Averting Rolling Blackouts: At What Price?

June 28, 2012 5:00 am by: Brian Baresch

Warnings of possible rolling blackouts are common in extreme weather, but they rarely actually happen. Photo by Dave Fehling/StateImpact Texas

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By Dave Fehling, StateImpact Texas

With this week’s triple-digit temperatures in Texas and the resulting demand for electricity for air conditioners, there’s been concern over rolling blackouts.

The state’s Public Utility Commission may vote today on a plan some say will spur the construction of more power plants to satisfy a growing population.

But ensuring blackouts never, or almost never, happen, whether in the heat or the cold, could cost you hundreds of dollars a year.

One day in February last year, temperatures plummeted across Texas. Dozens of ill-prepared power plants froze up. With too little electricity to meet demand, what followed were eight hours of rolling blackouts statewide.

Utility companies had procedures to spare certain customers with critical needs, like airports and jails. But in Dallas, electricity was cut to several big hospitals.

“I think it caught us by surprise,” said Sandra Minatra at Methodist Dallas Medical Center. She says their emergency generators ran for two hours.

“Most any hospital’s going to have a backup system, but you don’t want to turn to relying on that if you don’t have to,” Minatra said.

The utility in North Texas, Oncor, later apologized. But the incident showed how rolling blackouts can be complicated.

“I think anytime you take the power off a customer’s home it’s a big deal,” said Kenny Mercado, who manages the grid in Houston for CenterPoint Energy, which runs electricity to over 2 million customers.

Mercado says rolling blackouts are necessary in a shortage to keep the whole statewide system from collapsing. But with the exception of that day in February, he said, “It just doesn’t happen, I wouldn’t even say it’s once every 10 years, it’s once in a long, long time.”

But now there are warnings that in the next couple of years, Texas will face a greater risk of blackouts because it isn’t building enough new power plants.

“We turn up all the generation that we can,” said Dan Woodfin of ERCOT, which manages the statewide electricity grid. “Ultimately, when we get to where we basically have no reserves or very little reserves, we start having to do rotating outages.”

Last summer, the hottest on record, ERCOT got close six times but avoided any actual outages. Which raises a question at the heart of an ongoing debate: Just how much of a reserve margin is needed?

Because here’s the thing: Building more power generation is costly, and those costs will be passed on to consumers.

But not building more might only mean an increased risk of having your power cut off a couple of hours a year.

Sam Newell is a consultant hired by ERCOT to analyze, in part, how often the state would have to have rolling outages to “shed load,” as it’s called.

“You can plan on a very high level of reserves and almost never have to shed load,” Newell said. “That would be more expensive than maintaining a lower reserve margin. And there’s got to be a balance somewhere.”

At a meeting earlier this month, Texas Public Utility Commission Chairwoman Donna Nelson indicated that Texas needed bigger reserves for the sake of the state’s image.

“We want to get the message out ‘Texas is open for business,” Nelson said.

Nelson even said that suggestions that the public reduce energy use during the summer’s hottest days shouldn’t carry the threat that failing do so would lead to outages.

“We don’t want to say, if you don’t we’ll have rolling outages, OK?” she said. “So it’s a fine line to walk.”

Nelson and the other two commissioners have supported the idea of dramatic increases in the peak price allowed for wholesale electricity.

They hope the higher prices would encourage private companies to build more power plants.

But one industry group said the higher prices will add billions of dollars to the cost of electricity statewide, meaning residential customers each will pay hundreds of dollars more a year.

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