Testing times for Texas electric co-ops a year on from knockout storm

After last year’s freeze almost collapsed the grid, new measures have been put in place – and a court case over the bill is imminent

Earlier this month the state of Texas went into a cold snap – the first since a prolonged severe winter storm nearly knocked out the grid, a year earlier.

The storms in February 2021 knocked out half the US state’s power plants, sparking a shortage that saw electricity wholesale prices peak at US$9,000 per megawatt-hour and left 4.3 million people without electricity.

Electric co-ops were left with huge debts to the state’s grid operator – forcing Texas’s largest and oldest electric co-op, Brazos Electric Power Cooperative, to file for bankruptcy.

Brazos, which serves 16 distribution member co-ops that supply more than 1.5 million Texans, was landed with a US$1.8bn bill from grid operator ERCOT (the Electric Reliability Council of Texas) and filed for bankruptcy to protect its members.

Last August, the co-op filed a complaint within its bankruptcy, rejecting ERCOT’s claim for the payment of the bill and seeking to substantially reduce the amount. It argues that the charges are constructively fraudulent and excessive.

In October, Texas assistant attorney general Jason Binford rejected a motion by ERCOT to dismiss the case, which is now set for trial on 21 February.

Another of the state’s co-ops, Rayburn Country Electric Cooperative, has this week sold US$908m of bonds to pay off in full its power bill from the storm, averting the possibility of bankruptcy.

The 2021 storm left the state’s residents and power suppliers fearful of a repeat but the weather that hit Texas this month was much less severe. It caused many local power outages through downed power lines but the grid held up.

It was the first test for the changes put in place by state lawmakers, regulators and power providers, who have spent 12 months working to identify the causes of the outages and build resilience in the infrastructure.

Julia Harvey, vice president of government relations and regulatory affairs at Texas Electric Cooperatives, the apex body representing 76 co-ops serving more than 4 million members, told an interviewer that lessons had been learned from the crisis.

Speaking to the website of NRECA, the national body for electric co-ops, she said the cold weather had affected the transmission of natural gas to power plats, leaving several generators unable to operate at full capacity. “The loss of fuel access for electric generation became a multiple-day event,” she said.

This prompted changes to legislation and public utility regulations, with more than 4,000 access points on key utility infrastructure inspected since September, and enhanced measures put in place to boost resilience to extreme weather. More work is being done here, and a new critical infrastructure map has been created by regulators, allowing certain gas transmission assets to be designated as essential and prioritised by electric utilities.

Asked how confident she is that “co-op voices are being heard” in the process, Ms Harvey said ERCOT and regulators had been “very good about communicating with all segments of the industry – including co-operatives” in the run-up to this year’s freeze.

“We feel like we have a seat at the table from the co-operative perspective and our concerns are being heard and addressed,” she added.

She added that the new rules meant a repeat of the surge in indexed retail rates to US$9,000 per mWh is now prohibited has now been prohibited, with the maximum wholesale price limited to $5,000.

The 2021 power crisis also showed “the importance of maintaining diversified ‘all options’ generation portfolios that provide service and pricing flexibility,” she said. “We support an all-of-the-above energy strategy that allows the evolution of our market design to make sure that with that growth of renewables, that conventional thermal dispatchable generation still has a place in Texas to back that up.”