Blue skies and sunshine are seen behind Oncor electric transmission lines as North Texas begins to thaw from winter storms that brought snow and freezing temperatures on Friday Feb. 19, 2021, in Dallas. (Smiley N. Pool/The Dallas Morning News) This op-ed is part of a series published by The […]
This op-ed is part of a series published by The Dallas Morning News Opinion section to explore ideas and policies for strengthening electric reliability. Find the full series here: Keeping the Lights On.
The Electric Reliability Council of Texas hired an old hand as its interim chief executive. And that should give Texans hope that they don’t have to spend the summer digging survival bunkers and stocking up on batteries and trail mix.
When industry insiders were creating the first protocols for the Texas grid operator, veteran energy executive Brad Jones was at the table. He spent years developing generation and working with regulators for TXU, and he spent years in top roles at ERCOT. Jones has been to many rodeos.
ERCOT, still reeling from criticism over its handling of the record winter freeze, announced last week that it hired Jones, 58, as interim chief executive for up to one year as the company conducts a search for a permanent leader. He will lead the grid operator past the February outage crisis and into the crucial summer months at a time when the economy is reawakening and more people are moving to Texas, bumping up demand for electricity.
It’s not surprising that on his first day on the job, Jones declined to offer a solution to the reliability issues that led to power outages in February. He knows that all potential solutions -- building more plants, deregulating the industry, fundamentally changing the market to favor more capacity, building more power lines -- also present serious challenges.
Instead, Jones said in an interview with The Dallas Morning News that he will start by rebuilding trust. Trust with electricity companies, trust with lawmakers, trust, most crucially, with regular Texans. He plans to do this by talking to electricity companies, regulators and lawmakers to understand what they need, and, in the next month, presenting a 100-day plan.
“I expect for that plan to be very specific and very aggressive,” he said.
He wasn’t ready to say if he is leaning to one idea or another. He acknowledged that the matter of $3 billion in unpaid bills for power market trades will need to be settled. That represents money owed by wholesale buyers to power generators who sold electricity at the market cap rate during the freeze. (This extreme rate was sustained by the Public Utility Commission for days to try to incentivize power plants owners to get their plants working and back online, and the high rate ended up pushing some retailers into bankruptcy.)
The grid operator’s usual approach to handling unsettled market transactions is for all participants to pay fees to cover the costs, up to $2.5 million per month. At that rate, ERCOT might finally be finished paying for this year’s outages by the end of the century. The Texas Legislature is considering bills to allow ERCOT to securitize the IOUs, and Jones acknowledged that could put the grid operator in the unusual position of issuing bonds.
At this point, Jones said there are three components to his trust plan.
First, he said, ERCOT needs stabilizing, the company itself and the market participants.
Second, he plans to improve communication. “There were a lot of channels, and we simply weren’t doing a good job,” he said of the company’s communications efforts during the freeze. Enough jargon, he said, “we have to speak in very clear terms.”
And he said an important component of better communications is better relationships with the Public Utility Commission, the Texas Division of Emergency Management, the Railroad Commission, which regulates production of natural gas often used in power generation, and others.
Third, better dialogue on needed technical changes in the power market and ERCOT. For example, power plants were weatherized this winter, but for the ice storm of 2011, he said. This year’s storm was far worse, and ERCOT needs to look at weatherization planning.
Jones should listen to a range of voices on improving reliability. Industry insiders will be pounding on his door, but he should seek counsel from consumers, city emergency officials, health professionals and environmental experts, too. If past experience is any indication of future performance, he will.
ERCOT is a council of experts and executives from across the energy spectrum, including power generators, electricity retailers, natural gas pipeline operators, big, corporate consumers, and academics. Creating the original set of protocols that everyone could live with was surely good training for updating those protocols now.
“The development of those rules was really done by a broad group of diverse participants in the marketplace, including consumers,” Jones said.
And there’s another point on Jones’ resume that should give Texans confidence in him. Jones’ most recent job was chief executive of the New York Independent System Operator, which, similar to ERCOT, operates the New York state electrical grid. According to his LinkedIn page, he left for retirement after three years. Why would a CEO in his 50s retire?
While Jones was in New York, Gov. Andrew Cuomo set out an ambitious goal to shift power generation in the state to 50% renewable by 2030. Jones responded that meeting this goal would require an enormous investment in 1,000 miles of transmission lines, which could take many years to build. This caused some friction with the governor’s office, and Jones soon returned to Texas.
Too bad for New York, because a grid executive who can tether political ambitions to physical reality is an asset. Dramatically shifting our power grid to cleaner energy is a good thing, but it’s only a politician’s promise without electricity experts who know how to build a system to make it so.
After so many angry Texans became armchair electricity experts on social media during the February freeze, this state could use some tethering to reality.
“What I intend to do here at ERCOT is the very same thing,” Jones said of his experience in New York. “There will be times that we need to speak frankly at ERCOT about what needs to occur to preserve reliability”
Elizabeth Souder is commentary and Sunday Opinion editor and a member of the editorial board.
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