However, she said that the state needs to review whether the price cap should be kept so high for so many days.
Ercot Saw Blackout Potential Days Beforehand (3:40 p.m.):
Grid operator Ercot anticipated that blackouts were possible four to five days before the grid emergency occurred, Chief Executive Officer Bill Magness told lawmakers.
Modeling indicated that the state could be short on power supplies on the mornings of Feb. 15 and Feb. 16, he said.
A notice to conserve energy was issued publicly on Feb. 13, according to an Ercot presentation. A blackout warning went out on Feb. 14, hours before the outages began.
Calpine Says It Wasn’t Warned of Blackouts (3:15 p.m.):
Calpine Chief Executive Officer Thad Hill said Texas’s grid operator did not warn the company ahead of time that a grid emergency was possible.
“I felt that when I went to bed Sunday night that we were in good shape,” he said. He also said he wasn’t aware of any plan for shifting from rolling blackouts into controlled blackouts. “Nobody communicated to us directly on that.” As a result, Calpine wasn’t able to warn customers in a timely fashion, he said.
Vistra, NRG Say Costs Won’t Pass to Customers (1:29 p.m.):
Vistra and NRG executives said that their companies would not pass high energy prices from the event onto their customers. Spiking gas prices during the event offset the revenues made from selling electricity at the $9,000-a-megawatt-hour price cap, they said.
“There was a significant amount of wealth transfer from power to gas,” Vistra Chief Executive Officer Curt Morgan said. “We’re the guy sitting in the middle, getting it from both ends.”
Gas-Supply Issues Fueled Outages (12:27 p.m.):
Calpine, Vistra and NRG all said gas-supply shortages affected their ability to operate. Not only did freezing weather shut in some gas production, the blackouts ordered by Ercot compounded the issue as power was cut from pipeline compressors necessary to transport the fuel to power plants.
“If natural gas is compromised, the power system is going to be compromised,” said NRG President Mauricio Gutierrez. While NRG had contracted gas supplies, low pressure on pipelines feeding the system affected the company’s ability to run plants at capacity. Vistra’s Morgan said that, despite having 90% of plants available to run, “we just couldn’t get the gas.”
Calpine’s Hill said in written testimony that the company lost one gas-fired unit after a gas supplier lost electricity. He later said the company lost 40% of its gas supply on Tuesday, after the blackouts were ordered.
Grid Operator, Generators Disagree on Grid Issues (11:12 a.m.):
Vistra, Calpine and NRG said they had plants forced offline after the flow of electricity on the grid — called frequency — plunged during the early morning of Feb. 15, when blackouts were first ordered. Their comments contradict the version of events presented by the Electric Reliability Council of Texas, known as Ercot, which manages most of the state’s grid.
“We have examined this, we haven’t seen it,” Ercot’s Magness said in testimony before the Texas senate. If plants did go offline in tandem with the dip, it would only have been around 10 units, a number dwarfed by the total that was offline due to weather and gas-supply issues, he said.
Maintaining frequency at around 60 hertz is critical to keeping the grid stable. Ercot operating protocols say a deviation of 0.2 hertz “for a long period” could cause damage to generators and customer equipment. On the day of the blackouts, frequency dipped to 59.4 hertz for 4 minutes and 23 seconds, according to an Ercot presentation. It fell as low as 59.3, according to Bloomberg data.
NRG’s Gutierrez said the dip “threatened the majority of the fleet” but ultimately only caused one plant to go offline. Calpine’s Hill said in written testimony that two of the company’s natural gas-fired power plants tripped offline for the same reason.
Vistra was within three minutes of losing Comanche Peak nuclear plant because of low frequency, Morgan said. “We came dangerously close to losing the system,” he said.