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good afternoon everyone and welcome to our panel discussion on tackling the texas energy crisis i'm dr jen derosa the program coordinator for energy policy and climate program here at doc here in johns hopkins university now for the past 12 months our homes have become our safe havens they've become our retreats as the pandemic wages outside yet in mid-february a series of severe winter storms turned the homes in texas into a cold confinement the moment the electricity clicked off and residents felt the warmth seep away i reached out to a number of members of our hopkins community before hosting this event and i spoke to people in houston austin texas and dallas that were affected by these substantial power outages some people stayed in their homes going 90 hours without power others contacted neighbors friends relatives and really anyone without with power in order to take their children so that their children had a warm place to sleep for several days some people slept in their homes but spent most of their days driving around in their car in order to stay warm food from the freezer was taken outside and placed in the snow and snow was brought inside and melted and then boiled to make drinkable water because the power outages affected water treatment plants and ground groundwater pumping for many people water pipes burst and damaged their homes and some of the most vulnerable people passed away from hypothermia in their own homes the events that occurred in texas in the second half of february are heartbreaking and people are still dealing with the repercussions of this tragedy as we speak today electricity is what makes our homes the ideal retreat in modern times especially modern times of strife like during this pandemic you're comfortable right now listening to me talk yes in your heated home or your cooled space you can watch movies on demand you can work remotely for 12 months you can cook anything you wish in your kitchen that's all thanks to electricity but our talk today is not on the marbles of electricity rather we're going to take a closer look at the electricity in texas and how it reaches the homes of texans and in addition to that what kept the electricity from getting to so many homes of texans in the second half of february so here with me today are two of my colleagues from the energy policy and climate program at johns hopkins university dr jeremy lin and professor alex gilbert jeremy lin has over 20 years of experience in the power industry and power markets in the u.s including 12 years at pjm which is the largest electricity market operator in the u.s he has extensive experience in the design planning and operation of wholesale electricity markets as well as power system operation planning and reliability and jeremy also published a book called electricity markets theories and applications and he currently works as a freelance consultant and alex gilbert is also here with me today he's a complex systems researcher who focuses on governance and market design for energy nuclear and space technologies he's a project manager at nuclear innovation alliance where he advances regulatory and policy reform for advanced reactors to support climate mitigation he has worked in the private sector as an energy market analyst and climate policy consultant and alex's academic work explores the intersection between energy markets and climate governance so jeremy as we get started before we discuss the events associated with february winter storms can you explain how the texas electric power grid and the energy market system is different than the eastern and western power grids of the us good afternoon everyone enjoy the nice weather now i'm jeremy lin i'd like to thank jen and dan for organizing this panel which is very timely and relevant i also like to thank jen again for inviting me to this panel and nice introduction to answer jane's question let's start with the power grid structure in the north america particularly the united states as you might know already the power grid in the u.s is divided into three major interconnections the first internet connection is called the eastern interconnection which covers the grid area on the eastern part of the country the second interconnection is called a western interconnection which covers the great area on the western part of the country the third interconnection is called the texas power grid or more correctly the r cut which stands for electric reliability council of texas alco was found back in 1970 pushed by the federal regulations to ensure the reliability of the national power grid five years later the texas state legislature created the public utility commission which has an oversight of all literary utilities in texas and by extension an oversight on our cut as well in 1996 arca became the first independent system operator aka iso in response to the growing cause for forming a competitive electricity market also known as electric system restructuring and that's happening all over the country aqua does not cover the entire state of texas it only covers about 90 percent of the state of texas for example the electric utility in el paso called the el paso electric is not part of the outcome the apostle electric has connection with the western grid in new mexico so the number of customers under our code power grids is about 26 million even though the total population in the state of texas is about 29.5 million similar to other isos or rtos where rtu stands for regional transmission organization have three major responsibilities the first one is to operate the power grid reliably the second is to conduct system planning or grid planning and the third is to run a competitive electricity market i get back to this market operation a little later the power green texas in this case occurred has two asynchronous ties with the eastern interconnection asynchronous interconnection means the dc or the direct current in interconnection in contrast to the ac interconnection the capacity of these two dc ties is about 2000 megawatts the advantage of the dc tide is that you have control over whether you allow the power flow and how much power flow you want at any given time so in terms of system operation our responsibility is to maintain the reliable power supply to meet the load demand on 24 7 basis our current is also responsible for planning for transmission system upgrades and planning to keep up with the growing load growing generation and other changes in the system so back to the market operation alco also runs a competitive electricity market within its own operating territory transmission and distribution businesses are regulated but the generation sector is open for competition so if you're a generator owner you compete in the aqua energy market for the right to produce your energy under the order and guidance our cut and the right to earn revenue generators need to earn revenue to survive in the market environment with regard to the differences in markets aqua markets has energy market only so we call it energy only market by contrast the markets in pjm and new england have both energy market and capacity market the goal of an energy market is to match the generation supply and demand in the system on day-hand and real-time basis and determine the market prices in this sense all energy markets in the country are similar so the majority or all of the generators in the energy-only market such as our cut have to rely heavily on the revenue expected from the energy market now once in a while the generation supply can be tight it can be short for various reasons in this case by market economic theory the value of the supply will go up so to reward those resources in this kind of scarcity situation energy-only markets such as alka came up with a kind of scarcity pricing plan which essentially raises the ceiling for the energy price they call it a system-wide price cap over a number of years texas puc has allowed to increase the price cap and as of now that system-wide price cap is nine thousand dollars per megawatt-hour the highest in the nation that is one of the key characteristics of the energy only market so i'm not surprised to see if you live in akka area and see your energy price goes up to 9 000 per mega hour if the supply is short this is how the energy market in texas were designed now by contrast big contrast the electricity markets in the eastern interconnection such as pjm mid-content iso for example have some kind of capacity market mechanism to compensate for what is called a missing money problem so basically the missing money problem means that the revenue that some peaking generators earn in the energy market is not enough to cover the face cost of the generator if a generator cannot recover its phase cost from any available market it will not survive economically the electricity markets in the eastern interconnection chose energy market with some kind of capacity market model because they believe that raising energy prices very high value is not politically sustainable so in those markets consumers pay extra money call it premium like an insurance to make sure that there is a sufficient amount of generators available in case the system needs them in supply shortage situation like summer peak or even winter peak i would say that although that kind of market design is not perfect the consumers in these markets do not see the price shock the cap they put in those market is called a big cap it's not a price cap so big cap means a maximum bit that each generator can bid in an energy market but the actual price can go slightly higher the big cup in pj marketery used to be one thousand dollars per mega hour before they polar vortex in 2014 and 15 then they raise that to the 2 000 per mega hour if the situation requires during these polar vortex pgn also experienced significant amount of generation outages this will be the high level view of the texas power grids and its electricity market compared with the other grids and markets let me stop here and back to jen thank you for that overview it actually really helps um one quick question jeremy in terms of uh cut what uh what would be the percentage of electricity breakdown that's coming from renewables coal natural gas or nuclear that we might kind of expect on an average day yeah so based on the 2020 uh statistics uh natural gas 5 generators provided about forty percent of their total generation uh coal fire generators provided about eighteen percent of their total generation nuclear about eleven percent and win about twenty three percent and the rest of their generation came from other types of generators like solar you know other types of generators now alex can you walk us through um the sequence or the timeline of events that happened when the cold weather started to approach the region in mid-february and sort of what happened yeah of course so um when we actually started looking at the timeline of events things actually started a little bit sooner so every single season ercot does what's called a seasonal assessment of resource adequacy what it does is it looks at what resources does it have available what power plants does it have what power plants can it call upon and what is the expected demand for that season so urkot published its final uh seasonal assessment of resource advocacy for this winter in early november and in that assessment they have several key numbers that are worth noting they had an estimate for force outage rates in terms of how many plants are expected to be forced offline in severe scenarios they have a planned outage rate units that are not available because they're conducting normal operations and maintenance of their facility and most importantly they have an estimated demand level and their estimated demand level has multiple components they have it has a normal weather scenario and they have an extreme weather scenario their extreme weather scenario estimate and this is what they thought was essentially the most severe weather they could face and the liquid need to handle was about 67 gigawatts a gigawatt is a lot of power it's about the size of one large nuclear plant or a very large coal plant and so 67 gigawatts is around the maximum capacity that texas has ever needed to serve in summer or in winter now fast forward and we get to really um first signs would be in late january but early february the first sign that something might be up is a weather forecast now because of how weather forecasting works we only have a certain level of certainty in terms of what it means for energy demand about 14 days out is when we start entering a moderate level of certainty window at that point you can start estimating whether we're going to have somewhat colder somewhat hotter with with relatively large error bars by seven days the resolution gets much finer and by about five days out there's a very high level of certainty that we will be able to estimate what the weather conditions will be like so things uh as if you're looking in uh retrospect about a week before the weather hit ercot and grid operator of the grid operator as well as power plants individually would have started to suspect that there might be an issue uh that there would there would be an extreme demand scenario now the market participants are going to be watching this uh very closely particularly the seasonal assessment of resource advocacy for those estimated numbers but also these weather forecasts because uh this is where the scarcity pricing can happen and this is where they can make their most money and so if they know five or six days ahead of time they'd want their plans to be online so that they can make money the first sign that something was going wrong was friday afternoon friday afternoon uh gas prices natural gas prices started closing and everyone started realizing the market that there was massive demand for natural gas now one thing that was unique about this storm and it's something that is a growing concern when we look at region-wide grid operations as well as energy systems operations is this was a very wide-ranging event it spanned uh most of the middle half of the country from the canadian border all the way down to mexico by the time that the event began all of texas was under a winter storm warning and so this was a very severe demand scenario and so the natural gas system was exceptionally stressed there was a lot of demand uh both across the country and in the region and so gas prices actually closed anywhere from 10 to 50 times more than they normally would be and that what that is a sign of is that there's very high demand for natural gas for industrial and commercial and residential heating as well as for the power sector and my concern as soon as i saw that i thought there would be rolling blackouts this is something that has been a major concern for a while and we have seen this historically with some other regions in the country that we have this gas supply issue that if there starts becoming a straight constraint in the gas supply system power plants are the first ones to go out now ercot in texas began to respond i believe that the governor issued a natural disaster declaration on friday but one of the things that was striking about the beginning of this event is that the stringency of what was about to happen was not obvious to the public if you compare this to the relatively minor blackouts that happened in california last summer the grid operator there kaiso as well as the rest of state was very forward with people from the beginning whereas ercot the level communication they had particularly the beginning of the event was very minimal most people were not aware that they were about to enter into tight grid conditions the next step after uh the gas price they closed on friday was that on saturday and sunday we started having forecasts for monday in terms of electric demand and this is where i think alarm bells really started ringing so remember that 67 gigawatt number that i mentioned earlier their estimated demand for monday at peak demand was 74 or 75 gigawatts because texas is historically not a winter peaking region they use primarily electric for heating and most houses were not insulated and so if you were t do a curve of the relationship between temperature and demand it slopes up much more quickly in texas than other states and because this scenario is so severe they're estimating that the demand was 10 to 15 percent more intense or worse than their worst case planning scenario that was not a good sign and that was a sign that they might have to institute rolling blackouts which is how we do manage situations when there might be supply constraints things really came to a head though on monday morning we weren't quite there yet but we were at very high demand uh 74 gigawatts as note would have been a record demand for taxes ever including summer uh by uh the evening of uh the going into sunday evening into monday morning we started having another huge issue and that was force outages now there was a moment that i think was really severe and i think um grid operators are around the country and now they know about it it terrifies them there was about 10 minutes where the entire texas grid was on the verge of collapse to run an electric grid you need to have a certain frequency you need to have about 60 hertz you can only have minor deviations from that or else it can cause grid damage because the force outage rate was so high because units that were expected to be there were not there there started being a large deviation in the grid frequency the hertz at the most severe point got down to 59.3 that might sound like that's not that big of a difference from 60 but that's a really big issue when you're talking about very expensive equipment if power plants are connected to a grid that's operated at below about 59.5 hertz for a large period of time they can suffer major physical damage and so they can only do that for a few minutes before they're forced to exit the grid to protect their equipment texas was there for almost 10 minutes if you look at when the event began and what they had to do is they had to cut almost 7000 megawatts of load seven gigawatts over the course of that 10 minutes or else the entire grid would collapse because texas does not have interconnections to the rest of the uh country it would have the entire system would have been out we don't know how quickly they could have gotten it back online it could still be offline because a lot of the units that we used to uh restore the grid in that scenario was called the black start scenario were suffering force outages so we'd actually know if they would have been available to get the grid back online so that's a really severe scenario and that's something i want to emphasize that as terrible as what happened was it could have been much worse and that would it could have been something similar to what happened to puerto rico with the hurricanes so they were able to avoid that by shedding a lot of electric demand uh but the problem was that the rate of force outages was gigantic it was much more than they expected um i think at the peak uh something like almost half of a total expected electric capacity in the state was not available uh and that was due to a number of reasons if you look at some of the resources there was a lot of focus on wind because of ice turbines uh causing problems it actually wasn't a big planning consideration they expected when not to produce too much during these type of events um there was a small unit a small issue a nuclear unit that tripped it offline for about a day and a half uh and that cut some of the nuclear generation there were some issues at several coal facilities that cut their generation but the big issue is that texas was depending on natural gas to provide the majority of a capacity during an event like this they were expecting two-thirds of their capacity to come from natural gas at points it got down to almost 50 percent of that capacity wasn't available why a number of reasons first because of that really massive natural gas demand because there were issues on the natural gas system there were wells freezing uh there were demand issues there was actually the electricity blackout started impacting the natural gas ability to move through the system uh you had a lack of natural gas availability you also had plants that were not winterized and so they suffered forced outages when they were not available at its peak the outages were about 20 gigawatts that's about as much electricity as new england consumes on average so new england a new england's worth of electricity was gone it was almost gone for four days uh and so that is a really severe event the amount of people that lost power is probably uh close to eight to 10 million for an extended period these were not rolling outages the grid was in such a fragile condition they had to cut power to everything except for importance uh parts of the grid like hospitals or else they would have lost the entire grid and even then there were a lot of issues at hospitals and other critical infrastructure including some water water infrastructure which caused some of the resulting issues uh so now that we've kind of gotten this point where um we have power back this this event's not over we're going to have to pick the texas people of texas power companies in texas are going to be paying for this for decades the the total event probably cost 50 billion dollars because of these scarcity price designs as well as issues in the natural gas system and so this is going to be continuing economic burden on the state as it tries to figure out how to move on from what happens thank you for that assessment and it actually sounds worse than i thought it was um so in your analysis would you say that the natural gas side of things was the biggest fail of the system and that is that what you're is that what you're saying and and is there any part of the system that was not affected by the cold weather just out of curiosity so the highest highest level failure here was a failure of market design and grid planning this was something that we could have figured out a way ahead of time to manage this event by having texas on a separate grid you prevented the ability to import power from other areas but the fact is el paso kept power they're on a separate part of the grid they're still in texas they kept power we had very very minor amount of outages in the adjacent isos because they're able to import power from adjacent electric grids so at the highest level this was a grid failure that said when we talked about reliability we talked about where called n plus one events basically one incident away from losing reliability or having a reliability issue the problems because this country has gone so quickly to natural gas and especially uh the texas uh the texas grid california to a lesser degree the natural gas system is an n plus one issue if the natural gas system doesn't deliver it poses a reliability threat to the whole system and our grid planning and our uh general electricity priming does not really account for how do you manage that risk natural gas is assumed to always be there it's supposed to be a firm dispatchable resource it wasn't there and the worst part is we know that happens that's happened before in the us yeah i was zoomed in a little too much you're right okay that makes more sense um jeremy so as we're breaking down what happened we all tend to have kind of a hindsight is 20 20. especially after a disaster has occurred it's really easy to look back and say well we should have done this and and to deconstruct things and and sometimes even point fingers um but can you can you explain to us for a moment especially since we have probably a broad number of people in our audience that maybe aren't familiar with this term but can you explain for a moment what is grid planning and how grid planning did or did not work effectively in this situation alex i think mentioned it a bit but can you also kind of address that as well yeah sure so in grid planning the grid planners are looking at the low forecast generation expansion equipment aging the growth of demand response and changes in the exporting port of neighboring system policy drivers etc and the planners will look at the next five to 15 years out make a lot of projections forecasts and to see if the current transmission grid can handle those changes and to see if there will be bottlenecks issues on both real and reactive power flow and voltage constraints etc so then they run their transmission analysis and other analysis and propose some transmission solutions to alleviate those potential issues they will go through their planning process including stakeholder process approved by the board in this case like archive board once these proposed upgrades are approved the respected transmission owners were built construct and operate these upgrades when the grid planners do these analysis they make sure that the system or the grid can handle what is called n minus or events i'm glad that lx touch on it and here means a number of facilities in the grid such as transmission lines generators other equipment etc so the current system in the country is well designed to handle losing one electrical equipment such as one transmission line or one generator that is not a problem but beyond the n minus one is a little dicey the grid planner also plans for what is called a minus two which means you're losing two equipment simultaneously and also like n minus one minus one so losing one equipment now and losing another subsequent but the system is not designed to handle the loss of multiple equipment such as losing a number of generators at the same time it's also called the common outages so when it comes to the extreme weather event or some unusual event whatever that may be aqua grid or any other grid was not designed to handle that type of situation like losing multiple generators or losing multiple transmission lines or combination of those if you recall the 2003 northeast blackout it started with losing a couple of lines and generators and it cascaded to the losing entire grid in ohio and new york we call it cascading failure and it is a topic related to the system resilience which means the system can withstand and recover from those cascading failure events without losing too much power so back to jim thank you for explaining that um so there has been some debate as to whether or not these extreme cold weather events especially in lower latitudes will become more common with climate change and governor greg abbott for the state of texas said last week that he would mandate and fund the winterization of power infrastructure and alex you mentioned winterization of the grid a second ago so my question is for you alex what does winterization of the texas grid involve for comparison are the eastern and western power grids appropriately winterized for the kind of storms that we actually saw in february that hit texas too yeah so that's a great question i think that that is a focus a lot of the technical solutions uh to try and move on from what happened so when you're looking at designing a power plant you face a number of design choices and engineering constraints and trade-offs and so when you are looking at how to best make money in the electric grid or to serve any sort of needs you're going to design that plant for the prevailing weather conditions as well as the potential capacity or other sort of reliability requirements so when you're looking at texas texas is historically a summer peaking grid they have had some winter storms like this which is a big issue that they have had after actual reports that found very similar things happened and there was not action taken so this was potentially preventable if that had been addressed if those winterization uh recommendations had previously been taken up but essentially the power plants are not necessarily designed to operate in sub-zero temperatures uh that compares uh differently to say a place like tjm or miso which is the middle part of the country or new york or new england where winter is one of the major planning constraints for the grid and so even the way the power plants are designed is to actually handle those weather conditions one common thing in a place uh like texas is a lot of power plants don't have walls it might seem kind of crazy but what they're trying to do they're trying to increase the ability of the power plant to cool in very hot conditions because you really want to have the maximum production when it's hot out and so not having walls not needing to cool the reactor building or the turbine building can really help your plant efficiency the problem is that and then in winter conditions that exposes your plant to the elements there's other things so the nuclear unit that uh tripped the nuclear unit had a sensor issue that led to essentially a perception that there was a feed water issue to the plant and so they went ahead and scrambled the plant and they had to take a little bit a little bit of time to restart it that was a relatively minor issue and they're going to be looking at why that happens there are things like that that are small sensor things that are relatively they seem relatively small but if you haven't been preparing for them if you're not ready for them uh your plant's not gonna be ready for them comparably uh the nuclear fleet across the country actually did very well with this uh overall event this was something that was stressing multiple grids and most nuclear units around the country were online they were not suffering force outages so there are operational lessons but there's also potentially some things that some individual operators might have done that was uh maybe not what we do in a northern latitude so looking forward it's going to be a question of can we pay for winterization i know the governor has said that i'm not sure i believe that the texas has decided previously not to do these type of winterization actions and one of the big issues here is that you're not just talking about the electric grid you're also talking about the natural gas grid um for the same reasons for like for electricity infrastructure that's just not designed for that type of weather event the natural gas grid also had issues that related to the weather and so you actually have to do overall energy systems hardening but that has a cost and if it's something that's only going to pay for itself once every 10 or 15 or 20 years that's difficult to do and one of the issues with the texas market is there's not necessarily an incentive for you to make that investment there's the hope that the scarcity price will create some sort of incentive so that after this event if your plan was offline you could say oh well this happens again in 10 years i can make a lot of money so i need to make sure my plant is winterized and ready every single year for this event that's a big financial uh burden potentially and that's a lot of money that you could be putting elsewhere and so it's not clear you're going to have that with market incentives alone so we need to figure out either by right reliability centers at a national level or by other uh sort of state policy can we encourage grid operators to make those investments we'll have another question to kind of build on that um so because we've kind of been focusing on winterization but with climate change from the weatherization and sort of being proactive in terms of climate change is we hear we've been hearing and focusing on extreme cold but is extreme cold weather more of a threat to grid resiliency than extreme hot weather which one especially in a place like texas or maybe even in a place like here in maryland or virginia or the dc region which one is a bigger threat in terms of grid resiliency or or are both so i guess i'd like your thoughts on that yeah um so that is a really good question uh in the light of climate change what we it's hard to make any sort of specific regional predictions it's unclear whether there's a climate signal in the polar vortex which is what ultimately caused this issue in texas so it caused a similar issue that didn't cause blackouts in pjm in 2014 we're not sure if there's a climate signal there but just generally looking at what climate does we do expect more extreme weather scenarios and what i would actually say is i i think that this sho ld be a wake-up call that historically we plan the electric grid on meetings peak summer demand because of air conditioning demand that's when we have to do most of it in because of climate change the air conditioning demand is going to increase it's going to potentially have reliability implications um but because of solar power because solar power is so cheap because solar power and batteries can help us get that main peak down we actually might not have the same reliability concerns at least the degree that we used to about summer peaking it might become a summer peaking and a winter peaking concern and the issue with winter peaking is because we've done this gas electric integration it's not the maximum amount of electricity demand per se but is the maximum amount of energy demand the amount of demand that we have in the form of natural gas to provide heating for houses especially for new england uh new york places like washington dc um the amount of demand that's happening overall on an overall energy basis is at its maximum in the winter when you include electricity and the natural gas system and so over time especially as we go towards renewable resources that may not perform as well in winter conditions we need to figure out how to maintain that reliability and decarbonize the whole system i think that decarbonizing winter peak demand is going to be much more difficult than electricity summer demand and that also kind of reminds me of a different question that i have and this can be for either one of you um we've been talking a bit about natural gas today is natural gas still the best dispatchable resource in our sort of future climate change world or do you see something else on the horizon that will also start to fill that void just out of curiosity yeah so so as of now the um there's so much uh you know technological advancement and natural gas not just you know big combined cycle units but they're smaller modular so you can put any place you like it doesn't take a lot of space and definitely dispatchable controllable and every assist operator you know likes this kind of resources but i don't say this would be the only gay you know that the player in you know in town because uh uh with the you know growing um you know the uh the growth of the storage resources and people are starting to see a lot of valleys in terms of like not just putting the storage you know any way you like but if you combine with like wind and combined with the solar and then that will create a very attractive uh sort of type of resources where you actually increase your controllability and dispatch ability of resources and i can see those type of resources will be you know coming into the system in a mass number in the future and um on natural gas specifically one thing i think is really unappreciated about what happened with the coal gas transition that was turbocharged when the shale revolution happened because of past infrastructure decisions we had an existing natural gas grid that was largely empty for most of the year because it was built to meet this winter demand and we also built a large amount of natural gas combined cycle units between 2000 and 2005 in fact most of the fleet came from a big boom then and so we've been growing uh the rest of the natural gas system um since the shale revolution began but we basically had a lot of slack we took advantage of that slack and now what we're seeing is it's a systematic issue so we're talking about resources nuclear units to degree coal units renewable units are kind of unique because they're a self-contained operational system a natural gas system that does not have on-site storage is part of a much natural gas plant does not have on-site storage as part of a natural gas system and so we need to think about that from a system management level and that's something where the dispatch ability might not be what we thought anymore it's not just something that's an inherent trait of natural gas it's an emerging characteristic from the natural gas system thank you for explaining that um but my question is for both of you and you guys can choose to answer them in any order um as we wrap things up and we look to the future and try to learn from these heartbreaking and painful experiences that have played out in texas over the last two weeks what changes do you anticipate will occur in texas in response to what happened from a policy and a regulatory perspective and um either of you uh can take this first yeah let me jump in first uh sure so the easy one is uh you know alex mentioned the weatherization um i think there would be no more excuses so the wind turbines in texas should be equally weatherized as those in oklahoma are not dakota if the wind turbines or oklahoma can withstand extreme colds you know why not the ones in texas so same for the other types of generators the second is a big one is the interconnection of the neighboring system uh interconnection brings two benefits economics and reliability i'm not going to say one way or the other because texans are very proud of their independence that topic of interconnection should be revisited and thoroughly studied before making a decision i will personally favor the interconnection because there are many benefits associated with it in a connection with the neighboring system it is not a policy for this type of problem but will be one of the changes that can alleviate this kind of impact from this kind of event i want to give one good example when archer started the electric utilities in texas were interconnected why they were interconnected because they saw the benefits of interconnection now if they extend that idea to the neighboring system voila so benefits will expand and if you shot i will help and if i'm sure you will help right so in terms of the capacity market i'm a little reluctant to advocate for this because texas will be again very proud of the energy only market we have the debate for a long time in power industry when occur decided to continue the part of energy only market if the high price ceiling such as nine thousand dollars per mega hour is sustainable they can continue with energy only market if it is not they have to consider at least some kind of payment mechanism for the generators to make sure that they're available during the supply shortage but it's up to the policy makers to decide whether and how they want to go with this type of compensation mechanism the last point would be the reserve merchant mandate reserve margin means extra amount of capacity available above the projected peak load could be a winter could be a summer markets like pgm myso new york all have it so i'm a little surprised to know that our curt doesn't have the mandate i think they will be coming sooner or later thank you jen so i'm going to maybe feel more cynical and i'm going to say nothing's gonna happen um and i do hate to say that but look the thing is this happened in early february it's early march now the texas legislator will be done meeting in about two months so if they need to do something they do something fast because they do not meet next year the texas legislature only meets every other year and for there to be a legislative push it's going to have to happen very quickly because it's not going to happen in two years there's not going to be the same type of urgency and so because of the things that jerry mentioned that um texas is really proud of its energy-only market it does not want to be connected to the rest of the u.s electricity system and does not want federal regulation uh they are going to be resistant to a lot of changes and part of the thing i think is really challenging when you're looking at what can they do moving forward they have a 50 billion or so energy bill that they need to figure out how to allocate and how to determine uh how to pay for and that's going to go on consumers and so these things cost money and so putting that on top of that bill they're already paying uh that's gonna be a political challenge now there are things that i think you could change and i do hope that there um might be some things that we can actually do at the national level i think nerc in particular which oversees north american electricity reliability should look very seriously at winterization weatherization standards i believe that they've already started doing so but the thing that does concern me about this is this something that's been happening for several grids and winter seasons for the last 10 years there was a similar incident several years ago in the south central um united states pj m fit faced a similar issue in 2014 which i think they've done a good job in the market side and trying to prevent moving forward with how their capacity mark it works but there are things here at the plant level that i think we could really have a better conversation about how to regulate and so if there are changes i think it might come from outside of texas and i think this actually this event might be more impactful for how other grids operate and how they deal with these types of issues than necessarily ercod itself thank you um both of you for your assessment um we'll start going to questions now from the chat our first question is coming from sarah sarah would like to know will fuel costs and other utilities outside of texas also increase in the short term as a result of the scarcity that occurred in texas and are those likely to be pushed on to consumers i think she means it presumably or customers in those regions um who would like to answer that jeremy or alex uh yeah i can take that um outside of texas it's harder to say so um when you start getting into kind of market level analysis there's a lot of weird interconnections that kind of happen across all these systems so a lot of the scarcity pricing and severe gas price effects will be uh located primarily in texas but there could be knock-on effects there were other scarcity issues in nearby electric grids that i think will have their own issues but potentially depending on whether this causes any sort of additional investment in the gas pipeline network whether there's any sort of requirements for additional um weatherization at any sort of the gas infrastructure or intellectual degree if you have any sort of things that are required of a company that operates in texas and they have multi-jurisdictional operations there could be knock-on effects it gets really complicated i don't think it's going to be that much compared to what's happened in texas okay thank you we have another question coming from chris um actually two questions the first one is is there any indication so far that generators or full fuel suppliers gamed the system in texas to curtail supply in order to boost profits two decades ago enron did something similar his second question is does the experience in ercot territory with so-called firm generation being unavailable caused the iso's elsewhere to re-evaluate capacity market design and capacity payments if thermal plants are less reliable than previously understood then will other isos change their evaluations and plans well let me jump on this so um i want to give an analogy that uh pgm experience you know the polar vortex back in field of 14 and 15. again i i mentioned about common outages when uh you know the gas supply is short or you know disrupted uh the gas fire generators also lose the gas and then they cannot produce the energy uh i don't i don't think they were there the generators the gas fire generators game the system they definitely would like to produce energy that's how they would make money i think the similar events happened uh in texas and energy crisis because of their deep freeze and i know it frees up you know disrupted their get supply uh causing their disruption and that you know gets applied to the guest fire generators and there's no gas and they have no no electricity yeah um just quickly um i think that's all right um on the gaming question in particular one thing that is unique about this event is how severe it was um there was 20 megawatts of unmet demand at some point no one in texas has that much market power and prices are already at 9 000 and so if you had anything you'd want to run at that point market power and these kind of electric systems really happens when the imbalance between supply and demand is relatively small and you can influence that with a generator we have um systems and techniques to be able to try and detect that um in this case the prices hit 9 000 and they're there for days because there just wasn't any sort of uh electricity available and there really wouldn't be any incentives to get in the system there the incentives in that situation are to run your plan if you possibly can thank you thank you for going through that um we also had another question from skyler which i didn't ask earlier so i apologize skyler um skyler asked what was the total percentage change if you guys know this from before the storm to the middle of the storm with respect to increase of demand and what caused the shortage of natural gas exactly uh so the numbers i this is ballparking but i believe is about a 40 to 50 percent increase before between um demand before the storm and projected peak demand so that's a pretty significant increase um and then uh during the storm itself the actual capacity delivers around 50 000 so compared to before the storm it really wasn't that much of an increase of it really was on that demand um in terms of the natural gas shortages we're still trying to understand that it's going to be a while until they can do the post event analysis but uh i think there are two buckets that things will fall into gas supply issues and plant level natural gas issues and so gas supply issues are things like wells freezing off um oil and natural gas production in the state and actually the region collapsed we actually saw a very large collapse in oil um production which we haven't seen in a long time um so at the well we just weren't producing um there are physical limits to how much you can get out of storage especially in a place like texas which isn't really designed to have a lot go out of storage at once for these type of events and then there were also issues in delivering the gas especially when she started having the power outages because these systems are interlinked and so there were gas compressor stations that couldn't get power to keep sending natural gas so those are the system level issues at the plant level issues it's usually going to be some sort of issue with the plant not being weatherized or potentially some sort of pressure issue that you cannot actually get pressure at that specific plant because of the upstream pipeline issues thank you we had another question um from raul besides interconnection gas and nuclear um what each community on it on an individual i think he's asking um what can an individual in a community should do to prepare for this type of event focusing on the individual level in the community level any recommendations from either of you yeah let me jump in here so so i mean you know i mean it takes us uh most of the time you know a lot of you know you have a you expose a lot of the sun so you can put a rooftop solar yourself and uh and i have a colleague in austin and he's already shared with me how proud he is having an electric vehicle a little storage and then some uh you know solar power the rooftop so he actually self-sufficient and he kept saying i don't need the power from there you know austin energy so that's one way you can do uh you can do like community solar i mean of course in winter time you're not going to give it a lot of solar energy but it's a way to sort of become self-sufficient and then you can even sell the power to the grids um in terms of community preparedness i think that's a really good question um we kind of talked about those like this was a man-made disaster it was a man-made disaster but the proximate cause was the natural disaster this was really severe weather and if we're looking at what projections are saying for climate change communities in general need to be more resilient they need to be more prepared the degree that you can do simple things like just um having a o back or something like that in case you need to evacuate a region if you're in a hurricane area or something similar making sure that you have bottled water in the house in case for some reason you lose water like what happened here having plans in case you do have some sort of power outage like this so that you have a place to go or even just being aware of what those resources are and knowing uh who to listen to when you have one these type of events this falls into i think a broader bucket of what is community preparedness for natural disasters what does that look like and what role can you play and especially if you can especially if you can afford it have extra stuff so that you can tell about your community if they need it if you have if you could have like a couple extra dozen bottles of water right now that would have really helped some people um in the height of this crisis i like your recommendation for having a go bag that's something that a lot of people i know that live on the west coast tend to have for for wildfires um one thing we do in hurricane prone areas is whenever one is coming and we know we're going to lose power we tend to fill up all of our bathtubs because we know that when we lose power we're not going to have any water but thank you for both of those recommendations so i want to thank everyone for joining us today and i want to thank our panelists one thing i also want to remind everyone that again there's still a lot of people in texas but also in other regions not in texas that are also affected by this severe weather event and power outages um so it's not just people in texas we we just focused on texas as a case study so i encourage you guys and your sense of charity to reach out to we picked food banks because a lot of people lost a lot of food but there's other ways that you can help people in these regions a lot of people suffered a lot of property damage and people need help so i encourage you to help in ways that you can i recommend if you can helping at a local food bank like north texas food bank central texas food bank or houston food bank but there are other ways that you can help in those local communities and i encourage you to do so but thank you so much for joining us today so thank you for joining us and we really appreciate your questions thank you very much thank you