Thread by @douglewinenergy

A presentation from @NERC_official to an ERCOT working group provides more info on causes of Feb. outages & on possible gas market manipulation. NERC’s Thomas Coleman says it wasn’t power outages that caused gas to fail and that “price majeure” is being investigated. #txlege 1/🧵

The presentation is linked below. Coleman said FERC is investigating so-called "price majeure" when gas producers/suppliers withheld contracted gas in order to get higher prices. More on this later in the thread. #txenergy 2/
ercot.com/files/docs/202…

NERC’s Coleman disagrees with the Railroad Commission and some O&G spokespeople that power shut offs caused gas supply to fail, saying we had "massive freeze-offs" & Texas "didn't have requisite winterization so gas had to be shut it." (cont) 3/
#energytwitter

After he said that, there was a question:
Q: "So starting with slide 9, where it looks like we dropped down below 10 bcf… is that fair to say that that 10 BCF drop was not attributable to loss of electric power to at least the bulk of the production?" 4/
#txenergy

NERC's Coleman: "Yes, you're absolutely right. When we look at compressor stations that are electric, it's not a whole lot of critical mass in Texas… so most of this big drop is a result of freezing & winter conditions & not a loss of power to these facilities"
#txlege #txenergy

Given the problems w/ gas, NERC's Coleman believes gas is not completely reliable as some claim:
"You run into those scenarios where you’re looking at resource adequacy, and we count natural gas generation as nameplate capacity… (cont) 6/
#energytwitter

“...to meet a reserve margin requirement but if we don't have the fuel assurance, then how much can we count on those [gas] resources? So if... you're not guaranteed to get the commodity, can you actually count that as a resource to meet your peak demand?” 7/
#txlege #txenergy

Keep in mind, though, even if you have contracted for gas, agreed to a price and volume up front, and even if that gas is still being produced, you might not get it!

Coleman was asked what "price majeure" is and how prevalent it was... (cont) 8/
#energytwitter #TXEnergy

“We did see a lot of anecdotal evidence… We all know what force majeure is, & that's an act of God that prevents somebody to perform. But where the term price majeure comes from now is if you've got an underlying commodity price of $4 a decatherm, let's say, & you've..." (cont)

"...got that price fixed on a 30 day supply contract, and now spot prices go through the roof & they’re $1,000 a decatherm, then you do have scenarios where producers/ suppliers have incentives to cut that $4 transaction & *claim* that they can't perform..." (cont) 10/ #txlege

"...and then turn around & sell it for $1,000…So there's there's anecdotal evidence of that, and so that will be part of that FERC market inquiry…"

I think of all the massive finanical fallout from February. Will producers have to pay back ill gotten gains?
11/

I think of all the small city owned gas utilities and economic damage these "price majeure" tactics caused. #txlege #txenergy 12/
houstonchronicle.com/politics/texas…

And I think of the bigger gas utilities' customers paying $3.4b over the next 30 years.

Is the @txrrc investigating price gouging that happened intra-state trading? @FERC has no authority there...
#txlege 13/

kut.org/energy-environ…

I could go on...

I also wonder if anyone at the AG's ofc is investigating intra-state gas trading anymore. At one time, Texas' AG was investigating but I can find nothing on this since March
#txlege 14/

nbcdfw.com/news/local/tex…

Takeaways:

The outages were caused predominantly by a failure of gas supply.

That failure was *not* caused by power outages.

Price gouging likely occured and anyone who engaged in that should be held to account and pay fines that go to reduce customers' bills.
15/

Finally, h/t to @gridmonitor for posting meeting video and transcript and to those who brought my attention to the WMWG where this important presentation and discussion occurred. Thank you.
16/End 🧵
gridmonitor.com