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    New ERCOT CEO's first priority is restoring trust. Fixing the grid is more complicated.


    October 3, 2022 - Shelby Webb, Houston Chronicle

     

      Oct. 2—Pablo Vegas, the recently named CEO of the state's grid manager, said his focus will be restoring trust and confidence in a power system that failed in the winter of 2021, struggled through record-breaking demand in the summer of 2022, and faces more challenges as electricity consumption grows with the state's population, further stretching generation.

      "The best thing that we can do to rebuild trust is to continue to operate and execute reliably and to be transparent about it," Vegas said in an interview with the Houston Chronicle. "We have to let people know what we're doing and why we're doing it. We've taken some steps to help kind of open up the curtain a little bit as to what's happening with the operations of the grid."

      Vegas assumes the leadership of the Electric Reliability Council of Texas on Sunday. ERCOT's board of directors named Vegas as CEO in August, replacing interim CEO Brad Jones, who took the helm of the state's grid manager after the 2021 power outages plunged millions into freezing darkness for days on end.

      ERCOT, a private nonprofit supported by fees charged to buyers and sellers of wholesale power, will pay Vegas a $990,000 base salary, along with a one-time payment of $247,000 and up to $420,000 annually as part of a short-term incentive program.

      Even with that pay, Ed Hirs, an energy fellow at the University of Houston, said he would not take the job. He said Vegas will largely be an administrator working to enact the decisions of others.

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      "This is like being appointed the new coach of the Dallas Cowboys," Hirs said. "He has no control over the players he's inheriting, he has no control over the situation he's inheriting, and he really has no ability to change it without the cooperation of his CEO, which would be Gov. (Greg) Abbott or the Legislature."

      Vegas is no stranger to Texas, though. He was the head of American Electric Power, or AEP Texas, for years before leading that company's Ohio division and eventually becoming president of NiSource, a utility with operations in six states.

      He said those experiences helped him branch out from technical skills honed in control rooms, using computers to control and direct the outflow of power. They taught him the importance of personal relationships, he said.

      "You can never accomplish anything you need without buy-in and support," he said. "You can't make everybody happy with every decision. But what you do is you try to keep the end goal at the forefront of your planning process, and you work towards that end goal, and in the end you find ways to compromise and a chart pathways forward."

      His short- and long-term goal for ERCOT, he said, is reliability.

      But much of the decision-making that goes into making the grid reliable will be out of his hands, at least for the time being. The Public Utility Commission has yet to propose a wholesale electricity market redesign requested by lawmakers in 2021. Until that happens, and until lawmakers in the 2023 legislative session give their approval, Vegas won't know the shape of the market he'll be tasked with managing.

      In the meantime, he plans to continue practices instituted by interim Jones. Among them is ERCOT's more conservative operating posture, paying generators to keep plants humming in the wings in case the power is needed. Jones and PUC chairman Peter Lake have said that operating posture helped prevent emergency conditions multiple times this summer.

      But generators have said the units that are forced to run are already decades old — in some cases more than 50 years old — and have not had the time to come offline for maintenance, increasing the likelihood of breakdowns. Those operating measures could cost electricity customers $1.5 billion through the end of this year, according to ERCOT's independent market monitor.

      "We have to continue to support reliability," he said. "The market redesign is going to address some of the longer-term issues associated with why we have to do the conservative operations today. But in the interim, reliability has to be at the forefront of what we do, and we're always going to try to be as efficient as we can be within the operating parameters we have."

      The wait for the power market redesign has also hamstrung efforts to build more thermal generation, such as natural gas- and coal-fired power plants. Generators are unwilling to invest hundreds of millions of dollars into new power plants when they do not know how they might earn a return in yet-to-be-determined market.

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      Renewable energy projects, particularly solar power, are filling some of the gap. Solar generating solar capacity in the state could more than double by 2024, according to ERCOT, rising from 12,791 megawatts in August to as much as 29,174 in January 2024. One megawatt is enough electricity to power about 200 homes on a hot summer day.

      Vegas said that additional generation will help meet the state's growing power demand, and a projected tripling of utility-scale batteries — as much as 8,464 megawatts in storage capacity by January 2024 — will help keep the grid stable by pumping out power when renewables are offline. But his predecessor and PUC chairman Lake have expressed concerns that without more thermal generation, the state could be left without enough power on "cloudy and still" days.

      Vegas said the batteries will be useful when, say, demand peaks on a hot summer day as wind generation begins to drop off. But he agreed with Lake and Jones that more plants fired by natural gas will be needed to support intermittent wind and solar generation.

      "We're going to have to continue to retain the ones that we have, make sure that we can finance and support them economically in the market model," he said, "but also we need to look at what's the next generation that we're going to build."

      ___

      (c)2022 the Houston Chronicle

      Visit the Houston Chronicle at www.chron.com

      Distributed by Tribune Content Agency, LLC.

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