|It’s been a busy week. |
I’ve been doing lots of media and podcasts (as a guest and a host) over the past few days and doing lots of interviews to figure out what is going on at ERCOT and at the Capitol. The entire Texas political system has been knocked cattywompus by the Texas Blackouts and the slow-rolling financial disaster that has ensued. Every day, new details are emerging about the grid mismanagement and incompetence that left dozens of people dead and caused untold billions of dollars in losses. No one knows how much it will ultimately cost, but two things are obvious: this mess will take months, or perhaps years, to fix; and consumers are going to pay for this disaster. Several items this week: Blackout Week continues on the Power Hungry PodcastJuice is still free on RokuTwo Forbes articles on the Texas BlackoutsYellow-rumped (Audubon’s) warblers in the house! er, yardMedia hitsNote: The photo at the top of this note was taken in McKinney, Texas, during the blackout on February 16, 2021. Credit: Cooper Neill/Bloomberg
|J. Paul Oxer on the Power Hungry Podcast: wind and solar don’t generate electricity, they harvest it. The third guest in Blackout Week (which has been extended) was J. Paul Oxer, an independent power developer who has worked on a panoply of electricity projects over his 40+ year career in the industry. I met J. Paul about 20 years ago while I was writing my first book, Pipe Dreams: Greed, Ego, and the Death of Enron. J. Paul worked at Enron for four years before it collapsed. That experience, and many others, give him a unique perspective on the power industry, deregulation, and what happened in Texas. During the first few minutes of our conversation, he said “what we’re really doing with renewables is harvesting energy, we’re not generating energy.”|
Like all the other episodes in Blackout Week, my talk with J. Paul is getting lots of downloads. You can listen to it here.
|John Harpole on the Power Hungry Podcast: natural gas is a strategic fuel for America Like all of the other guests who’ve appeared during Blackout Week, John Harpole has decades of experience in the energy sector. John is the president of Denver-based gas broker Mercator Energy. He began working in gas markets while working for General Electric in the late 1980s and has been in the business ever since. We talked about how ERCOT’s mishandling of the rolling blackouts ended up cutting off juice to some of the natural gas plants and pipelines that were needed to deliver that gas to homes and electricity generators. He skillfully explained how gas markets work, ERCOT’s failure to heed the lessons from the 2011 blackouts, and why natural gas should be seen as a strategic fuel for the United States.|
Early in our talk, John explained that Texas has an “energy-only market, which paradoxically, rewards scarcity.” That observation gets close to the heart of the cause of the electricity crisis in Texas and the mistake Texas politicians made when they birthed this disaster back in 2002. That is: We don’t want electricity to be scarce. We want electricity to be abundant, cheap, and reliable. We want plentiful reliable electricity because the electric grid is the Mother Network, the network upon which our entire society depends.
John is an expert in every aspect of natural gas. He is also a dear friend of mine (and a lousy ping pong player). If you have a moment, give the episode a listen.
|Reminder: You can still watch Juice for free on Roku! |
If you haven’t seen our documentary yet, here’s a quick reminder: you can view Juice: How Electricity Explains the World, on Roku, for free. Just click this link.
|Last Sunday, I published a piece in Forbes which pointed out what is becoming painfully obvious: low-income ratepayers are going to get hurt the most by the Texas Blackouts. I wrote: The first law of plumbing is that poop rolls downhill. That law also applies to how costs are allocated on electricity grids. And it is about to be proven again in Texas in the wake of the deadly blizzard and blackouts that pummeled the state earlier this month. There are many things we don’t yet know about the Texas Blackouts that plunged more than 4.5 million customers into the dark. But this much is certain: low- and middle-income Texans will end up footing the biggest bills for the disaster in the form of higher electricity rates and/or higher taxes.I concluded the piece with this:Here’s the bottom line: Texas residential ratepayers are about to be hit with a triple whammy. They will have to pay electricity bills that will be far higher due to increased electricity use during the blizzard. Second, they will be on the hook for any defaults by ERCOT market participants. And finally, they will be paying more for electricity in the future because the state will have to upgrade its electric grid. Those upgrades should include (if sanity prevails) winterizing generation units, requiring some generators to have on-site fuel storage, and making capacity payments to generators to assure the grid has reliable, dispatchable power that can be called on when it is needed. The Texas Blackouts are the result of one of the biggest government failures in modern history. Texas residential electricity ratepayers — and low- and middle-income Texans in particular — are going to pay a hefty price for that failure.Please give the piece a read and pass it on.|
|On Sunday, I published a piece in Forbes regarding another painful fact about the Texas Blackouts: the state of Texas will have to intervene to bailout ERCOT. I wrote: As the losses, lawsuits, and bankruptcies caused by the Texas Blackouts pile up, it’s no longer a question of if the state will have to step in and rescue the Electric Reliability Council of Texas, it’s a question of when it will happen and how much it will cost to winch the state’s beleaguered electricity system out of the financial ditch. A bailout is inevitable for two reasons: The Texas Legislature created ERCOT’s energy-only electricity market and it’s the only one that has the authority to clean up the mess. Second, the state is the only entity with the financial resources that will be needed to rescue the grid operator, which is in the midst of a liquidity crisis. Those facts lead to another hard fact: much of the cost of the multi-billion-dollar bailout will be borne by ratepayers, and in particular, low- and middle-income Texans. Since I published that piece, news reports indicate that ERCOT overcharged customers by about $16 billion and that the system operator was being encouraged to roll back some of its charges. To be sure, getting a handle on the exact amount of money that will ultimately change hands is difficult. But the most-common estimates of the electricity charges incurred during the blizzard put the total at about $50 billion. Thus, even if $16 billion is subtracted from the total, that still leaves another $34 billion that will have to come from somewhere. As I note in the article, the Texas Rainy Day Fund has about $10.7 billion. Thus, this electricity catastrophe could wipe out that sum and much more.|
In my conclusion, I quote J. Paul Oxer, who, as noted above, was a guest on the Power Hungry Podcast earlier this week. He told me on Thursday morning that the blizzard was bad, but “the real storm is coming.” He also said, “ratepayers and taxpayers are going to wind up shouldering the biggest share of the costs and those costs will be measured in billions.”
Please read the full piece.
|Yellow-rumped warblers! The feeders and birdbaths in our yard have been much quieter since the blizzard. The clouds of cedar waxwings and flocks of American robins have left for other locales and we have seen only one or two hermit thrushes since the snow melted. But we are seeing some beautiful visitors, including yellow-rumped warblers (Setophaga coronata). I am lousy at identifying warblers but I can easily identify “butter butts” — as my mentor, Peggy Wall, calls them — due to the big flash of yellow feathers on their posteriors. Around Christmas, I saw flocks of yellow rumps numbering dozens, or even hundreds, in the pecan trees near Barton Springs Pool. Since the blizzard, I haven’t seen any large groups of them, but am seeing ones and twos in our yard and during walks on Barton Creek. My 1960 edition of Roger Tory Peterson’s A Field Guide To The Birds of Texas, doesn’t have an entry for the yellow-rumped warbler (or butter butt warbler). Instead, it calls it Audubon’s warbler. It’s one of a handful of birds who have (or had) more than one moniker. (The image above is a snap of the illustration in my vintage Peterson’s guide.)|
We’re heading to Big Bend next week and will be on the lookout for cactus wrens and my favorite desert bird: Gambel’s quail.
|Media HitsOn Thursday, I was on the Institute for Energy Research’s podcast with Alexander Stevens talking about the blackouts. Here’s a link. |
On Wednesday, I was on Fox 26 News in Houston again talking about some of the points I made in Forbes regarding the potential costs to ratepayers of the ERCOT bailout. Here’s a link to the segment.
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