The polar vortex storm that plunged Texas into chaos continues to reverberate through the state’s power grid operator, which fired its CEO on the same day Congress launched an investigation into its failures.
The staggering cost of last month’s storm, which killed dozens, left millions without electricity and water, and caused billions of dollars in damage has prompted ratings agencies to downgrade the debt of Texas’s electric utilities, at least one of which has already filed for bankruptcy.
The board of the Electric Reliability Council of Texas (ERCOT) has become a prime target for customers’ and politicians’ ire over its apparent failure to prepare for the cold weather and the enormous bills some customers have faced due to a massive spike in energy prices.
ERCOT’s board fired President and CEO Bill Magness late Wednesday after an emergency meeting that gave him 60 days’ termination notice, the company announced.
“During this transition period, Bill will continue to serve as president and CEO and work with state leaders and regulators on potential reforms to ERCOT,” the company said in a statement shared with AFP.
– Investigation announced –
The firing came hours after the House Oversight and Reform Committee launched an investigation into the failures that led to the outages.
Representative Ro Khanna, a California Democrat, sent a letter to ERCOT demanding “all documents relating to preparations, from 2010 to the present, for an extreme winter weather event.”
The letter said the company was warned following previous once-a-decade storms in 1989 and 2011 to better prepare its installations for extreme cold, but failed to do so.
“Following the 2011 event, the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) conducted an investigation, which found disturbing similarities between the power disruptions in 1989 and 2011,” Khanna said.
The agencies found “that lessons learned from the 1989 winter weather event were either not implemented or not maintained,” Khanna wrote.
He added that the most recent storm could cause losses of up to $50 billion stemming from damage to property and infrastructure and lost crops and wages.
Unlike other states, the power grid in Texas is largely disconnected from the national grid, which was done partly to avoid federal regulation and means it cannot import power in the event of outages.
Texas Lieutenant Governor Dan Patrick, who had called on the leaders of ERCOT and the Public Utility Commission of Texas (PUC) to leave, welcomed the news.
Two “days ago, I called on ERCOT and PUC leaders to resign. Good news — now they are both gone,” Patrick tweeted.
“Next — one of my top 31 priorities — reforming ERCOT and fixing what went wrong.”
PUC chair DeAnn Walker resigned on Monday and several ERCOT board members also stepped down in the wake of the catastrophe.
Texas Governor Greg Abbott has ordered an investigation into the grid operator, and FERC also said it will, again, probe the factors behind the power outages.
ERCOT’s Magness sent a letter Tuesday to the company’s technical advisory committee outlining the most urgent reforms and a “commitment to prevent this kind of event from ever occurring again.”
But the letter’s eight points largely deal with communications and coordination reviews, although it does call for the firm to “analyze a great range of potential risks for extreme weather events and their impacts on the ERCOT grid.”
The committee is due to meet Friday to discuss the points.
– Bankruptcies and downgrades –
The financial repercussions of the storm are reverberating through the state’s energy sector.
Brazos Electric Power Cooperative, the largest electricity cooperative in Texas, filed for bankruptcy protection after it received a $2.1 billion bill from ERCOT, while Canada’s Just Energy petitioned the PUC to intervene to defer payments.
Residential customers who signed for variable-rate plans have reported receiving electric bills as high as $16,000.
S&P Global Ratings has cut or warned it could cut ratings on the debt of several local companies due to the storm’s financial impact.
“The demand surge resulted in extremely high wholesale prices for power and natural gas, in turn generating significant costs and potential liabilities for those utilities that were short or insufficiently hedged,” S&P Global Ratings credit analyst Paul Dyson said.
