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Texas Still Reeling As Country, Companies And Traders Assess Damage From Winter Storm's Strike On Energy Grid

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Texas Still Reeling As Country, Companies And Traders Assess Damage From Winter Storm's Strike On Energy Grid

The U.S. is still coming to grips with what Bloomberg News described today as "one of the most remarkable weeks in power and gas market history."

A blast of cold weather triggered blackouts and disruptions to water systems throughout the week, after Texas experienced one of its coldest days on record on Monday.

Tens of millions of people have been affected by lack of power and water since. More than 4 million of Texas' 29 million people had no power at one point, and the water supplies of over 14.5 million people were affected as the extreme cold caused pipes to freeze and burst, according to Reuters.

Texas has a deregulated power market that is largely cut off from the rest of the country's. Warning signs came two days before Monday's events, when a sudden loss of power hit the grid. That, and a similar but smaller event in 2011, has drawn criticism against operators for failing to adequately prepare.

About 65,000 customers of ERCOT, the state's main grid operator, remained without power as of Saturday afternoon.  State health officials have linked more than two dozen deaths to the power crisis. About half of the state is still experiencing water disruptions, Reuters reported Saturday.

Here are some more of the headlines from this weekend's media coverage of the Texas energy crisis:

  • The surge in electricity demand crippled the state's grid, forcing authorities to use rolling blackouts to prevent an uncontrolled blackout that might have taken weeks, or longer, to fix. This was the country’s biggest-ever forced blackout, according to Bloomberg. CBS News quoted the state's top power grid official as saying that the system was "seconds and minutes" away from leaving residents without power for months when the storm hit. The system was back to normal as of Friday, operators said. 
  • President Joe Biden on Saturday approved a major disaster declaration for Texas. This will allow affected people to get federal funding for home repairs and low-cost loans. At least two dozen people have died as a result of the crisis.
  • Gas traders are pleading for cash as the prices for heating fuel went up to 300-fold due to increased demand and slashed production.
  • As Texas struggles to recover, customers in the state are facing unprecedented price hikes in their power bills as a result of the recent snow storm. Media reports tell of residential customers facing bills jumping into the thousands of dollars for the month of February, compared to the low hundreds for January. Power customers are being hit with huge bills if they had chosen a floating-rate contract, which is tied to wholesale contracts, the Financial Times reported. The wholesale power rate hit the maximum allowed $9,000 per megawatt hour for five days beginning last Sunday, according to the newspaper. That amounts to a rate of $9 a kilowatt-hour for a typical household that normally pays 12 cents per kilowatt-hour. 
  • Reuters reports that pollution escalated as refineries burned and released gases to prevent damage to their equipment amid the power and gas outages. The flaring, as this protective measure is known, darkened the skies with smoke that was visible for miles in eastern Texas. Refineries belonging to Valero Energy Corporation (NYSE: VLO), Marathon Petroleum Corp (NYSE: MPC), Exxon Mobil Corporation (NYSE: XOM) and Motiva Enterprises were the top polluters, according to a Reuters review of preliminary data supplied to the Texas Commission on Environment Quality. 
  • Dow Inc (NYSE: DOW) CEO Jim Fitterling called on Biden to use the crisis to advance the president's proposed $2 trillion push for infrastructure and green energy spending. "Don’t waste the crisis, you use this to drill in,” he said in an interview with the Financial Times. Dow had to shut down chemical plants in Texas during the storm, and the company expects investments in grids will boost growth in the years ahead, according to FT.
  • Atmos Energy Corporation (NYSE: ATO) is aiming to raise cash to fulfill a multi-billion-dollar committment to secure fuel, Bloomberg reported today. Atmos is one of the biggest independent suppliers of natural gas in the country and has 3 million customers in eight states. But it is not mainly a producer natural gas and as such had to hit the markets to secure more gas last week. The bill, due at the end of March, could be as high as $3.5 billion.

Photo courtesy the National Oceanic and Atmospheric Administration.

Gary Anglebrandt contributed to this report.

 

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