The Railroad Commission of Texas has adopted the state’s first weatherization rule for natural gas facilities to protect gas flow to power generators.
The commissioners approved weatherization standards set forth by Title 16 Texas Administrative Code (TAC) §3.66 on August 30. The new Weather Emergency Preparedness Standards rule, also known as Statewide Rule 3.66, implements provisions in Senate Bill 3.
This bill was passed by the Texas Legislature and signed by Governor Greg Abbott after Winter Storm Uri in 2021 and its adoption comes a year and a half after the storm.
The standards will harden natural gas wells and pipelines in Texas, requiring critical gas facilities on the state’s electricity supply chain map to weatherize. This policy will be based on facility-specific factors with the aim of ensuring sustained operation during a weather emergency.
The rule will also work to correct any issues that caused weather-related forced stoppages occurring before December 1, 2022. Companies will contact the RRC if they maintain a weather-related forced stoppage during a weather emergency.
Critical facilities covered by this rule include natural gas wells and oil leases containing natural gas wells, saltwater disposal wells, gas processing plants, all intrastate underground natural gas facilities, and gas pipelines that directly serve electricity generation on the electricity supply chain map.
“These new rules ensure our state’s natural gas supply chain is prepared for extreme heat and freezing cold,” said RRC Chairman Wayne Christian.
“However, as Texas adds 1,000 new residents a day, the long-term solution to meeting our state’s energy needs must include building more reliable and affordable natural gas-fired electric generation,” Christian continued.
The railroad commission was instructed to adopt modified rules by the Texas Legislature in Senate Bill 3 passed in 2021. The legislature also gave the commission authority to enforce fines for failing to conform to the new weatherization standards.
The proposed rule creates a table of violations that assigns point values for each rule broken, with fines allocated accordingly. Fees range from $3,000 to $1 million per violation.
Some consider the fee structure to be too lenient, suggesting that it would be cheaper for power companies to pay the fines rather than spend money to meet the new standards.
For example, Texas Competitive Power Advocates claimed that it would be “almost impossible” for a company to accumulate enough points to be placed in the worst tier, where fees can reach $1 million daily.
“Thus, any penalty is likely to be $5,000,” the organization said. “While we do not seek to make the penalty provision overly punitive, they should be designed in a way to incentivize compliance with the applicable weatherization requirements and deter operators from taking shortcuts and failing to address non-compliant operations.”
The railroad commission insists, however, that “Operators who intentionally disregard the weatherization rule will not get away with paying a low penalty. The penalty structure in the rule places a stiff enforcement action for those who do not properly prepare their facilities for weather emergencies.”
