CEO’s Message – March 2021
Blackouts in Texas and Grid Reliability
The extreme cold weather event during the week of February 15 made headlines in the United States and worldwide. The electrical grid, water systems and natural gas delivery in Texas experienced catastrophic failure, leading to power blackouts, and water and gas shortages like nothing ever experienced before. This month, I want to explain some of the reasons why this failure happened and reassure you that our wholesale power provider is prepared to continue providing reliable electricity to you.
The main reason for this failure in Texas was ultimately that its power grid, water and natural gas systems were not winterized, and therefore unable to withstand the extended cold temperatures over multiple days.
Several other factors contributed to the breakdown of the Texas electric grid. The Texas power grid consists of only Texas generation and transmission facilities. It is not a multi-state, regional system like most other grids in the country. Therefore there was a limited pool of energy available to supply the significantly increased demand for electricity.
Additionally, Texas’ generation facilities rely on natural gas for roughly 60% of power generation. The cold weather put unsustainable demand on this resource. In addition, some bulk natural gas systems froze up, which cut off the supply of gas to the generation facilities, further impacting energy production.
Finally, electrical distribution in Texas is deregulated, meaning that independent third parties can buy bulk electricity and sell it directly to end-use consumers. During the week of February 15, the cost of wholesale power in Texas jumped from less than $50/MWh to $9,000/MWh. This increase caused Texas’ independent third-party electricity providers to pass these costs on to their customers, leading to extremely high electricity bills.
Our wholesale power provider Great River Energy is a member of the Midcontinent Independent System Operator (MISO). The MISO system runs from Manitoba through the east central part of the U.S., down to Louisiana, and is split into three separate areas. Great River Energy is in MISO North, which operated very well during the February polar vortex.
Great River Energy’s power supply resources, which include coal-, gas- and fuel oil-based power plants as well as wind energy, performed as planned for the extreme weather event. Because MISO called for a “maximum generation” event, all Great River Energy generation was operating at full capacity during this time to meet the demand for electricity.
Great River Energy’s coal-based Coal Creek Station and Spiritwood Station operated throughout the cold weather with no issues. Great River Energy’s peaking stations operated as designed, injecting electricity onto the grid quickly and dependably when needed. Most of Great River Energy’s peaking plants are “dual fuel” facilities, which means they can operate on fuel oil when demand for natural gas is heightened.
Additionally, Stearns Electric and Great River Energy utilized a robust demand response program to curtail electrical use during peak times. A number of load control events took place during the week of February 15 to reduce the demand for electricity.
Last June, I talked about Great River Energy’s power generation portfolio transition and explained how Great River Energy is planning to retire its 1,150 MW Coal Creek Station. Great River Energy also plans to utilize natural gas as a fuel at its Spiritwood Station power plant, and upgrade the capacity of its existing peaking plants.
With the upcoming retirement of Coal Creek Station, we continue to work with Great River Energy and ask future strategy questions on behalf of our members. We want to ensure Great River Energy’s generation resources are sufficient to continue providing reliable energy through potential weather events like these.
Additionally, it’s important to note that Great River Energy’s natural gas and wind generation power plants are weatherized and prepared for both extreme cold and extreme heat weather events.
Stearns Electric continues to promote grid reliability through Great River Energy, MISO and our own distribution system. Being part of a regional integrated electric grid and diverse energy mix assures that we have electric service reliability during extreme weather. We are up to the challenge of achieving reliable service and cost competitive electric rates, while being sensitive to consumer preference for alternative forms of energy.
Robin C. Doege