By RICARDO CASTILLO
While here in Mexico, President Manuel López Obrador (AMLO) on Wednesday, March 3, was celebrating the 58 to 48 passage (with 22 abstentions) of his electricity reform bill the night before by the Senate, back in Texas the state government was busy issuing walking papers to nonprofit Electricity Reliability Council of Texas (Ercot) CEO Bill Magness, considered responsible for the Feb. 13 through Feb. 17 disaster that left at least 5 million people in the dark and cold, as well as without water.
The massive Texas outage, caused by double snow storms, did not stop at the border with Mexico. It affected similarly six Mexican states, which had to undergo similar days of duress as their northern neighbors.
Though weather-wise there were no differences, the political repercussions on both sides of the Texas-Mexico border came from two political extremes trying to prevent this type of damage in the future, damage that not only made people suffer, but led to the deaths of at least 50 people (40 in Texas, 10 in Mexico) and showed economic losses of some $50 billion in Texas and $20 billion in Mexico, which buys gas to produce electricity from Texan suppliers, who suspended sales due to frozen pipelines.
AMLO said the approval of his electricity bill “is going to strengthen the Federal Electricity Commission’s (CFE) ability to confront difficult moments like the ones in Texas,” which had major repercussions in Mexico.
“We, however, resolved the problem in five days with the help of the help of our (CFE) workers,” he said, five days being the duration of the freezing weather period that stopped cold the states of Chihuahua, Coahuila, Nuevo León and Tamaulipas at the border, as well as the inland states of Durango and Zacatecas. All of them suffered from power failures.
AMLO has been touching on this issue since the outage began, and on Friday, Feb. 26, he made a comparison of the quality of electricity production and management in Texas and Mexico.
“Now that Texas faced freezing weather, it became clear that the energy policy applied in that state does not work well, at least not in that state,” he said.
AMLO referred to the fact that in Texas energy distribution is managed by the state (through Ercot) and not by the federal government. At a critical moment, Texas could not be supplied by northern states, which, by the way, had their own problems.
Ercot manages the Texas grid with different suppliers of gas, as well as wind, solar and maritime energy feeding into it. This is the reason why Magness has been relieved of his duties. Other state government officials belonging to the Public Utilities Commission (PUC) have also tendered their resignations to Texas Governor Greg Abbott and Lieutenant Governor Dan Patrick, both Republicans.
But in the aftermath of the twin storms, Ercot management found out that while one company, the Brazos Electric Power Cooperative, with a large customer base of spread-out farms, filed for bankruptcy, Ercot and PUC forced company Griddy, which produced gas electricity, to try to charge customers outraging prices as high as $7,000 for a week of service they did not supply. There are no price controls in Texas.
During his press conference, AMLO did not say how he managed to restore electricity so quickly to the border states. The answer is that, in the case of this emergency, the CFE purchased the entire surplus production of fuel oil that its sister company, Petróleos Mexicanos (Pemex), hd produced to ignite plants and feed the national energy grid.
In his Wednesday, March 3, press conference, AMLO also announced a revamping of the 14 hydroelectric plants that the CFE owns “to produce more clean energy at a lower cost.”
During the Senate vote the night before, several conservative National Action Party (PAN) senators called the bill the Fuel Oil Law, given the extraordinary surge of Texas gas prices, which feed Mexico at large, will be used until the market settles down. Of course, fuel oil is highly contaminating.
AMLO did not go into it, but another difference between Texas and Mexico is that while Mexico’s new electricity law regulates the market, giving priority to state-produced over privately-produced energy, it makes the CFE the chief regulator of tariffs and supply. Under the new law, AMLO said that he is willing to negotiate with private suppliers.
In Texas, Republican administrations have spent years creating the current electricity system, proudly touting that the government has no regulations over producers because regulations “kill jobs.” But this time around, the state faces a surge of unemployment due to the freeze and, for a change, is now considering regulations in order to protect the grid, the producers’ capacity to continue supplying electricity and the pockets of wage earners.
Certainly, Governor Abbott and the Texas Congress have a lot of positive pondering to do to ensure that energy producers protect their facilities against extreme cold weather conditions.
It happened before in 1989, 2011 and now in 2021. All eyes are on Ercot, which failed to ¿force producers to invest in antifreeze measures.
It’s hard to foresee what will happen at the border, but Mexico will surely continue to buy gas from Texas suppliers, while also making the most of available fuels (coal included, when necessary) to keep electricity flowing for its industries, business and homes alike, at fair prices.
…March 5, 2021