North Carolina is setting its energy future. Advice has come in from special interest energy groups and consumer groups. The Governor and legislators have taken initial stands. The utility has proposed an integrated resource plan, which is not final yet.
Some advice for North Carolina: Learn from Texas’ situation.
Lesson: Get the power where it is needed.
North Carolina’s bill looks at improving the transmission system. Good. The utility has been arguing for that for some time, frankly. Trouble is that “wires,” as it is called in the industry, is not as alluring as power generation to legislators, in my opinion. A grid in need of improvement is asking for trouble for customers.
Lesson: Account for changes in the climate.
I think of heat when I think of Texas. (I have worked in Austin and Houston in the summer.) Yet Texas suffered fatal cold temperatures that crippled its power system. North Carolina had its Polar Vortex a couple years ago and had a close call on power. North Carolina also has three of the top five locations for hurricane strikes (and hurricanes are getting worse).
In Texas, wind generation was blamed by politicians in part for the power problem. Not the real issue. Wind units can be winterized. Same with gas plants that did not work in Texas. Now that lesson is understood in Texas. North Carolina can apply the lessons and planning.
Lesson: Offload red tape, wisely.
This is a balance. Texas designed a low-cost, low oversight system (yes, even with its own regional transmission organization). Texas’ low-cost, low-reg system got the exact results it designed.
Less red tape does not need to be ineffective. The trick is how rules are managed. Time should be spent by utilities to provide service in the real world, not bow to whims created in a policymaker conference room. Put intellectual effort into the electric system, not make-work.
Lesson: Understand the need for “just in case” power
Texas is its own energy island; Texas is independent – sometimes to its own detriment. Check this: “Not only are there minimal opportunities for Texas to import electricity during crises, but there is also no reserve margin (extra available power above demand) enforced in the state—meaning companies have absolutely no incentive to build capacity above expected demand.” (Source)
An analogy: Families have emergency funds. Companies have reserves or pre-set loan options for unexpected issues. States sometimes have “rainy day” funds – NC has a robust fund. Makes sense.
Power is the same. Have some extra sources of energy ready. They may be power plants that spin-up easily or storage. Texas was short on extra power.
Lesson: Have clear, mutual goals.
Finger-pointing started during the Texas freeze, not after. Arguing is a waste of time, an insult to customers.
“Clear, mutual goals” spring from utilities and regulators working together. Avoid the error that the Texas Governor recently made, He issued a letter to the Texas Public Utilities Commission that tells them what to do, picking winners and losers in energy – instead of allowing the process to work on its own.
North Carolina would benefit from defining clear goals for energy diversity, reasonable costs, added resilience, and the way people will work together. Devise teamwork, make hard decisions now to set up for success later, not complaints.
Any column like this is a moment in time. There will be more lessons, maybe from Texas, maybe from other states.
NOTE: This is one of a two-part series about what North Carolina and South Carolina can learn about the power failures in Texas from earlier this year. Some lessons apply to both states, some are unique to each. For more on our view of what happened in Texas, and what consumers, industry and policymakers can learn from it, see our “The Mess in Texas – Energy Lessons from the Lonestar State,” page, where we’ve collected all of the blog posts we’ve written to date on the subject.