Our Perspectives on the Latest Issues
In our previous article, we explained how Pennsylvania’s energy grid became perilously close to a brownout event during last month’s winter storm. Read part one for a day-by-day breakdown of the chain of events.
In December, fracked gas and coal plants across the Pennsylvania energy grid failed at rates of significantly higher than the grid operator had anticipated.
While PJM collects more detailed information on the cause of the 2022 holiday weekend outages, their preliminary data aggregates the causes into a few categories. Most of the outages are reported to have been caused by failed plant equipment, low fuel supply, or start failure and unit trips. Outages in the last category are often a consequence of equipment or fuel issues.
Fuel supply for gas plants is an on-going concern. An operator must not only purchase sufficient fuel, but they must also have sufficient pipeline capacity for that fuel to be delivered when and where it is needed.
Gas generators can arrange for sales and delivery with either “firm” contracts (where the customer is a high priority) or cheaper “interruptible” contracts, where an order can be canceled if someone else is willing to pay more. Preliminary data shows that more than 17 percent of the gas in Pennsylvania was acquired through interruptible contracts, meaning many gas power plants would lose their supply when other consumers needed it most.
Even firm contracts don’t insure delivery. Unexpected conditions—like severe winter storms—can result in local gas utilities and gas-fired generation competing for the same supply and pipeline capacity. In those situations, the local utilities normally take priority. That’s because, if they lose gas, millions of households will have no other option for heat, not to mention the danger of re-lighting massive numbers of pilot lights. As a result, gas-fired power plants with firm contracts can have the tap turned off. It looks like this may have happened as well.
Fracked Gas is Rightfully Nervous and is Looking to Cast Blame Elsewhere
High on the list of industry talking points is the tired claim that environmental protections get in the way of their operations, and, with less oversight and fewer regulations, they could do better—we just need to trust them. Unfortunately for them, there is no evidence this is true.
Preliminary reports show that only a very small percentage of facilities reached their emissions limits and had to shut down That isn’t surprising since section 202(c) of the Federal Power Act already addresses this problem—the Department of Energy allows generators to temporarily exceed their emissions limits or operate contrary to any environmental law or regulation when needed to respond to an emergency. In fact, 202(c) was invoked on the evening of December 24, and PJM reports that several plants were able to operate for a few additional hours because of that order.
Blaming PJM itself appears to be another popular approach. The fracked gas industry is arguing that the problem was PJM making bad energy forecasts, or PJM notified plants too late to secure the fuel they need.
PJM admits that, while they historically overestimate demand on holiday weekends, this time they underestimated demand by 10 percent. But, to their credit, they also realized they lacked confidence in the forecast and went into the event with a reserve capacity almost ten times higher than they normally would want. That would have been sufficient but for the shockingly high forced outage rate.
The lack of timely notification makes even less sense. PJM reported that in 92 percent of cases, generators gave them one hour or less of notice of outages. If these facilities had fuel concerns, they should have reported that to PJM back on December 21 when PJM issued a cold weather alert, and certainly by the time a second alert was issued on December 23.
After years of claiming the mantle as a “reliable” source of energy, it shouldn’t be a surprise that the gas industry is quick to point fingers. Rather than hold themselves accountable for failing Pennsylvanians, they’re trying to bend reality so that they don’t have to pay for their mistakes. But a cold, hard look at the situation proves that the (fracked gas) emperor has no clothes.
What does this mean for Pennsylvania’s Energy Future?
Not only does someone need to pay to the energy industries failures during December 2022, but policymakers, grid operators, advocates, and industry need to take a critical look at Pennsylvania’s energy grid with an eye to reform.
But first we must get past the industry hyperbole. The fracked gas industry is already claiming that the solution is more fracking and more pipelines to create even more oversupply. That simply doesn’t make any sense. In addition to the obvious environmental and public health consequences of fracking, the economics just don’t work. We would need to spend billions of dollars to over-build vast amounts of infrastructure to guard against shortages, likely causing an unsustainable glut in the market outside of these events. Consumers would ultimately pay far higher energy prices to over-frack the Commonwealth with little benefit.
The real solution is not putting all our eggs in one energy source basket in the first place. If we diversify our generation—particularly away from resource-constrained fossil fuels and towards non-resource constrained clean, renewable energy—we will be less exposed to supply chain risks and mechanical failures. If we also invest in energy efficiency, we can mitigate peak demand so there is less need to over-supply the grid in times of crisis. And, if we expand our capacity for energy storage, we will have more flexibility—and more options—to manage the grid when we need it most.
Doing all these things requires thoughtful planning and policy, but they are the stalwarts of a modern-day energy system. What the December 2022 energy crisis is teaching us is that Pennsylvania needs to move away from an energy grid steeped in the philosophies of the last century and reflect the needs and technological innovations of today.
Conclusions and Next Steps
Each year, billions of dollars of ratepayer money goes to the fracked gas industry in the form of capacity payments in return for their guarantee that they will be available to power the grid when needed. More than 37 percent of our fracked gas plants couldn’t run when needed them most. That raises serious concerns as to the reliability of the energy sources we’re paying to underpin the grid. A broader rethink of this energy policy is needed immediately.
But most insidious is how unfair Pennsylvania’s energy system has become. It’s now dominated by a fracked gas industry propped up by taxpayer subsidies and lax regulations that struggled to keep our lights on. Their failure to live up to their commitments caused energy prices to skyrocket to historic levels. Over time, those costs of these bills—and even the penalties gas generators incurred—will be borne by small businesses, households, and other energy users.
In other words, we’ve built a Pennsylvania energy grid where taxpayers are paying for the fracking, the pipelines, and the power plants up front through subsidies, but also paying for the cost of their grid, without mentioning the monumental health and environmental costs throughout the fracking process. It’s high time that Pennsylvania rolls up its sleeves and re-thinks its energy policies that have created this unfair grid before the next storm causes real blackouts.