Texas Electric Grid Faces Uncertainty in 2012 — Energy | The Texas Tribune

Texas Electric Grid Faces Uncertainty in 2012 — Energy | The Texas Tribune

Texas, meanwhile, faces a unique risk. Among the nation’s contiguous states, it is the only one that has its own electric grid, and this relative isolation means less outside help is available in emergencies.

Donna L. Nelson, the chairwoman of the state’s Public Utility Commission, which oversees the grid operator, said the state is struggling to get enough power capacity for several reasons, starting with a new federal Environmental Protection Agency regulation. The cross-state air pollution rule, which takes effect Jan. 1 unless a federal court orders a stay, aims to reduce sulfur dioxide and nitrogen oxide emissions from power plants.

Luminant, a giant power generation company, plans to take two units of its 1970s-era Monticello coal plant in Northeast Texas offline in January because of the rule. (A third unit will keep operating but use cleaner coal.) Texas state regulators, citing blackout risks, have protested the timing of the EPA rule. But environmentalists argue that Luminant should have anticipated the regulations. Another EPA rule, announced this week and aimed at reducing mercury and other air toxins emitted from power plants, will not take full effect until 2016.

Another challenge is the drought, which remains troublesome despite recent rains. The plants that produce coal, gas or nuclear power need lots of water for cooling. This year one coal plant already had problems, and ERCOT says some 3,000 megawatts — about 4 percent of last summer’s peak demand — could be at risk by May if severe drought persists.

Looking beyond immediate cooling needs, Doggett said, water constraints could hinder planning of new gas or coal plants. A decision this year by the Lower Colorado River Authority, a Central Texas utility, not to sell water to a large proposed coal plant called White Stallion in southeast Texas was something of a wake-up call, he said.

“We normally think of a plant as being a fairly sure bet once they get their air permit and their interconnection agreement with the transmission company,” he said. “But we’re beginning to rethink that, and believe that we probably need to add their water availability to that list.”

A third difficulty, from the standpoint of regulators and electricity generators, is that profit-driven energy companies are not motivated to build new plants when power prices are low. Through September, power prices in Texas were down 2 percent from the same period last year, according to federal data, and they are down more than 15 percent from highs three years ago, largely because of falling natural gas prices associated with the shale boom.

An Independent Texas is in the Sights of Big Federal Government.

Time to Limit Federal Government.