September 29, 2021

FERC and NERC Issue Critical Report on February 2021 Freeze

Holland & Knight Energy and Natural Resources Blog
F. Alvin Taylor Jr. | Brendan H. Connors
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At the open monthly meeting of the Federal Energy Regulatory Commission (FERC) on Sept. 23, 2021, a joint team composed of the staffs of FERC, the North American Electric Reliability Corporation (NERC) and NERC's various regional entities presented a preliminary report regarding the February 2021 winter storm that afflicted Texas and the Midwest.

The report analyzes the root causes of the power outages caused by the freeze and highlights the actions taken in response by the affected balancing authorities, focusing particularly on measures taken by the Electric Reliability Council of Texas (ERCOT), the Southwest Power Pool (SPP) and the Midcontinent Independent System Operator (MISO). The report then outlines certain preliminary actions it recommends that these entities take to prevent, or mitigate, the harm caused by any future, similar weather events.

In analyzing the reasons for the extended power outages caused by the freeze, the report identifies the freezing of generator components and natural gas supply shortfalls as the primary culprits. The report blames the generator freezing mainly on the failure to sufficiently "winterize" the units for cold weather conditions. In turn, it attributes the natural gas supply shortages to the combined effects of decreased natural gas production, the specific terms and conditions of natural gas commodity and pipeline transportation contracts, and other issues such as low pressure. Conversely, the report concludes that SPP, MISO and ERCOT's reliability coordinators effectively coordinated with one another to manage the constraints imposed upon the grid by the freeze.

The report then makes 28 separate recommendations, including nine "key" recommendations, to be implemented across one of four time frames. Among the "key" recommendations are:

  • revising reliability standards to require generator owners to identify and protect cold-weather-critical components
  • forcing owners to winterize new units, or retrofit existing ones
  • allowing owners to recover the costs of doing so
  • requiring gas facilities to implement cold-weather preparedness plans
  • hosting a joint FERC/NERC/Regional Entities technical conference to discuss how to improve generator winter readiness

Finally, the report recommends certain subjects for further study, including researching:

  • black start unit availability in ERCOT during cold-weather conditions
  • additional links between the ERCOT Interconnection and the Eastern, Western and/or Mexico Interconnections
  • potential measures to address natural gas fuel supply shortfalls during extreme cold-weather events
  • potential effects of low-frequency events on generators in the Western and Eastern Interconnections
  • establishing a guideline with criteria for identifying critical natural gas infrastructure loads

A final, full version of this report will likely be released in November, so interested parties should continue to monitor FERC's actions in this arena.

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