The Texas energy grid, a power crisis that didn't have to happen: Will there be a repeat this winter?
2021 PRINDBRF 0513
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By Stratton Horres, Esq., Karen L. Bashor, Esq., and Taylor A. Buono, Esq., Wilson Elser
Practitioner Insights Commentaries
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December 2, 2021
(December 2, 2021) - Wilson Elser attorneys Stratton Horres, Karen Bashor and Taylor Buono examine factors that contributed to the Texas electrical grid failure in February 2021 and recommend ways to prepare infrastructure for extreme weather in the era of climate change.
In our November 5, 2021, article, "Focus on Infrastructure," we wrote that our facilities and structures are literally at war with Mother Nature, and she is winning. Since then, President Biden signed his $1 trillion bipartisan infrastructure bill into law on November 15. This plan will put $550 billion in fresh money into transportation, broadband and utilities. Notably, $73 billion1 is designated to update the nation's electric grid.
This money, while a significant sum and a shot in the arm for our economy and aging infrastructure, is woefully inadequate to repair and replace critical roads, bridges, tunnels, overpasses, utilities and electrical grids, much less prepare for the dramatic impact of climate change that we face in the coming years. We've got to stop underestimating Mother Nature and make the modernization of our energy infrastructure an immediate national priority.
There is no recent case study more instructive on the consequences of failing to modernize our infrastructure than the deep freeze in Texas this past February and the looming winter season now dead ahead.
Significantly, in June 2021, Governor Abbott signed bills that would require the Texas grid to prepare for severe weather, but the grid changes will not even be implemented in time for this coming winter. This article will focus on the past winter, what lies ahead for this winter and beyond, and what can be done to prevent this crisis from happening again.
The Texas electrical grid malfunction: a case study
A decade before the deadly freeze in February 2021, Texas was warned its power grid could be susceptible to severe weather. In February 2011, an ice storm struck Texas, overwhelming power plants and resulting in rolling blackouts. Roughly 1.3 million customers were out of service at the peak of the crisis, and 4.4 million customers were affected over the course of the storm.
After conducting an investigation, the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) issued a comprehensive report that recommended energy providers implement winterization plans, identify and address freezing problems, and prioritize repairs and maintenance for freeze protection.2 The state also enacted a law requiring power generators to prepare and submit winterization plans to the Texas Public Utility Commission (PUC).
It is not clear whether the 2011 recommendations were implemented by the power generators, though some have suggested they were ignored.3 If Texas had updated its grid then, perhaps the crisis that came a decade later might not have been so severe.
In February 2021, Texas again experienced a severe winter storm, with the state facing record-low temperatures. As the thermostats dropped, the electricity demand rose and power plants struggled to remain operational.
After a cold weekend, just after midnight on Monday, February 15, the Energy Reliability Council of Texas (ERCOT), which operates the state's electric grid, declared an Energy Emergency Alert and began rolling blackouts. The blackouts allowed ERCOT to avoid a catastrophic failure. Normal energy operations were not resumed until Friday, February 19.4
During the 2021 crisis, more than 10 million consumers lost power; 14 million Texans had a boil-water notification because the water distribution dropped to an unsafe pressure or disinfection equipment was not functioning in the storm; and 210 people died, with the majority of deaths linked to hypothermia.
Damages alleged to be linked to the freeze have exceeded $20 billion.5 Numerous lawsuits have been filed against ERCOT and other Texas energy generators, and Chevron was sued for its failure to deliver natural gas during the winter storm.6
Officials point to a number of interconnected issues that caused the blackouts, including the plummeting temperatures across the state that caused the natural gas system to freeze. Because of the freeze, gas production was cut almost in half, meaning power companies also were cut off from fuel to generate electricity. And due to Texas's independent energy grid, the state could not get energy from the Eastern Connection to import power to prevent more severe blackouts.
FERC's preliminary findings stated that the freezing temperatures were the largest single cause of generating unit failures, "which in turn are caused by failure to sufficiently 'winterize' the generating units for cold weather conditions" across the state.7
Following the crisis, Texans and others across the country demanded action. The Texas Legislature passed a law to address the clear need to update the state's electricity infrastructure. But many say that the new legislation was not enough.
While the new law, signed by Governor Abbott in June 2021, requires power generators to prepare for extreme weather, experts have said the law ignores the major issue of the interconnectedness of the gas infrastructure with the electric grid, which led to many of the problems in February.
Moreover, the required weatherization will not be in place in time for the approaching winter. Natural gas companies are not required to prepare for harsh winters until late 2022.8 However, power generators are required to winterize their equipment before the coming winter, though the PUC's newly issued requirements are based on the standards first recommended in 2011.9
What Texans are facing this winter season
The Texas grid is not prepared for another winter storm similar to the one suffered in 2021. Even if the power generators can upgrade their equipment in time for the season, they are being held to decade-old standards that are outdated given our understanding of the increasing ferocity of Mother Nature.
But even if the power generators' updates are sufficient to withstand another harsh winter, the natural gas system will not be ready. As we saw this year, the interdependency of the grid with the natural gas providers can lead to catastrophic results. Because the gas industry is the top supplier of fuel for the state's power plants, if the gas wells freeze in another harsh storm, we could experience another series of rolling blackouts because power plants will not have the fuel needed to meet the electricity demands.10
As we have seen all too often over the past decade, climate change has contributed to a sharp increase in the amount and severity of extreme weather events over the globe. While scientists have not yet established clear connections between global warming and severe winter weather, experts say the long-term trends in climate change show that when we do experience significant cold spells, they are more extreme and last longer than any ever recorded.11 Therefore, the likelihood of Texas facing another severe winter storm is higher.
How do we get ahead of Mother Nature?
So what can we do to avoid another catastrophic and deadly failure? Some appropriate steps have been taken, such as requiring infrastructure upgrades and supplying funding to do so. But these steps are not nearly sufficient. The Texas plan doesn't take into consideration the dependency of the grid on natural gas, and it is unclear when states will be able to get their hands on money from President Biden's infrastructure bill.
And while governments need to be able to access those new funds quickly and spend them where they are needed most, more is required. As we saw in Texas, those affected by the winter freeze are seeking compensation from energy and gas suppliers.
What happened in Texas should be a lesson for world governments — get proactive about upgrading vital infrastructures and don't wait a decade to bring them up to date. It is better to pay the costs to repair and update infrastructure now than to gamble with the possibility of catastrophic loss in the future. The old saying "Pay me now or pay more later." comes to mind.
When updating our infrastructure, we need to keep in mind the realities of climate change. Preparing for what we know now may never be enough to prepare for the realities of climate change a decade from now.
Climate change is occurring faster than scientists believed a decade or even a year ago, and with it, extreme weather events are becoming more common.12 Those developing new infrastructure and updating the old should keep climate change in mind and consider whether their efforts can withstand extreme weather conditions we can't predict.
The consequences of failing to update
At least some of the money in the infrastructure bill signed into law on November 15 is specifically dedicated to infrastructure and climate change.13 And, as this article goes to press, the House passed the Build Back Better bill, which includes $550 billion to fight climate change.
But the bill faces a stiff challenge in the Senate, and no doubt an amended version will be sent back to the House.14 But will this be enough fire power to prevent the severe consequences of climate change in the coming decades? And is this too little, too late?
Some critics say that the bill isn't nearly enough, with reports estimating that climate change could cost tens to hundreds of billions of dollars each year.15 If we do not take the threat of climate change to our aging infrastructure seriously, Mother Nature will wreak havoc on our society and we will have no choice then but to pay the bill.
Conclusion
The Texas deep freeze just 10 months ago dramatically and graphically illustrates the consequences of the government's failure to address the state's energy needs. But the same is happening in other states and across the globe. The much-needed changes resulting from this past winter won't even be implemented in time for this coming winter and, once again, Texans are at the mercy of Mother Nature.
The definition of insanity attributed to Albert Einstein comes to mind when thinking of the government's approach to climate change thus far: "Insanity is doing the same thing over and over and expecting different results."
Notes
1 Emily Cochrane, Christopher Flavelle and Alan Rappeport, Here's What's in the Infrastructure Bill that Biden Signed Today, N.Y. Times (Nov. 15, 2021), https://nyti.ms/319saCu.
2 Federal Energy Regulatory Commission, Outages and Curtailments During the Southwest Cold Weather Event of February 1-5, 2011 203-209 (2011), https://bit.ly/3o6ogmg.
3 Neena Satijia and Aaron Gregg, Ten Years Ago, 241 Texas Power Plants Couldn't Take the Cold. Dozens of Them Failed Again This Year, Wash. Post (March 6, 2021), https://wapo.st/31f7HeU; Rachel Frazin, Regulator: Evidence Suggests Texas 'Absolutely' Didn't Follow Recommendations to Winterize Power Equipment, The Hill (March 24, 2021), https://bit.ly/3rn3TTX.
4 University of Texas At Austin Energy Institute, The Timeline and Events of the February 2021 Texas Electric Grid Blackouts 26 (July 2021), https://bit.ly/32BXPN2.
5 Michael E. Webber, The Texas Power Crisis Didn't Have to Happen, Am. Soc'y of Mech. Eng'rs (June 15, 2021), https://bit.ly/3Ia6g2k; Bill Chappell, 8.7 Million People Under Boil Water Notices in Texas, NPR (Feb. 22, 2021) https://n.pr/3o8qq4W; Christine Hauser and Edgar Sandoval, Death Toll from Texas Winter Storm Continues to Rise, N.Y. Times (July 14, 2021), https://nyti.ms/3pkjaT8.
6 Jaclyn Ramkissoon, Texans Sue ERCOT Over 'Negligent Management' of Power Grid During Winter Storm, KXAN (Oct. 8, 2021), https://bit.ly/31iivJv; Michelle Casady, Chevron Hit With $85M Suit Over Winter Storm Delivery Woes, Law360 (July 9, 2021), https://bit.ly/3xC9UNE.
7 Federal Energy Reliability Commission, February 2021 Cold Weather Grid Operations: Preliminary Findings and Recommendations, Federal Energy Reliability Commission 11 (Sept. 23, 2021), https://bit.ly/3E84nko.
8 Isabella Zou, Texas Power Generation Companies Will Have to Better Prepare for Extreme Weather Under Bills Gov. Greg Abbott Signed Into Law, Tex. Tribune (June 8, 2021), https://bit.ly/3FXstPt; Mose Buchele, Texas Lawmakers Passed Changes to Prevent Blackouts. Experts Say They're Not Enough, NPR (June 2, 2021), https://n.pr/3pczxB4; Mitchell Ferman, Texas Senators Blast Regulator For Power Grid Winterization Loophole Lawmakers Wrote Into Law, Tex. Tribune (Sept. 28, 2021), https://bit.ly/3pbfPFL.
9 Scott Friedman, Texas PUC Requires Power Plants Fix Issues Related to Winter Outages, NBC Dallas Fort Worth (Oct. 21, 2021), https://bit.ly/32M1p7v.
10 Mark Chediak and Naureen S. Malik, Texas Isn't Ready for Another Deep Freeze, Bloomberg (Oct. 30, 2021), https://bloom.bg/3rCqX1p.
11 Stephanie Ebbs, Historic Winter Storm Raises Questions About Climate Change and Cold, ABC News (Feb. 19, 2021), https://abcn.ws/32FKy65; Chris Mooney, How Climate Change Could Counterintuitively Feed Winter Storms, Wash. Post (Jan. 4, 2018), https://wapo.st/3damp9H.
13 Coral Davenport and Christopher Flavelle, Infrastructure Bill Makes First Major U.S. Investment in Climate Resilience, N.Y. Times (Nov. 6, 2021), https://nyti.ms/319w8em.
14 Kelsey Snell, The House Passes a $2 Trillion Spending Bill, But Braces for Changes in the Senate, NPR (Nov. 19, 2021), https://n.pr/3D6erZV.
15 Nathan Rott, Critics Say Infrastructure Bill Doesn't Have Enough Funds to Address Climate Change, NPR (Nov. 15, 2021), https://n.pr/3xKMxBF.
By Stratton Horres, Esq., Karen L. Bashor, Esq., and Taylor A. Buono, Esq., Wilson Elser
Stratton Horres is a partner at Wilson Elser in its complex tort and general casualty practice. He focuses on crisis management and catastrophic high-exposure cases. He is based in Dallas and can be reached at [email protected]. Karen L. Bashor is a partner in the firm's Las Vegas office and a member of the complex tort and general casualty practice. She also focuses on crisis management and catastrophic high-exposure cases. She can be contacted at [email protected]. Taylor A. Buono is an associate in the firm's Las Vegas office. She practices in the areas of employment defense, professional liability defense, insurance coverage advice and insurance litigation. Her email address is [email protected].
Stratton Horres, Karen Bashor and Taylor Buono of Wilson Elser LLP present lessons learned from recent tragedies caused by the failure to maintain and update infrastructure.
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