Texas is experiencing electric blackouts. Bill Marcus is a highly respected energy expert. He sent this analysis to a list I snipped out. Bill tells the story of the current Texas blackouts and the follow-on suffering in New Mexico and, as well, the financial impact on California. You won't get Bill's spin in the MSM.
Gene Coyle Begin forwarded message: > From: "Bill Marcus" <[email protected]> > Date: February 3, 2011 10:01:00 PM PST > > Subject: FW: Yahoo! Finance Story - > > Here’s an article about New Mexico Gas curtailments. > http://finance.yahoo.com/news/Natural-gas-cutoffs-affect-apf-3608090486.html?x=0 > It wqas caused in part by blackouts in Texas due to weather that screwed up > gas processing plants. And the gas curtailments are heading west to > California – where there are non-core (thank goodness not core residential > and small commercial) curtailments today in Southern California to try to > keep as much of the core gas on as possible in New Mexico. And the spot > price is heading through the roof. > > We’ve figured out one of the reasons why these problems in New Mexico and > California happened. It got cold in Texas and 50 – count them 50 – > conventional powerplants shut down because of burst pipes, frozen coal > piles,and other cold-related problems that Texas is not prepared for because > dereg means “don’t spend money on powerplants to protect against things that > are unlikely to happen.” (Though all the conservative Republicans are > spinning that it was entirely the fault of windmills because the wind stopped > blowing and TXU’s fault for stopping the construction of 8 coal-fired > powerplants out of “political correctness” – never mind that they wouldn’t be > there yet, and never mind if they were there, they would be charging $1/kWh – > so we’d have economic, not physical blackouts). So they called rotating > blackouts. And they blacked out a lot of facilities that process natural gas > to send it west. > > The end result is that New Mexico core customers and California non-core > customers are suffering to keep electric heat customers toasty (with only > minor interruptions) in Dallas and Houston. We he3re in the West, where > conservatives claim that environmentalists cause problems, thought we weren’t > interconnected with Rick Perry and the Texas Utes, but we were wrong. > Because Rick and his ERCOT friends drank the dereg Kool-Aid but don’t know > how to deregulate competently. Dereg begets blackouts, but Texans don’t know > how to run blackouts and blacked out gas processing plants – which not only > took the gas out in New Mexico but took out a bunch of their own powerplants > that could have run except they couldn’t get gas. > > And I wouldn’t be surprised to see in retrospect that it didn’t have to be > this bad, but a bunch of excuses, delayed maintenance, withholding, and other > things to keep pool prices artificially elevated in Texas. Right Eric > Woychik? > > And it fundamentally comes back to cost allocation and rate design. The > Texas utilities and PUCT act as if winter peaks are non-existent, because > it’s in the industrials’ best interests, and the bid’ness of Texas is > bid’ness. All transmission costs (and generation costs in the parts of Texas > that aren’t deregulated) are allocated on 4CP summer. The non-deregulated > utilities (like Southwestern Public Service – a subsidiary of Xcel Energy out > of Denver) follow that into rate design with steeply declining blocks in the > winter. I fight them (for the Texas Office of Public Utility Counsel). I > either lose or get a few crumbs in a settlement. It’s the same virtually > everywhere in the south (with a partial exception in Arkansas, which > allocates some fixed costs to energy using an average and peak method – but > even they have some declining blocks that need working on). Declining block > rates low in the winter plus low industrial rates because baseload plants are > allocated by summer peak. > > I have been fighting electric heat promotional rates for 13 years, starting > in 1997 with Virginia Power, which didn’t only have declining block rates but > legally bribed developers to install electric heat, calling it an “energy > efficiency” program, when it didn’t pass the participant test – raising costs > to everyone who got handed a subsidized heat pump. [And I lost there.] > > Of course, the end result is that they end up with lots of electric heat in > Texas (like other places in the South). Electric heat uses more gas than > burning the gas in people’s houses if gas is at the margin, and produces 400% > as many greenhouse gases if coal is at the margin. But no one cares, because > global warming doesn’t exist anyway, right? So we can just make more > electricity off-peak in the winter if folks need it. > > Except when we can’t and we screw up New Mexico’s gas system for the next > week trying to send guys out to turn on gas house by house so we don’t blow > someone up with an unlit pilot light (remember the 1996 rate case of PG&E > when they tried to propose doing that once every 30 years with a straight > face?!). Thank you PUCT. Thank you ERCOT. Thank you Rick Perry. Thank you > utilities who think you can make money by going all-electric and making life > difficult for gas companies (an idea that went out of fashion almost > everywhere but in the South in the 1970s). > > It’s a wonderful country. And it’s more interconnected than you think. > > Bill > > > P.S. Will a NASUCA member please forward this to NASUCA and will an NCLC > member please forward this to NCLC.
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