US utility firms spent big preparing power grid for storms – and still failed

Electric utilities spent billions after 2014’s polar vortex to ensure power plants and the grid could handle extreme cold, but this winter it still wasn’t enough.

US utility firms spent big preparing power grid for storms – and still failed
National Grid vehicle is seen near downed wires in Buffalo, New York, in December 2022. (Jason Murawski Jr / Reuters)

Published in the Guardian

The warnings to residents in the Southeast United States came right before Christmas: Delay washing clothes or running the dishwasher, and curb hot water use until the bitterly cold temperatures eased up.

It still wasn’t enough for two of the nation’s largest electric utilities.

As temperatures plummeted to 40 F (4.4 C) in a few hours, and gale force winds swept across the region between December 23 and 24, the pre-holiday preparations were put on pause as Tennessee Valley Authority (TVA) and Duke Energy implemented historic rolling blackouts lasting about 30 minutes to an hour.

By some accountsm, the utilities’ inability to supply power during the extreme weather almost plunged the entire Eastern United States into darkness. And in some parts of the country, as much as 63% of the outages came from natural gas plants, according to the PJM Interconnection, an organization that operates the largest regional power grid in the United States.

The near miss came after those two utilities, among others, spent billions preparing the grid for such a storm after the 2014 polar vortex, when record cold weather exposed vulnerabilities in the power grid. Yet, despite those investments, when the cold hit again last year, equipment at natural gas and coal-powered plants throughout the Southeast still froze.

Clean energy advocates and grid experts argue the December weather proved the growing number of natural gas plants, which now supply more than one-third of the nation’s electricity, are not the right choice to deal with extreme weather and are delaying a move to less climate-polluting alternatives.

Despite that, Duke, Southern Company, TVA and others are looking past that argument and building more gas plants anyway. “They don’t seem to see the writing on the wall that gas is not this (dependable), reliable resource,” said Maggie Shober, research director at the Southern Alliance for Clean Energy.

Yet, some say natural gas is the best option for right now, as utilities close older power plants and add more renewables, steps that upend the traditional power grid.

“Gas, nuclear, coal are sometimes less reliable, but they are more reliable than renewables,” said Paul Patterson, a financial analyst with Glenrock Associates LLC who follows utilities.

Elected officials and industry experts have formed a blue-ribbon panel to study what went wrong across TVA’s seven-state territory during the storm, and Duke officials told its state regulators in January it has started an internal review.

What happened?

Because the demand for electricity was so high compared to the supply of electricity, a wide swath of the nation’s power grid was at risk for extensive blackouts that could have been as severe as the north-east blackout in August 2003, one Duke Energy executive told a hearing.

Had Duke not purposely reduced the amount of energy demand pulling on its grid, the stability of the Eastern Interconnection — the bulk electric system that stretches from central Canada to Florida and west towards the Rockies — was at risk, said Sam Holman, Duke’s vice president of transmission and system operations at a January hearing of North Carolina’s utility regulator.

He compared the possible outcome to what did happen during the Northeast blackout in August 2003. “Allowing the physics to solve the problem was what we were defending against in (Duke’s territories) when we made the decision to shed load,” he said.

If Duke and others had not done rolling blackouts, they put the grid at risk, “and that risk comes in the form of an uncontrolled loss of the system,” Holman said. “We weren’t the only ones, there were others that were struggling during this same period of time,” said Holman, “Everybody was tight (on electricity supplies). There were just no purchases to make.”

Like Duke, TVA said it proactively implemented a multi-step plan to ensure grid stability that included asking customers to conserve electricity and cut power to large industrial companies before turning to rolling blackouts, a spokesperson said.

“TVA and the local power companies were extremely successful in implementing the plan to safeguard the bulk electric grid,” TVA spokesperson Scott Fiedler said.

Southern did not comment on whether the severity of the challenges to the power grid threatened the Eastern grid as a whole.

The plants that were running used so much natural gas that pressure declined in the pipelines, causing problems for other utilities that needed gas. “I don’t think (the electric companies) have really taken into consideration how extreme cold and extreme heat is going to put a stress on their gas plants or the coal fleet,” said David Neal, a senior attorney with the Southern Environmental Law Center.

As plants began to fail, Southeast utilities looked to purchase additional power from the Northeast and Midwest. But that demand exceeded the supply as Christmas neared and temperatures dropped.

The problems were on top of a high-tech software failure that miscalculated how much electricity would be needed. The software’s computer models told utilities they had plenty of power for the storm. But utilities now say the software’s predictions were off by as much as 10%, leaving them with a demand they were unaware of and unable to fill.

“It was a mess,” said Simon Mahan, executive director of the Southern Renewable Energy Association (SREA), who closely followed the storm’s effect on the power grid and collected data from government and other sources to show its impact.

With electricity demand higher than expected and power plants not working, utilities had limited — and few cheap — options. So, some utilities started running their power plants on another type of fossil fuel: oil. “They end up running even more polluting fuel to try to mitigate those price spikes,” said Neal, of the Southern Environmental Law Center.

Polar vortex lessons

This wasn’t the first time such a systemic failure occurred because of extreme weather. The 2014 polar vortex similarly caused the system to freeze and knocked dozens of plants offline. After that, utilities said they needed two things to prevent a repeat: a more resilient power grid and more power plants.

With the blessing of state regulators, the companies spent or are spending billions on the electric system to improve it: $75 billion for Duke Energy to create a stronger grid, $17 billion for Southern Co. to improve older power lines and $18 billion for TVA to upgrade its power plants and fix older power lines.

“Our commissions expect us to plan to these extremes,” said Stan Connally Jr, chief executive of Southern Co. Services, a unit of Southern Co. that, among other things, oversees the utility’s entire power grid.

After utilities build new plants, they keep some older plants, including older coal or oil plants, to operate when demand is highest. After the polar vortex, the industry said it needed more “just in case” plants, with some electric companies in the Southeast asking to have at least one-quarter of their power plants on backup.

Following the storm, Alabama Power, owned by Southern Co., decided to build one huge power plant, buy two others and purchase electricity from a third to increase the amount of “just in case” power. All of the plants are powered by natural gas.

Leaning on gas

While advocates argue over-reliance on gas is a big problem with the grid, utilities and regulators say gas plants have fewer emissions than coal plants, cost billions less to build than nuclear and can run more often than renewable energy.

Over the last seven years, gas has replaced coal as the dominant source of power across the nation, and utilities are adamant it must remain a significant fuel source for the power grid for decades to come.

“Natural gas has to have a place in this conversation,” Connally said.

Indeed, people are talking about natural gas after the December freeze — but not in the way the utility industry would like. More than two dozen gas plants didn’t work as expected across the eastern half of the United States, which contributed to the rolling blackouts.

Utilities like TVA are staying the course. TVA has plans for a large natural gas plant to replace an old coal plant, a proposal the Environmental Protection Agency argues is in opposition to the Biden Administration’s climate goals.

“It’s the best overall solution,” said Jeff Lyash, TVA’s CEO.

Grid experts want utilities and their regulators to look at other options before immediately turning to more natural gas plants.

Mahan at SREA said if there had been more solar on the grid in December, it would have shortened the length of the blackouts or reduced the number of people impacted.

Electric utilities disagreed: Electricity demand was at its highest in the early morning before the sun came up, which meant it was too dark for solar to work.

But observers say utilities must find another solution.

Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School's Environmental and Energy Law program, called natural gas plants “just a Band-Aid.”

Lyash at TVA said he hopes investigations highlight new ways utilities can work with agencies on how to make the grid even stronger.

“The storm highlighted the risk of significant weather events — and the need for the utility industry to adapt,” he said.

TVA immediately identified 240 steps it could take to make its power grid stronger and completed roughly 80% of them immediately, Lyash said at a February meeting. There are still long-term, more complicated questions to answer, Lyash said, such as whether the utility relies too much on importing power from its neighbors.

“We want to take immediate action to ensure that in the same event we wouldn’t have the same problem,” Lyash said. “That’s not to say there’s not work left to be done … this falls into a resiliency category.”

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Kristi is a veteran business reporter with years of experience covering the electricity industry.

Kristi E. Swartz/Floodlight