Colorado residents were spared from the massive power outages last week that left more than 4 million Texas households in the dark and bitter cold, about 12 million under orders to boil their tap water and an untold number coping with empty store shelves and disrupted lives.
Nor did they have to cope with the more localized outages that hit residents of Oregon, Louisiana, Mississippi, Alabama, Virginia, West Virginia, Ohio and Kentucky. Nor was a power system failure an issue here as it was with the Southwest Power Pool, which covers Kansas, Oklahoma and parts of another dozen states across the Great Plains.
The SPP instituted rolling blackouts for the first time in its 80-year history to head off a total collapse of its system as demand for power exceeded supply for several days.
“Colorado has gone through the exercise of weatherizing the system. Overall it seems that Colorado has been preparing very well,” said Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines in Golden.
But Colorado consumers likely won’t get off scot-free. The lack of adequate preparation in other states could show up in higher fuel costs on utility bills in the coming months, depending on how much regulators allow to pass through.
Extreme demand for electricity and natural gas caused short-term prices to surge. Keeping the power on in the state came with added costs the Colorado Public Utilities Commission has asked utilities to detail in a “general situational report” by Wednesday, said PUC spokesman Terry Bote.
For example, the spot price for natural gas at the Rocky Mountain-Cheyenne hub, the regional market, surged from under $3 an MMbtu (one million British Thermal Units, the measurement used for natural gas) before the cold snap to around $190 per MMbtu early last week as the demand to heat homes competed with providing fuel to natural gas turbines that generate electricity.
The Public Service Company of Colorado, a subsidiary of Xcel Energy, estimates it had to spend an extra $650 million in electricity and natural gas costs through Tuesday because of surging commodity prices, according to a 10-K filing it made last week with the Securities and Exchange Commission.
“We expect our regulator to undertake a heightened review, and we intend to work with our commission to recover these costs over time to help mitigate the impacts on customer bills,” the company said in its filing. The company also plans to expand a debt offering so it has enough money to cover the gap between paying fuel providers and collecting from customers.
To head off higher fuel costs, Tri-State Generation and Transmission Association, based in Westminster, switched from natural gas to fuel oil to power its combustion turbines early last week, said Mark Stutz, a spokesman for the member-owned power provider.
“While this weather event itself was historic, its impact on our system was not unlike weather events we have seen in previous years. Tri-State draws on a wide range of generation resources, power contracts and power purchases to help ensure electricity is available for our members,” he said.
Diversify, connect and plan
In many ways, the widespread failures in Texas are because of reasons unique to Texas. The Electric Reliability Council of Texas or ERCOT, responsible for balancing power in the majority of the state, is self-contained by design, in part to avoid federal regulations that come with crossing state lines.
Federal power regulators had asked power producers in the state to winterize better after power failures because of cold temperatures in 2011, but they couldn’t force the issue, and that has come back to bite both Texas and regulators.
Dennis Wamsted, an analyst with the Institute for Energy Economics and Financial Analysis, said the electricity market in Texas incentivizes companies to keep costs as low as possible, meaning they aren’t as likely to pay to insulate equipment and plants for the kind of “almost unprecedented” cold weather that gripped the state last week.
“I’m not sure there are any real lessons for Colorado. I think that there are a lot of places around the world, including Colorado, where we’re much more used to cold weather. Because we have cold spells far more often, there’s a lot more investment that’s been made to make sure that equipment works during cold weather,” said Will Toor, executive director of the Colorado Energy Office.
Some energy analysts and politicians, most notably Texas Gov. Gregg Abbott, have blamed renewable sources for the crisis, especially wind generation, which provides about a quarter of the power in Texas, but suffered a big drop as blades iced over and the wind died.
But utility and energy experts argue there was plenty of blame to go around and that finger-pointing works against finding needed solutions.
“This is a complex and very important issue that people need to understand. We aren’t interested in playing that political back-and-forth game. It is disheartening,” said Dustin Meyer, vice president of natural gas markets at the American Petroleum Institute.
Xcel Energy has winterized its wind turbines in Colorado and Minnesota, allowing them to perform at temperatures as low as -22 degrees, said Michelle Aguayo, spokeswoman for Xcel Energy Colorado. But even then, the turbines still need wind, which was in very short supply early last week.
Stutz echoed that, saying both solar and wind generation fell on the Tri-State system. At the Southwest Power Pool, wind generation, which represents just under a third of electricity production on average, ran about 10% on Monday and Tuesday.
But none of that came as a surprise. Grid operators knew that renewables would underperform in extreme cold and they could forecast it precisely.
“Wind production has performed as we have forecasted on a minute-by-minute, hour-by-hour and day-by-day basis,” said Lanny Nickell, chief operating officer of the SPP. “We didn’t expect to have a windy day on a subzero temperature day.”
What surprised utility operators was when natural gas, coal and even nuclear underperformed in the cold temperatures, leaving them unable to fill the gap. Even in Texas thermal sources were meeting increased demand through the weekend, until things got so cold they couldn’t.
Highlighting the importance of diverse power sources, one power authority within the SPP drained a lake to create additional power to meet demand. Hydropower from the Western Area Power Administration also came to the rescue.
Power supplies on the SPP system came up short 1.5% of demand on Monday, requiring targeted blackouts lasting about 50 minutes, Nickell said. The situation got worse on Tuesday when more power generation went offline. The system was short 6% of the power supply it needed, necessitating dispersed blackouts that lasted three hours and 20 minutes.
Still, that was better than Texas, where outages stretched across multiple days in sub-freezing temperatures. Nickell said a helping hand from neighboring states was critical. Imports from nearby states, including 210 megawatts of electricity from the Public Service Company of Colorado, averted a more severe disaster. But in the early morning and evening hours, many outside utilities had to use every drop of power to serve their own customers. And as demand rose, it became more difficult to move resources on congested transmission networks.
One lesson that Colorado and other Western states, who historically have operated with a comparatively balkanized grid, should take to heart is the importance of being connected to a bigger regional system. Having other resources to draw on in a pinch will become increasingly important as intermittent sources of power like wind and solar represent a larger share of the mix, Toor said.
Colorado utilities were about to join the SPP about three years ago when Xcel Energy Colorado backed out, citing a lack of adequate cost savings. Tri-State has moved forward with forging closer ties to the SPP, while Xcel Energy, Black Hills Colorado Electric, Colorado Springs Utilities and the Platte River Power Authority are looking to the California Western Energy Imbalance Market.
But that isn’t necessarily a bad thing, in that Colorado power providers will have a foot in two large regional groups.
“What the Texas crisis has highlighted is that thoughtful planning is essential to power systems,” Bazilian said “The technical knowledge and the ability to maintain a reliable, resilient and affordable system exists.”
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