As a winter storm attacked Texas in February, the state’s grid operator made a last-ditch attempt to avert mass blackouts. The move ended up constraining natural-gas supplies needed by power plants, a Wall Street Journal examination shows. The Electric Reliability Council of Texas activated a program that pays large industrial power users to reduce their consumption during emergencies. But the grid operator, known as Ercot, didn’t know who was being paid to participate in this program and what type of facilities were getting shut off, it has since acknowledged.
The estimated value of the program for the five days of the blackout was about $2 billion—and participants including oil-and-gas companies earned a portion of that for turning themselves off at Ercot’s behest. Two companies petitioned Ercot for permission for idled facilities to come back sooner, the grid operator said. By the time they were allowed to restart, the crisis was nearly over.
Natural-gas power plants wound up spending billions of dollars procuring fuel or shutting down altogether for lack of supply, exacerbating a dire electricity shortage that left more than four million Texans in the dark, bankrupted several crucial players in the state’s power market and resulted in more than 130 deaths.
“We do not know what type of facility it is,” said Kenan Ögelman, Ercot’s vice president of commercial operations. “We do know [a facility] has qualified and performed to the requirement because we test them, but we don’t know what it is they do.”
‘That would be ridiculous for those facilities to voluntarily go offline during a situation like this.’
Many power grids around the U.S. have similar programs that aim to reduce power use during peak periods by incentivizing large users, such as the owners of skyscrapers and factories, to consume less when called upon. These programs generally anticipate curbing consumption for minutes or hours during demand spikes, such as hot summer days. Neither Texas grid officials nor participating companies envisioned such outages lasting for days.
The program hasn’t received much public attention from Texas lawmakers, who are attempting to address the many root causes of the state’s blackouts, which include a lack of regulations requiring operators to winterize power plants and gas infrastructure. It appears to have played an important role by compounding the gas-supply shortage that delayed the state’s ability to restart power plants.
“That would be ridiculous for those facilities to voluntarily go offline during a situation like this,” said James Robb, president and chief executive of the North American Electric Reliability Corp., an independent group charged by the federal government with ensuring that the nation’s power grids remain on.