Quest for cheap fuel led to rolling blackouts

Print
Email
|

by BYRON HARRIS

Bio | Email

WFAA

Posted on February 8, 2011 at 8:14 PM

Updated Tuesday, Feb 8 at 9:41 PM

AUSTIN — On the eve of another potentially bad winter storm, state officials are wondering what they can do to prevent another electric disaster.

Dozens of power plants had to shut down last week when they lost the natural gas they use to produce electricity. On Tuesday, the Texas Railroad Commission heard that the blackouts may have happened because power companies tried to save money by buying cheap gas.

All was serene in the hearing room of the Railroad Commission. The questions and answers were polite.

But Ron Kitchens, chairman of the Texas Energy Reliability Council (TERC) delivered a tough message in a velvet glove. He said last week's blackouts were not the fault of the natural gas industry.

Here's why: There are two kinds of gas contracts — "firm" and "interruptible."

"Firm" contracts are almost guaranteed. They are the last contracts to be cut off.

"Interruptible" contracts can be cut off in a pinch, but the gas is cheaper.

Power companies save money by buying an interruptible gas supply.

According to Kitchens, no electric company with a firm contract lost its gas supply last week. He would not agree that the blackouts were motivated by profits, but the TERC chief did concede that the power companies that lost their fuel supply tried to save money by buying cheaper gas.

"That's correct. But they are in business to make money, and when they aren't generating electricity, they aren't making money," Kitchens said.

Power companies are warned in advance when their supplies will be interrupted. It's up to them to try to solve the problem.

In a deregulated market, the lowest price electricity is king. That means the less one pays for gas to generate the power, the cheaper the price to consumers.

That's great — until the gas gets cut off and the power stops flowing.

The Railroad Commission heard that there were problems with gas delivery last week, the result of frozen pumps in gas fields and in well servicing. Some pipelines were stretched.

The industry says it is working to prevent that from happening if another weather event occurs.

E-mail bharris@wfaa.com

Print
Email
|