Houston-based energy expert raises concerns of rolling electrical blackouts from Texas power grid

AUSTIN, Texas - The two large generators inside the main building at the Decker Power plant are now off.

The units were retired because of age and high maintenance cost. The site is an example of a growing concern regarding a gap between generation and demand.

"The last new gas fired plants, I think we're built about five or six years ago," said energy analyst Ed Hirs.

The University of Houston Energy Fellow wrote a recent Op/Ed to raise the power gap red flag.

"I think we're going to need a lot of luck to get through the summer without rolling blackouts," said Hirs.

In the article Hirs wrote in part, "new traditional power plants aren't being built for a simple reason: it’s more profitable not to build. Better for generating companies to wait for prices to spike and make a windfall than to increase supply and keep prices down. The result? Companies win, consumers lose."

Hirs is not confident the ongoing redesign of the power market by the Texas Public Utility Commission will provide better protection for the consumer.

"Absolutely. It is built wrong. The Public Utility Commissioners, the legislature and ERCOT have all been captured by the companies and the commodities traders. No one's really looking out for the shareholders of the state, the consumers of the state, the voters of this state," said Hirs.

In a statement sent to FOX 7, officials at ERCOT said the agency: "... expects sufficient generation to meet forecasted demand."  

Increasing wind and solar is part of the strategy in meeting demand. Hirs is critical of that.

"And we don't have yet enough storage capacity. And by that I mean batteries," said Hirs.

For some, the debate erodes confidence in the grid. For others like Cedar Park resident Kevin Hopcus, the debate may bring real change.

"I think it’s a good and healthy debate," said Hopcus.

Along with that optimism Hopcus has a small gas generator as a backup and is also considering installing solar shingles. A broad diversified approach he suggested state officials may want to follow.

"We have great opportunities with our buildings and infrastructures. We currently have to use renewable energies more also to make smart buildings to decrease on energy consumption, higher efficiency units that decrease on energy consumption. You know, smart sensing technology and thermostats where if areas aren't occupied, why are we calling them? Why are we heating them? You know, there is a great opportunity here for innovation and for us to save money through innovation and people thinking smarter," said Hopcus.

The idea of having a backup plan is something Hirs is suggesting for consumers.

"The message for the consumer for the summer in this winter is being prepared. You know, as ERCOT pointed out, there are several scenarios that could occur this summer where rolling blackouts will be required to keep the grid's integrity rolling and maintained. So everyone should have additional supplies of water and ability the ability to cool off somehow," said Hirs.

That’s important advice because the legislative debate doesn't start until after January when the Regular Session begins. If some type of building plan is approved, Hirs has another warning, don’t expect a quick fix. It can take up to 2 years to build a new power plant.

You can read Ed Hirs' opinion letter: Summer Grid Red Flag below:

"Three days after six power plants faltered in mid-May, prompting calls for Texans to turn up their thermostats and conserve energy, the Public Utility Commission chairman and the interim CEO of the Electric Reliability Council of Texas (ERCOT) insisted that Texans will not suffer power blackouts this summer.

That will take some luck.

Texas’ population and economy keep growing but generating capacity from traditional electricity sources does not. This summer, Texas natural gas, coal, nuclear and hydroelectric plants will provide less electricity than they did in 2010 even though the Texas economy has grown from $1.25 trillion in 2010 to $2 trillion in 2021. ERCOT has relied on growth in Texas’ nation-leading wind energy fleet and a growing solar power fleet to prop up our shaky grid. But there are limitations to wind and solar; if the wind doesn’t blow or the sun doesn’t shine, these sources can’t help in a crisis. Without cooler than normal weather, ERCOT will be short of power this summer. 

Meanwhile, new traditional power plants aren’t being built for a simple reason: It’s more profitable not to build. Better for generating companies to wait for prices to spike and make a windfall than to increase supply and keep prices down. The result? Companies win, consumers lose.

Entering the week of May 9, every generator and commodities trader knew something that the public did not -- that more than 20,000 megawatts of generators were offline for maintenance. The approaching heat wave guaranteed them a money-making opportunity. Under ERCOT rules, generators would be able to charge higher prices than normal because there would fewer generators bidding into the market, hence less competition. Sure enough, on Friday the 13th, six generators, less than 1% of the fleet, went offline and the wholesale price jumped from $100 per megawatt hour to over $4,500 per megawatt hour—a 4,400% increase. 

The entire structure of the market needs to be scrapped and redesigned to prevent this, but the PUC's May 10 contract with a consulting firm to "redesign" the market does not go far enough. And who will make the investments to build new generation?  Given that building a new gas-fired generation plant takes between 12 and 18 months with no supply chain issues, they should have started months ago to be ready for September 2023.

In establishing an independent power grid for Texas, unencumbered by pesky federal regulations, Gov. Abbott and former governors Perry and Bush followed the failed California market design too closely.  What has California done to reverse its path?  CAISO, the ERCOT counterpart in California, is contracting for new natural gas generators to help when the weather fails to provide enough wind and solar. 

California’s second strategy -- drawing electricity from other states-- is failing because the expansive heat waves that led to blackouts across California also hit California’s neighbors. Connecting to neighboring states would take ERCOT years to accomplish, and one weak grid connecting to another weak grid is no solution.  

Meanwhile, we're stuck with a broken grid in Texas -- and a hefty bill for bailing out the energy industry that failed us. The state will oversee the borrowing of billions in bonds to prop up the utilities and power generators, leaving consumers on the hook.

By any other definition, this is socialism. Texans will spend years paying it off while our elected officials continue raking in millions in campaign contributions from commodities traders and generating companies. Transparency is the hallmark of competitive markets, yet ERCOT hides behind legal smokescreens claiming that it is immune from lawsuits and cannot disclose "competitive" information from its market participants.

On Friday, May 13, we were told to set our thermostats to 78 degrees as the temperature outside soared. Just when we needed it most, state electricity officials demanded that we pay more and use less."