February 19, 2021

As It Recovers from Its Own Winter Storm, Can Texas Take Lessons from the 2014 Northeast Polar Vortex?

Holland & Knight Energy and Natural Resources Blog
Todd F. Kimbrough | Graham T. Coates | Dane McKaughan
Energy and Natural Resources Blog

The winter storm that recently hit Texas has caused more power outages and damage to the electric grid than any storm in decades. However, extreme weather events have hit other regions of the U.S. more recently, and Texas may be able to gather lessons from those prior experiences. In particular, the polar vortex that hit the Northeast U.S. in 2014 shares marked similarities with the 2021 Texas storm.

In January 2014, a polar vortex, similar to the Texas storm, engulfed the Northeast region, with several states experiencing some of the lowest recorded temperatures in 20 years. Regional electric grids suffered near-catastrophic failures as a generation fleet heavily reliant on natural gas was unable to secure gas through constrained interstate pipelines. As natural gas generation went offline, available capacity reached near-insufficient levels, causing large spikes in power prices and mitigation measures by grid operators. The massive price spikes caused during the polar vortex were ultimately passed through wholesale markets to consumers and caused significant disruptions in retail supply electric markets in the region. The underlying weather and operational issues of the 2014 polar vortex closely resemble the 2021 Texas storm.

Since the 2014 Northeast polar vortex, state public service commissions and regional grid operators have evaluated the unique threat a winter peak presents to the electric grid. After identifying threats, meaningful state policy and wholesale market solutions implemented by ISO New England (ISO-NE), New York Independent System Operator (NYISO) and the PJM Interconnection (PJM) and coordinated among the states have to some extent mitigated the problems of winter peak demand in the region.

While no two situations are identical, Texas regulators can look to the solutions and analytical frameworks employed in the Northeast as Texas now grapples with a winter peak crisis of its own. At the direction of Texas Gov. Greg Abbott, the Public Utility Commission of Texas (PUCT) already has opened a project to examine the winter storm and this project could be a platform for an evaluation akin to the one conducted by state commissions in response to the 2014 polar vortex. Similarly, it is likely that robust examination of the Texas storm will occur at the Electric Reliability Council of Texas (ERCOT) stakeholder committees in a way that resembles the work of ISO-NE, NYISO and PJM related to the 2014 polar vortex. These reviews must grapple with new frameworks for evaluating system reliability, including integrating more robust winter protections for the grid, streamlining curtailment policy and expanding the discussion around available capacity within ERCOT. In some respects, the Texas process may be simplified by the fact that it relates almost entirely to one independent system operator (ERCOT) that is governed by a single state commission (PUCT). The one thing that is clear is that a thoughtful and deliberate examination of the events related to the power outages should improve policies in the future.

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