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Texans Pay the Price for Weak Oil & Gas Oversight

Hotter summers and colder winters continue to stress the state’s power supply. After Winter Storm Uri in 2021, utilities have largely raised prices for Texans as a way to pay for a lack of planning.

The public voiced their concern about natural gas wellhead and pipeline failures -a key driver of the blackouts- by submitting record numbers of comments on Railroad Commission rulemakings that followed Winter Storm Uri. As a result, some changes were made that will help to ensure that gas is available for power plants during extreme winter weather, but the rules fall short of securing the total amount of gas Texas will likely need during another event like Winter Storm Uri. Additionally, the commission is known for allowing generous exceptions to its rules.

A poorly weatherized natural gas supply chain means that we can expect gas shortages and price spikes during extreme weather events. Consumers have had to face rising costs from Winter Storm Uri, and we could face more in the future.
These increased costs make inequality even worse. More families are burdened with a higher portion of their paycheck going to their electricity and gas bills.
After Winter Storm Uri, the Railroad Commission approved higher gas utility rates so that the utilities could pay gas transmission companies that made billions from price spikes during the storm.
Instead of pushing higher prices onto everyday Texans, the Railroad Commission should hold the gas well and pipeline operators accountable to strong safeguards that ensure gas supply to power plants, protect people, and take into account a worsening climate.

Texas and a Changing Climate

Winter Storm Uri in 2021 resulted in power outages that led to the deaths of at least 246 Texans and billions of dollars in economic losses. Commission Shift has weighed in on the Railroad Commission’s failure to prepare the natural gas supply chain for extreme winter weather. In the 2021 regular legislative session, lawmakers passed Senate Bill 3 requiring the commission to adopt rules requiring weatherization of the natural gas supply chain as a preventative measure, but these rules don’t go far enough.

We continue to highlight the commission’s management failures as well as the increased electric and gas bills that will result from securitization of market-driven extraordinary costs brought on by scarce gas supplies during the freeze. Collectively, Texas ratepayers are on the hook for decades, paying billions of dollars for a few days of power outages.
The climate is getting even more intense in Texas. We need the state agency that oversees oil and gas – the Railroad Commission – to plan ahead for a changing climate. Instead of chastising renewable energy and greenhouse gas emission reduction interventions, the commission should be planning for more extreme weather.

At Commission Shift, we will push the Railroad Commission to make decisions based on science, not politics, to ensure a steady stream of energy for our state.

Weatherizing Our Energy Supply

Weatherization refers to protecting the electric grid and the natural gas supply chain from extreme heat and cold. A failure to insulate natural gas pipelines and well heads is what led to some of the worst power outages during Winter Storm Uri in 2021.

State leaders neglected weatherizing the grid and the natural gas supply chain years before the 2021 winter storm. Over 10 years ago, when Texas experienced widespread power outages affecting 4 million power customers, federal officials recommended that the Railroad Commission “investigate whether minimum standards for the winterization of gas production and processing facilities should be adopted.”

After the commission declined to pass such standards, Texas experienced widespread power outages again during the February 2021 winter storm. The 2021 storm affected 4.5 million power customers in Texas, leading to hundreds of deaths and the largest carbon monoxide poisoning event in state history.

After 2021, lawmakers approved a new state law to improve reliability standards for the natural gas supply chain. But it’s not strong enough.

The penalties for companies that violate the safety standards are so weak that they may not deter natural gas companies from taking shortcuts. The Railroad Commission needs to make these safeguards tougher to protect people from power outages.

In most cases, penalties could be less than $5,000 per violation, even if an operator that produces the highest volumes of gas (> 5 million cubic feet per day) was deemed “reckless” and created a potential hazard to public health or safety. Such low penalties might lead operators to accept the violations as cost of doing business, rather than paying to weatherize their equipment, leaving Texans at risk of more widespread blackouts.

The importance of this weatherization rule cannot be understated. Creating clear and effective processes for operators to follow will help to ensure the safety and reliability of the natural gas supply chain and our state’s electrical grid.

Bailouts for Oil and Gas Companies

After Winter Storm Uri in 2021, the Railroad Commission approved “securitization” for natural gas utilities. These are guarantees that Texans will pay back billions of dollars charged to their utilities by major gas transmission pipeline companies.

In other words, our energy bills will be higher in order to pay back companies that profited the most from Winter Storm Uri. Lawmakers have not taken any steps to make investments in energy efficiency for buildings, which could help Texans reduce their utility bills during both summer and winter extremes. Instead, state leaders have done all they can to protect oil and gas companies.

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.

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