Federal authorities launch investigation into energy market manipulation, note other issues during winter storms in February

Investigators suspect market manipulation resulting from the winter storms in February. Two natural gas companies are under federal investigation.

AUSTIN, Texas – In a report On energy enforcement, auditors from the Federal Energy Regulatory Commission (FERC) reported two natural gas companies.

Listeners told the commissioners about the alleged market manipulation during the February winter event known as Winter Storm Uri.

Manipulation affects supply, impairs the reliability of the power grid and increases costs.

“We looked at the price rises or falls associated with market players, as well as their gross revenues and expenses in the gas markets,” said Kevin Dinan, legal counsel in the Office of Law Enforcement at the FERC.

The auditors forwarded the files to the ministry’s investigation unit. The names of the companies are not being disclosed.

“This review is continuing as new information comes to light,” Dinan said.

It comes two days after FERC, North American Electric Reliability Corporation (NERC), Midwest Reliability Organization, Northeast Power Coordinating Council, ReliabilityFirst Corporation, SERC Corporation, Texas Reliability Entity, and Western Electricity Coordinating Council released their February 2021 Storm Report.

Agencies made 28 recommendations in Texas, including recommendations for weatherization, how to better forecast electricity demand, and increase rotational capacity in blackouts.

“We know what happened in 2011, the last time recommendations were made to require generators to winter in Texas. They’ve been diluted into voluntary guidance, ”FERC President Richard Glick said at the committee hearing on Thursday.

This year, Texas lawmakers passed a law requiring power companies to winterize based on guidelines from ten years ago. The Public Utility Commission published its rules for weatherization on the basis of the new law. Meanwhile, the PUC regulates the state’s electric utilities.

“You had the problem of winterizing the generators. And then you had a second major reason, which was the failure in many cases of gas supply to these units, ”said FERC Commissioner Mark C. Christie.

This federal report shows that February’s power outages were mainly due to freezing temperatures and the supply of natural gas. During the February storm, weak natural gas suppliers caused more than a quarter of all power outages, according to the report.

The gas supply is operating according to the expectations of a typical year. The report shows that natural gas suppliers did not stock enough reserves to meet demand from the storm, leading to problems, such as low pressure from pipelines to reach power producers. Low pressure reduces the ability to generate electricity.

The Texas Railway Commission (RRC) new rules proposed around when the flow of natural gas can be restricted to certain customers so that the resource can reach others.

Under the proposal, gas utilities will follow a priority list during any downsizing event. The proposal shows that the top priority would be “firm deliveries of natural gas to customers with human needs and firm deliveries of natural gas to local distribution systems serving customers with human needs”. The second priority would be “firm deliveries of natural gas to power generation facilities”.

Nothing will change for this winter season.

“We have two very distinct problems to solve: extreme weather events and blue sky problems – when we do not have adequate resources on an otherwise perfectly normal day due to intermittency,” said the president of the PUC, Peter Lake, in working session Friday.

The Winter reliability assessment 2021-2022 released Thursday predicts that Texas has a 0.05% chance of a winter event like last February. Resource data shows that ERCOT projects have higher reserve margins than last winter.

“With an anticipated reserve margin of 42%, the capacity reserves in the RE-ERCOT area of ​​Texas are sufficient to meet the expected peak demand and to cover the types of severe weather events regularly encountered in the region,” indicates the evaluation.

These capacity reserves drop to 26.8% if the state suffers a “typical failure”. The assessment shows an anticipated reserve margin for extreme conditions at -37.1%.

“We know that we don’t have enough distributable energy, distributable resources in ERCOT. We know we’re going to have to put money on the table somewhere to pay for these resources, ”Lake said.

Public comment for the rule change proposed by the RRC will end on Friday January 7th. The proposed effective date is April 1.

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