Why Was ERCOT's CEO Bill Magness Terminated? A Lesson for Utility Executives

Why Was ERCOT's CEO Bill Magness Terminated? A Lesson for Utility Executives
(Jay Janner/Austin American-Statesman via AP)
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In mid-February, Texans were plunged into a period of freezing cold and snow, causing an unprecedented demand for electricity. Alas, the Texas electric grid — operated largely by the Electric Reliability Council of Texas (ERCOT) — was unable to meet that demand, plunging over 4 million Texans into the cold darkness. The electricity shortage was not caused by frozen wind turbines or natural gas plants, but rather ERCOT mismanagement and poor planning.

What happened in February? As the cold spell hit on February 9, the demand for electricity immediately began to rise. Unfortunately, as temperatures began to drop, the wind died down, and Texas was forced to meet demand by ramping up its natural gas power plants.  Coal and nuclear were already operating at maximum capacity. 

In the late hours of Valentine’s Day, as temperatures were plummeting to their lowest, all of the dispatchable sources (coal, natural gas, and nuclear) were operating at their max. This is a very dangerous condition, as these systems are strained. They cannot produce more power and are running hard. It is like running your car with the pedal to the floor. Eventually, something gave out. One plant went offline, and this imbalance in the grid, when everything is running at capacity, is the type of event that the industry knows can trigger a catastrophic failure of the grid. It forced many more plants to shut down, and this is why ERCOT introduced rolling blackouts. ERCOT was minutes, perhaps seconds, away from a catastrophic failure that could have left millions of more Texans in the dark for days, or even weeks.

During a typical winter, Texas has no difficulty meeting electric demand. But February 2021 was different. This was an atypical weather phenomenon, which caused the electricity demand to skyrocket. However, this isn’t the first time Texas has experienced these low temperatures. Furthermore, over the last three years Texas had increased its total electric capacity from 78,000 MW to 86,000 MW, so why weren’t they able to supply enough electricity?  Seems like they were prepared.  And if they were, why was the ERCOT CEO abruptly let go?  What did he do wrong?  Wasn’t the problem wind (if you are conservative) or fossil fuels (if you are liberal)?

The problem wasn’t wind, per se, nor was it fossil fuels. The problem was ERCOT and its inability to acknowledge the limitations of wind and solar when it comes to extreme weather events, and to plan accordingly. ERCOT certainly had plenty of warning in past years that wind dies down in times of cold weather. Nonetheless, ERCOT continued to build wind energy capacity.

So why wasn’t there more energy somewhere to compensate for the intermittency of wind? Well, there was - a few years ago - but ERCOT prematurely decommissioned over 5,000 MW of coal power plants in the last three years.

The greater issue that this catastrophe revealed, however, is this: Many experts in the utility industry are painfully aware that if we are going to add wind and solar responsibly, we need to invest an enormous amount of money into backup power or batteries. However, these same experts seem unwilling to speak out for fear of being criticized; they would have to tell their shareholders that it is very expensive to have reliable power from wind and solar. Perhaps the abrupt termination of Bill Magness will send a message to those in the industry who have been silent – that it is your duty to speak up. Once they do that, Texans will not have suffered in vain.

 

Richard Axelbaum in the Jens Professor of Environmental Science in the Department of Energy, Environmental and Chemical Engineering at Washington University in St. Louis.

Phillip Irace is a Ph.D. candidate and an National Science Foundation Graduate Student Fellow.



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