by Robert Zullo, Georgia Recorder [This article first appeared in the Georgia Recorder, republished with permission]

July 26, 2023

From winter storms to sweltering summer heat, there’s a consensus among experts that increasing extreme weather, a shifting electric generation mix, delays in getting new power generation projects connected and the difficulties in getting new transmission lines and other infrastructure built all pose an increasing risk to the grid.

At U.S. Senate committee hearings as well as Federal Energy Regulatory Commission meetings, there have been plentiful warnings over the past few months about a coming reliability crisis.

Much of the debate has centered on what U.S. Sen. John Barrasso, a Wyoming Republican, characterized at a hearing last month as “reckless policies” aimed at limiting pollution from existing power plants, retiring older fossil fuel generation facilities and speeding the transition to cleaner sources of energy to mitigate the consequences of climate change.

But there’s been less sound and fury about one of the biggest factors in recent severe weather blackouts, like those across parts of the South during Winter Storm Elliott, when large numbers of fossil fuel plants, particularly those fired by natural gas, tripped offline because of freezing equipment, inability to secure fuel and other failures.

“The overwhelming threat to reliability right now is fossil plants failing to perform in the winter,” said Tom Rutigliano, a senior advocate at the Natural Resources Defense Council’s Sustainable FERC program.

And though FERC approved new power plant winterization standards in February, one  commissioner flatly said they don’t go far enough and pointed out that they don’t become enforceable until 2027.

Winter might seem far off right now with much of the country in the grips of a punishing heat wave, but as it approaches, the grid is still very much vulnerable to severe storms like Elliott and Winter Storm Uri, which caused a catastrophic collapse of the Texas electric grid in 2021 that killed an estimated 246 people.

“Nothing really has fundamentally changed since last winter,” said Michael Goggin, vice president of Grid Strategies, a consulting firm focused on clean energy integration. “It’s just a question of do we get lucky and avoid another cold snap.”

‘Implement these recommendations now’

During Elliott, which brought rapidly plummeting temperatures to many parts of the country over the Christmas weekend, rolling blackouts were instituted by the Tennessee Valley Authority, which provides electricity for 153 local power companies serving 10 million people in Tennessee and parts of Georgia and five other surrounding states, Duke Energy in the Carolinas and several utilities in Kentucky, cutting power to hundreds of thousands of customers.

PJM, the nation’s biggest regional transmission organization, coordinating electric flow for 65 million people in parts of 13 states and the District of Columbia, urged its customers to cut usage and avoided blackouts despite losing about 47,000 megawatts of capacity.

TVA said 38 of its 232 generating units were “negatively impacted, mostly due to instrumentation that froze,” during the storm, taking thousands of megawatts of power offline as demand surged to historic levels.

In Duke Energy’s territory in the Carolinas,the company lost about 1,300 megawatts of power output mostly from coal and gas (though no plants failed entirely) due to instrumentation issues from the cold and power imports from out of state that failed to materialize,a company spokesman said. Duke’s problems threatened the broader reliability of the broader electric grid that serves more than half the country, called the Eastern Interconnection.

In PJM, gas power plants accounted for 70% of the outages. “Most outages were caused by equipment failure likely resulting from the extreme cold, though broader issues of gas availability also contributed to the outages,” PJM staff wrote in a report released July 17.

”There has been a lot of talk that we must preserve the current resource mix, which in PJM is made predominantly of natural gas, coal and nuclear resources,” said Greg Poulous, executive director the Consumer Advocates for PJM States, at a FERC forum on PJM’s capacity market last month. “However I have yet to hear someone say that having 20% of coal resources and 23% of natural gas resources fail to perform during Winter Storm Elliott is acceptable. That seems to be lost in all of this.”

In a separate proceeding on an inquiry into what went wrong during Elliott, FERC Chairman Willie Phillips noted that extreme weather has become more commonplace.

“This is the fifth winter storm event that we’ve had in the past 11 years,” Phillips said. “So what seems to have been a once-in-a-generation event is now every other year.”

Per a presentation by FERC staff, more than 70,000 megawatts of power generation went offline across the country during the storm, and for strikingly similar reasons as in winter storms in 2011, 2014, 2018 and 2021.

“We’re finding that unplanned generating unit outages continue to be the primary challenge that are seen in all of these events,” said Heather Polzin, who works in FERC’s Office of Enforcement.

Both FERC and the North American Electric Reliability Corporation, which is charged by federal law with setting and enforcing reliability standards for the North American power system, have repeatedly urged power generators to make the upgrades necessary to improve performance during severe weather.

“Implement these recommendations now,” Phililps said. “Right now. We know, to borrow a phrase, winter is coming. Let’s get ready. Let’s stop this. We can do this.”

But there’s been some resistance, particularly from independent power producers who sell their electricity on the open market.

The Electric Power Supply Association, a trade group for competitive power generators, filed a request for a rehearing on the new winterization standards FERC approved, arguing that the standards lacked a cost-recovery mechanism and that their members could be put at a competitive disadvantage. Vertically integrated utilities, which are generally responsible for generating, transmitting and distributing electricity in a given territory, can simply pass the costs of winterization upgrades onto their ratepayers, the association said.

“Competitive generation owners lack similar opportunities,” EPSA argued, noting that some power plants will also be exempted from the new rules (for technical, commercial or operational reasons). “The Feb. 16 order not only neglected to give this issue special attention, it gave this issue no attention at all.”

FERC denied the request for another hearing.

“To the extent competitive generators believe that their existing rates do not offer an opportunity to recover the costs … they may make appropriate filings,” the commission wrote.

A ‘tricky’ fix

So if a major cause of blackouts in severe weather is power plant failures, why can’t federal regulators simply force them to quickly make the upgrades necessary to improve cold weather performance?

It’s not that simple, said Jim Robb, NERC’s president and CEO of NERC.

“In all of our standards that we’ve passed, particularly if they require a change in operating practices or capital investment, you have to give the sector some time to respond to that, so there’s a delay from when you pass the standard to when it’s enforceable,” Robb said in an interview with States Newsroom. “In between there, we jump up and down and try to promote early action as quickly as we can.”

The other quandary for regulators, at a time when there’s widespread concern about the pace of power plant retirements, is getting better performance from those units without prompting them to shut down.

“We don’t want to cause an event that would prematurely retire any generation. … All the stuff that’s kind of the backbone of the electric grid are all under pressure economically and because of other regulatory actions. Our goal isn’t to compound that,” Robb said.

He added that winterizing plants in the South can be particularly challenging, since they must be able to operate in extreme heat as well as cold.

“At the same time we want to be clear that these plants need to be able to perform under the kind of conditions that we’ve seen five times over the last 11 years, three times over the last five and each of the last two winters,” he said. “That’s becoming the norm and that’s got to become much more the planning case for the grid.”

He noted that FERC is directing his organization to take another look at exceptions related to technical feasibility in the new rules that would allow power plants to avoid making the upgrades. When they do come into effect, though, Robb said NERC believes the new standards will prevent the types of power plant failures seen during Uri and Elliott.

“It’s a tricky problem to work through but that’s what FERC came back and said we want tighter language around that,” Robb said. “I don’t disagree with them at all.”

The future of gas

Though the U.S. is currently seen as being in the midst of a big single electric transition (from fossil fuels to renewables) it’s actually at the tail end of an earlier one (from coal to gas) that hasn’t been fully reckoned with from a reliability perspective, according to some grid experts, like Rutigliano of the NRDC.

Natural gas has become a crucial part of the electric generation mix. Coal fell from 52% of U.S. power generation in 1990 to 18% in 2022 as gas climbed from 12% to 40% over that time. That’s made the electric grid that much more vulnerable to outages from gas plants, which depend on deliveries from gas pipelines and don’t typically have fuel on site like coal or nuclear power plants.

“Natural gas has failed at a very disproportionately high rate,” Rutigliano said.

Although during severe weather many gas power plants failed because of freezing equipment, others were unable to run because they weren’t able to get fuel.

“Where we haven’t seen much progress is making sure the fuel supply is firmed up,” said Devin Hartman, director of energy and environmental policy at the R Street Institute, a Washington think tank focused on policy solutions. “We really have to talk about gas industry reforms as well. There’s only so much juice we can squeeze out of this lemon on just the electric side.”

But with gas projected by some to be part of the U.S. electric generation mix for the foreseeable future, it’s crucial to make sure it can perform when called upon. Like it or not, that means more investment in gas infrastructure, Robb said, even as technologies like battery storage come into more widespread use.

“We have like five gigawatts of batteries in California right now, which is spectacular,” said Robb. “That is a ton of batteries. It’s a drop in the bucket compared to what you would ultimately need to not have natural gas on the system. …The batteries we have are doing a lot of really great things, they’re just not everything we need them to do and nor are they likely capable of doing that.”

Hartman said it’s time to have a “conversation about prudent investment in the gas industry” so it can perform when needed, such as during severe weather.

“Natural gas, to be totally frank, is going to play a very major role in the electric fuel mix for at least a couple of decades,” he said.

A 2019 paper prepared for the American Petroleum Council noted that although natural gas power plants had become the largest users of the interstate pipeline system, “power plants, particularly those in the regional competitive wholesale electricity markets that cover most of the country, are reluctant to contract for firm transportation.” Firm contracts are those that cannot be interrupted except “under unforeseeable circumstances,” per the U.S. Energy Information Administration.

The gas industry is designed, operated and incentivized primarily to serve what Robb called its “core customers,” local gas distribution companies, not power plants.

“The gas-electric coordination issues are really very, very significant and also very challenging to resolve. Otherwise they’d be solved,” Robb said. “So we’ve got to figure out how to make that interface work in a way that it’s not right now because the failure of natural gas generation has been the common theme throughout each of the five major winter events that we’ve studied.”

However, the North American Energy Standards Board has worked for about a year and a half on a list of recommendations to improve coordination between the gas and electric power industry, he said. They would not be binding though.

Local and regional fixes

While the new power plant standards approved by federal regulators won’t become enforceable until 2027, that doesn’t mean states and the regional entities that coordinate electric flow in much of the country are toothless.

PJM is proposing changes to its capacity market, which was created to ensure power generators provide enough electric generating capacity to meet demand when the grid is under stress, such as during severe summer heat or frigid winter weather. But there’s widespread concern that the system of incentives and penalties to get generators to show up when they’re needed isn’t working.

In North Carolina, regulators at the Utilities Commission are reviewing Duke Energy’s failures during Elliott. “We always work to improve from every incident and have been applying lessons learned from that event to improve the operations of our plants during extreme conditions,” Duke spokesman Jeff Brooks said.  

TVA said it has made more than 250 equipment upgrades to guard against a repeat failure. Kentucky regulators have raised the possibility of fining one utility related to its attempt to recoup from ratepayers the cost of emergency power purchased during Elliott, contending that it should have done better planning.

“Our standards and our mission and our charter is to avoid large scale cascading outages,” Robb, the NERC CEO, said, adding that states could and should check into utility fuel contracts, substation security and whether they have enough power generation on hand, among other issues. “States have the responsibility to ensure that their customers have power when they need it. … States are always able to go beyond what we prescribe.“

For some, there’s also a broad need to promote more “demand response,” the ability to cut electric demand for some nonessential customers during severe weather. Hartman, from the R Street Institute, said that in Austin during the deadly Winter Storm Uri, “we were keeping downtown vacant office buildings lit up while people in other parts of the city were without electricity.”

There are calls as well for better planning and “accreditation” of the different strengths and weaknesses of generating plants, so grid operators aren’t caught as much by surprise.

“If PJM is counting on gas plants to be available on short notice — their vaunted flexibility — then they should be. And they should be paying what they need to to be available if they’ve taken on the capacity commitment,” said Casey Roberts, an attorney with the Sierra Club, at a FERC meeting on PJM’s capacity market last month. Power generators, in turn, say they need more money from power markets like PJM to ensure they can get gas and be ready when needed.

For some electric grid observers, there’s still a lot the federal government can do. For instance, FERC has been considering whether it should impose an interregional transfer requirement — a certain amount of electricity that can move between regional systems — to improve electric reliability. Proponents describe it as creating a grid bigger than the weather.

“It’s an insurance policy against all these events, being able to bring power from another region,” Goggin said.

Georgia Recorder is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Georgia Recorder maintains editorial independence. Contact Editor John McCosh for questions: info@georgiarecorder.com. Follow Georgia Recorder on Facebook and Twitter.