FERC Still Investigating Potential Natural Gas Market Manipulation During Winter Storm Uri

An initial FERC investigation that found “abnormalities” during Winter Storm Uri in February 2021 may have been caused by natural gas market manipulation, Chairman Richard Glick said Thursday.

The Federal Energy Regulatory Commission is unable to investigate some aspects of the possible illegal activity because Texas’ main power grid, the Electric Reliability Council of Texas (ERCOT), operates 90% of the state and operates independently, Chairman Richard Glick said in Houston. He spoke at S&P Global’s 40th annual CERAWeek.

However, networks in other states, which did not have power outages during the killing freeze, reported potential manipulation by Texas power generators, Glick told the public.

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“We are investigating potential allegations of manipulation that may have occurred in jurisdictional electricity markets, and we have found anomalies,” he said. “These are under further investigation.”

Loss of power from natural gas electric generators in Texas made up most of the outages identified by FERC during an extreme cold investigation. The joint investigation with the North American Electric Reliability Corp. (NERC) determined that gas generators accounted for 58% of all unplanned outages, derates, or start failures.

Review of evidence

Probing a potential manipulation, however, will take time, Glick said. Regulators will act, however, if there was illegal activity.

“One thing I’ve tried to make clear during my presidency is that if wrongdoing happens, or if wrongdoing is alleged to happen, we’re going to go after it, and it certainly will in this situation,” said Glick. “It just takes a while to sift through all the evidence.”

The extreme weather event resulted in the largest manually controlled load shedding event in US history, according to FERC and NERC. During winter storm Uri, ERCOT ordered a total of 20,000 MW of power outages to prevent a complete grid collapse. More than 4.5 million people in Texas lost power, some for up to four days.

Uri “is a great example…of why you need a resilient power grid,” Glick said. “Most of the blackouts have happened in Texas. They didn’t happen in some of the surrounding states where they had similar weather conditions in Louisiana, Kansas, Oklahoma… And those states had minor outages. But as we’ve seen in Texas, we’ve seen multi-day outages. And a lot of it, we lost businesses, hundreds of millions of dollars.

“But worse, hundreds of people died in the United States of America. People died because they had no access to electricity. We have to do something about it. And the problem is that we know that across the country the weather is different across the country, but everywhere, whether it’s out West, with dry conditions and wildfires or hurricanes or tornadoes or obviously extremely cold weather.

Will there be another Uri-like event?

The nation must “act to make the grid more resilient,” Glick said, or “we’re going to see similar situations… What happened in Texas during winter storm Uri. And part of it was extremely cold, and a lot of power plants froze in. They weren’t weatherproof enough.
However, in other areas, “they haven’t lost as much power as Texas. And the reason they didn’t is because they were connected to the rest of the network. They actually had access to transmission so they could bring in electricity. For example, in the PJM interconnect, the network operator “did a great job of…sending the excess power it had” into neighboring networks to prevent massive outages.

“Texas because it’s its own grid, and I know it’s very Texas, and the people of Texas don’t want to be regulated by FERC. But we really have to find a way to make the grid Part of that is adding more transmission capacity so people can bring power when they need it in extreme conditions.

Some have said a problem in Texas is the lack of communication between ERCOT and customers, Glick said.

ERCOT leaders “did not necessarily have a plan and strategy to ensure that natural gas producing areas had access to electricity. So whether it was a generating facility or a processing facility, they were often losing power as well and they weren’t able to supply natural gas to the generating facilities , which only made the situation worse.

Anti-Gas? Not FERC, says Glick

At the conference, Glick also discussed recent policy changes at FERC, which require natural gas infrastructure proposals to be climate tested.

Gas pipelines and liquefied natural gas (LNG) export projects are subject to scrutiny and potential permit delays due to the reviews, which are the first in 30 years.

Since some recent gas pipeline and LNG approvals have been blocked by federal courts, the policy statements would guide FERC in how future infrastructure is approved. A draft Greenhouse Gas (GHG) Policy is included to provide “legal durability” to FERC decisions.

Critics say the revisions will cripple needed infrastructure plans. Glick told the public that FERC had no choice but to comply with the courts.

“Whether we’re just figuring out whether a project is needed or not,” Glick said, “we need to consider whether it’s actually a growing area that will need more gas consumption. . But…by its nature, in that if you’re going to use the pipeline more often because it’s a growing area…the emissions are going to be higher…

“You are balancing those emissions and the climate change impact, against the benefits of the project, to meet the growing energy needs of a region.”

Ironically, on Friday, a day after Glick shared his views on the reviews, the United States Court of Appeals for the District of Columbia (DC) returned a certificate that had been issued by FERC in 2020 for a 2.1 mile loopback and compressor upgrade project. by Tennessee Gas Pipeline Co. LLC.

The project, which includes the retirement of two less efficient compressors, would provide additional firm delivery of 72,400 TND to Columbia Gas of Massachusetts and Holyoke Gas and Electric.

Environmental groups had fought the project based on a lack of emissions data. The court found that FERC needed an environmental assessment for the project to comply with the National Environmental Policy Act.

Glick said Thursday he has met with nearly a dozen pipeline executives so far regarding FERC’s revised guidelines. The leaders, he said, “expressed great concern about some of the uncertainties they suggest we have raised in these policy statements.”

Noting that he spoke only for himself, Glick said: “I think we need to at least address some of those uncertainties, provide a bit more certainty as to what we mean by some of the provisions in total…

“There is still work to be done and there is always work to be done because the proof will be in the pudding. When we actually look at these…permit applications for LNG facilities or pipelines. That’s when we’ll see how we implement them.
FERC also faces other challenges, including reviewing the national grid to ensure its reliability, Glick said. The nation also needs “more transmission, potentially to reduce congestion, to…give consumers access to more economic power.” In addition, interconnection issues are under consideration.

“We have a ton of new electric generation, in many cases because the developers want to bring the generation online, but it takes years and years and years, study after study. And we examine it in a very fragmentary way. So, we are trying to figure out how to speed up the process and at the same time build a long-term transport network, reduce the time for the new generation to connect to the network? »

Many state policies “encourage” wind, solar and storage construction, Glick noted. “Obviously, utilities are also looking to go green. And they can’t because we can’t bring these projects to the interconnection.

It is complicated

The FERC chief said it was “very difficult to explain to people around the world how our utility systems are regulated because we have state, federal and regional enemies. It’s very difficult. Cities get involved.
The East Coast is a story in itself, with “the massive amount of offshore wind being developed. There are people who are now talking about doing it in California, here and in the Gulf of Mexico, for example.

“But the biggest weakness is that it takes a lot of investment and infrastructure to access these facilities in order to interconnect them to the grid. And that’s something that FERC is also looking at in our rulemaking process.

FERC wants to “break down barriers,” Glick said. He expects the Commission to soon publish “several regulatory proposals addressing some of these issues, including interconnector reform, and in particular interconnection as it relates to offshore wind…

“And then hopefully by the end of the year, early next year, we’ll be able to implement the final rules and look at removing barriers to new technology.”

FERC’s job is not to promote technologies, Glick said. However, “we are supposed to break down barriers to technology. Often these market rules that have been written across the country were written long before some of these technologies, such as wind, solar, and hybrid technology, etc., were economically efficient.

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