Natural gas companies in Texas won't be able to opt out of winterization mandates for their facilities simply by checking a box on a one-page form and paying a $150 fee — a possibility that has been viewed as an Achilles' heel in ongoing efforts to bolster reliability of the state's electricity grid.
The Texas Railroad Commission, which regulates the oil and gas industry and created the potential winterization loophole, moved Tuesday to tighten the opt-out requirements from its original proposal.
Under a rule adopted by the commission, operators of critical natural gas infrastructure — such as big production and storage facilities and pipelines directly serving gas-fired power plants — can't opt out at all. Those that are eligible to do so "must provide objective evidence demonstrating a reasonable basis and justification to support an application for an exception," according to the agency.
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An initial draft of the plan prompted a firestorm of criticism over the past couple of months because it would have allowed companies in the sector to designate seemingly any of their facilities as "not prepared to operate during a weather emergency" — and thus not subject to winterization mandates — by filling out the one-page application form and paying the $150 fee.
Public interest groups, energy experts and a number of state lawmakers lambasted the initial proposal, saying it would result in a major weak leak in the state's interconnected power grid.
"The $150 exemption by the Railroad Commission for gas facilities is a huge hole in the regulatory structure to ensure a reliable gas supply," Dave Tuttle, an Energy Institute research associate at the University of Texas, said of the initial proposal.
A lack of consistent natural gas supply for gas-fueled power plants was among the top causes of the widespread and lengthy power outages during February's deadly winter freeze, according to the Federal Energy Regulatory Commission — coming in second behind a lack of winterization at power plants of all types.
The natural gas industry has scrambled since the disaster to avoid blame and the potential for increased regulation, with its main lobbying and trade organization — the Texas Oil & Gas Association — paying for a report issued in April that largely absolved it of responsibility.
The gas industry has contended that power generators largely failed first and then triggered a wave of outages across the state's power grid — including at natural gas production facilities that need electricity to operate.
But the Federal Energy Regulatory Commission found otherwise, concluding in a final report on the crisis issued about two weeks ago that only 22% of the declines in natural gas production could be attributed to rolling blackouts or issues such as downed power lines, and that the production downturn started before the widespread outages.
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Despite those findings, Railroad Commission Chairman Wayne Christian bristled at the notion Tuesday that the gas industry bears an outsized portion of responsibility for the power outages.
"While no form of energy performed perfectly during (the crisis), the insistence that natural gas producers are the primary culprit of the February blackouts is pure hyperbole," Christian said.
Regardless, he and the other two members of the Railroad Commission voted to approve the final version of the rule that will make it harder than the initial proposal for companies in the sector to opt out of winterization mandates for their facilities.
The $150 opt-out application fee will remain, however, with Christian noting that the commission doesn't have authority over the amount of the charge.
Members of the Texas Public Utility Commission, which oversees power generators, praised the final version of the Railroad Commission's rule, saying it will make the power grid more reliable.
"This is a fundamental reason why we will be better — (power generators) will know where the critical natural gas facilities are," said Peter Lake, chairman of the utility commission, speaking earlier Tuesday.
Under certain circumstances, generators still might have to cut power to natural gas facilities deemed critical, but Lake and others said the new rule will help them prioritize those actions.
At least 210 Texans died for reasons related to the severe winter freeze in February. More than 4.5 million lost power for extended periods, with some going days without electricity.
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