Following the February 2021 winter storm that left millions across the state without electricity and several hundred people dead, the U.S. Federal Energy Regulatory Commission (FERC) initiated a review of the electric system in Texas.
The findings were released in a November report. The contents included several recommendations to improve the Texas electric system and referred two cases of possible price-fixing by natural gas companies to its investigations department.
FERC’s analytics and surveillance division found the two cases by examining the market activity of the natural gas and electricity industries during the winter storm known as Uri. The analytics division used trade data, hotline tips, and meetings with numerous involved parties to determine if market manipulations or other crimes possibly occurred.
The examinations and meetings led to inquiries into ten natural gas companies. Regulators cleared seven of the companies of wrongdoing, referred two for investigation, and are looking further into one other company. The report did not identify the names of the companies.
If FERC’s department of investigations finds the two companies guilty of manipulating natural gas prices, they would be subject to stiff civil penalties. As of now, the investigation is still ongoing.
Winter storm Uri left more than 4.5 million Texans without electricity; some went as long as four days without power. According to the Texas Department of State Health Services, the freeze and lack of electricity killed 210 people.
Rolling blackouts were ordered during the winter storm by the Electric Reliability Council of Texas (ERCOT), which operates most of the power grid in Texas. ERCOT called for the blackouts to avoid the entire grid collapsing, as the extreme cold led to frozen gas pipelines and forced numerous power plants to shut down.
Power plant operators reported great difficulty getting natural gas during the storm, leaving them unable to generate electricity. When power plants finally could purchase natural gas, the price had risen hundreds of times higher than usual. The exponentially high natural gas prices were passed down to utility companies and their consumers, leading to some electric bills with astronomically high price tags.
“The final report on Winter Storm Uri is a sobering analysis that highlights the significant work that needs to be done,” FERC Chairman Rich Glick said. “The devastating effects of extreme cold on our bulk power system’s ability to operate in 2011 and now, 2021, must not be allowed to happen again. We have a duty to protect the bulk power system and public safety, and we will do just that.”
ERCOT recently released a statement saying that its electric generation fleet is ready for winter. ERCOT’s announcement comes after the Texas Legislature passed multiple laws requiring better winterization plans for all power plants and electricity transmission services this year. The Legislature also increased the maximum penalty for violating the weatherization rules to $1 million per day per violation.
