By Virginia Palacios
January 23, 2024
Each winter in Texas, we brace ourselves, wondering and worrying how our power will hold if the temperature dips, and if we can adequately prepare. This energy anxiety is a result of a long history of overlapping political and regulatory forces, leading us to where we are now. While ERCOT and the Public Utility Commission of Texas (PUCT) have received deserved attention and reform for their role in grid oversight, the Railroad Commission of Texas, our state oil and gas agency, has largely avoided restructuring.
The Railroad Commission of Texas (RRC) is responsible for the rules and policies that oversee natural gas production and its transportation from the ground to power generation facilities – known as the natural gas supply chain. In 2021, roughly 48% of the electricity on the Texas grid was generated from natural gas-fueled power plants. Ahead of the 2020 – 2021 winter, ERCOT predicted that these plants would provide 59% of our electricity.
In 2011, when Texas experienced widespread power outages affecting 4 million power customers, federal officials recommended that the state oil and gas agency, the Railroad Commission, consider establishing rules to weatherize the natural gas supply chain. (Source: FERC and NERC. Aug. 2011. Outages and Curtailments During the Southwest Cold Weather Event of February 1 – 5, 2011.)
After the commission declined to pass such standards, Texas experienced widespread power outages again in 2021 during Winter Storm Uri. The second largest cause of electric power plant outages was natural gas fuel shortages. (Source: FERC and NERC. Nov. 2021. FERC-NERC Regional Entity Staff Report: The February 2021 Cold Weather Outages in Texas and the South Central United States.) Many of these fuel shortages were caused by water freezing at natural gas wellheads and pipeline components. The 2021 storm affected 4.5 million power customers in Texas, leading to hundreds of deaths, the largest carbon monoxide poisoning event in state history, and hundreds of billions of dollars in damages.
After 2021, members of the public testified and sent comments to the state legislature, and lawmakers approved a new state law to improve reliability standards for the natural gas supply chain. When the Railroad Commission opened a rulemaking to implement the law, over 900 Texans commented on the draft rules, and made them stronger as a result. (Source: Proposed new rule 16 Tex. Admin Code 3.65 Critical Infrastructure. Sep. 14, 2021.)
There are still some shortcomings in the gas supply chain weatherization laws. The penalty structure for companies that violate the safety standards is so weak that they may not deter natural gas companies from taking shortcuts. The Texas Legislature mandated that companies not be fined more than $5,000 per violation per day unless their violations were in the highest tier. When the Railroad Commission finalized the rule that implements that law, they constructed the rubric for violation categories so that it would be unlikely for violations to reach the highest tier, so most companies will be fined less than $5,000 if they violate the weatherization rules. The threat of high penalties should be more imminent to incentivize companies to comply with the rule.
How our state oil and gas agency implements and enforces those rules can also affect how well companies adhere to the standards. The good news is that the Legislature established a new Critical Infrastructure Division at the RRC in 2021, and that Division now has dedicated staff members focused on implementing and enforcing the critical infrastructure and weatherization rules, and developing guidance documents and training for operators. In RRC’s 2023 Year in Review, the agency reported total gas production per day during Winter Storms Elliott and Mara, compared to total gas demand for residences and power plants – this is essential analysis the RRC should be conducting that was not reported before 2021. The agency also reported that it conducted weatherization inspections related to both extreme summer heat and winter weatherization measures, as well as participating in a hurricane simulation exercise with the Texas Division of Emergency Management. We are also pleased to see the RRC providing some reporting in their Year in Review on the Texas Electricity Supply Chain Map. Although the map is not available for the public to view, the commission has included a link to a video of their annual public meeting with collaborating agencies and key statistics about the map — this is a helpful step toward transparency and public accountability. We would like to see more reporting from the agency on the total number of unique facilities that have been inspected ahead of summer and winter each year, and the count of violations for these facilities.
The Texas Energy Grid consists of many interlocking parts, but none of it will hold up if our oversight agencies make compromised decisions that are not grounded in data and the public’s interest. The role of the Railroad Commission is to ensure public safety and economic vitality for the benefit of Texans, but too often we see the commissioners making decisions that benefit their campaign donors at the risk of everyday Texans.
State law allows Railroad Commissioners to accept campaign donations at any time from anyone. Over two thirds of RRC campaign funds come from oil and gas interests, the industry they are supposed to oversee. What we saw right after Winter Storm Uri was state legislators and Railroad Commissioners doing all they could to protect oil and gas companies. Because the public got involved, giving testimony and writing public comments, the laws and rules came out stronger. There is more work to be done, but this experience tells us the public has power when we get involved.
