Both electric and gas utilities that rely on natural gas delivery from Texas' Permian Basin could find themselves paying bloated prices or facing shortages of the fuel should another cold snap hit the region this coming winter.
Global supply chain issues that have already affected production of solar panels intended for use in replacing a coal-fired power plant in New Mexico provide an additional threat to resource adequacy as regulators and utility planners adapt to planning in a rapidly changing and increasingly unpredictable time period.
A law enacted to prevent a repeat of Texas' February energy crisis—during which frozen natural gas infrastructure was one of many factors that led to several days' worth of power outages across the state during freezing weather—will not go into effect in time to prevent a similar crisis should temperatures plummet this winter to similar levels.
Members of the Texas Senate Business and Commerce Committee on Sept. 28 met to discuss the implementation status of legislation enacted after the February outages, which led to multiple deaths in the state. Skyrocketing natural gas prices during the same period were tied to a lack of preparedness for extremely cold weather among Texas suppliers. The high prices caused heat and power bills to rise in Texas and around the region, much of which depends on natural gas from the Lone Star State for power generation, cooking and heating.
According to local media accounts, the lawmakers were frustrated that SB 3, passed by the Texas Legislature after the storm and signed by Gov. Greg Abbott in June, does not call for the Texas Electricity Supply Chain Security and Mapping Committee, designated to map the state's energy infrastructure, to finish that job until September 2022. The law gives the state Railroad Commission, which regulates natural gas businesses in Texas, another 180 days to finalize weatherization rules for suppliers after the map is complete, meaning that rules would likely not be in place in time for the 2022-2023 winter season.
In addition to Texas' massive power outages, utility customers in the Southwest and Intermountain West will be paying for years to recover fuel costs their energy providers paid to maintain service during the February storm (see CEM No. 1635). Another gas shortage due to weatherization failures could cause fuel prices to soar once again, putting utilities and their customers further in debt.
"The RRC and several other agencies are in weekly contact as we work towards getting the map and the subsequent rules," RRC spokesperson Andrew Keese said in an email to California Energy Markets. "We are taking proactive steps to work with operators in preparation for the upcoming winter season," he added.
The RRC this week issued a notice to operators asking them to "take all necessary measures to prepare to operate in extreme weather conditions during the winter season of 2021-2022." The commission's highest priority is ensuring that all available natural gas under its jurisdiction is available to be used as a reliable energy resource for Texans, the notice says.
Commission inspectors are also making site visits to assess gas facility operators' preparedness for the winter season and to ensure that pipeline operators are preparing to operate during extreme weather conditions prior to publication of the map. The RRC's Oil and Gas and Oversight and Safety Divisions included in the notice best practices for weatherization.
"The RRC will work with natural gas operators in preparation for the upcoming winter," Wei Wang, executive director of the RRC, said in an Oct. 7 news release. "We are reminding them of updating their information with their electric providers for critical load serving electric generation, and letting them know of best practices for winter preparation and be prepared."
Natural gas suppliers must voluntarily declare themselves to the state as being "critical infrastructure," in order to be exempt from load shedding requirements during an energy emergency (see CEM No. 1645). Companies that fail to do so could effectively opt out of weatherization requirements, though being taken off line would render them unable to serve customers during such an emergency.
Natural gas facilities, including electric compressor stations that could have helped alleviate the crisis in February, were in some cases cut off from power during the February storm due to a lack of awareness by the Electric Reliability Council of Texas, the state's grid operator, about their function when it instituted emergency load-shed orders (see CEM No. 1638). The critical-infrastructure designation is intended to prevent the recurrence of such an error.
Temperature extremes at both the upper and lower ends of the thermometer are contributing to spikes in demand, while other issues threaten to compromise reliability throughout the West as the effects of climate change and global supply chain shortages make for more challenging planning on the part of utilities and grid operators.
Regulators during a Sept. 29 meeting of the New Mexico Public Regulation Commission revisited concerns raised in July by representatives of Public Service Company of New Mexico, the state's largest utility, regarding a potential capacity shortage in summer 2022. Supply chain issues related to the COVID-19 pandemic are expected to delay the implementation of replacement resources for the utility's 847-MW coal-fired San Juan Generating Station, which is scheduled to close in June [20-00182-UT] (see CEM No. 1652).
Commissioners at the meeting discussed plans to ask PNM for monthly updates on its effort to address the anticipated shortfall, and also discussed the potential for supply chain issues to affect reliability more broadly.
"I just don't feel like . . . as an individual commission member that I have a handle on the extent and the impact of these global supply chain issues," commission member Joseph Maestas said at the meeting.
The commission said it would explore expanding its summer readiness docket to address resource-adequacy issues generally, and would consider issuing a bench request to PNM seeking monthly updates on the utility's plan to address the anticipated summer 2022 capacity shortfall.