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Texas

GEUS keeps an eye on the regulatory future of the grid

The second anniversary of “Winter Storm Uri” will be around next month as fallout from the massive Arctic explosion continues to circulate through the Texas power industry, including here in Greenville.

Urie initiated a comprehensive review of the ERCOT (Electric Reliability Board of Texas), which is responsible for ensuring the reliability of the power grid as well as promoting a competitive electricity market in Texas.

For several days in February 2021, Uri wreaked havoc on the state’s power grid as extended power outages affected millions of people. According to materials published Forbes.

With extremely limited supplies during the storm, wholesale prices soared to $9,000 per megawatt-hour, leaving utilities with little choice but to pay exorbitant rates.

According to Alicia Hooks, CEO of the Greenville Electric Utility System, the citizen-owned utility cut its natural gas supply during the storm and switched to diesel, which it hadn’t burned in about 10 years, to continue generating electricity. known as GEUS.

The ability to burn diesel reduced the amount of power that GEUS needed to get from ERCOT. However, the hurricane cost GEUS $16 million, about half of which is funded by long-term debt. Taxpayers take away this tab in the long run.

While $16 million seems like a lot, GEUS got off relatively lightly.

“People in the electricity world were shocked when they found out that GEUS had a net worth of $16 million. Many utilities have faced much higher costs,” Hooks said. For example, Brazos Electric Cooperative lost about $1.8 billion during the storm.

Given the economic carnage unleashed by Uri, stabilizing the grid and energy market in Texas has become a focus for lawmakers and other government officials. The 87th State Legislature passed the ERCOT reforms in 2021 and the details are still being formed. Just this week, Gov. Greg Abbott endorsed the Texas Public Utilities Commission’s grid reliability and market design reform package. Legislators, however, want to have a say in the final package of reforms.

Navigating an uncertain regulatory environment presents a unique challenge for utilities across Texas, including GEUS.

“I would say the biggest risk right now will be changes in the ERCOT market,” Hooks said when asked about the challenges ahead. “We really need to get a definitive answer on what the market design will look like so we can understand what changes we need to make here to be able to fit what we’re doing into this new structure. So that will be our biggest challenge going forward to adapt to the changes that will eventually come to the design of the ERCOT market.”

At the moment, utilities have to contend with volatile market prices, Hooks said. “A lot of that has to do with regulatory uncertainty,” she explained. “There are a lot of changes going on in the ERCOT market right now.”

GEUS maintains a portfolio that combines on-site generated power with market-sourced power, a blend that includes fossil fuels, offshore offshore wind and solar power from West Texas. GEUS generates electricity from its own gas-fired power plant when it is economically viable. He buys electricity from the market when it’s cheaper, Hooks explained.

GEUS must provide a reliable supply of electricity to meet the ever-increasing demand from Greenville’s commercial, industrial and residential sectors.

Many of the new homes in Greenville, for example, run entirely on electricity, Hooks notes.

“Most of these new buildings do not supply gas. There are fully electric houses. During the winter, when temperatures are below freezing and customers have to switch to emergency heating, this really impacts the demand for our system,” Hooks said.

When it comes to the demands placed on GEUS during the city’s growth spurt, the numbers speak for themselves:

Peak usage

2022

Summer peak 124 MW (megawatt)

Winter Peak 115 MW

2021

Summer peak 111 MW

Winter Peak 101 MW

2018

Summer peak 115 MW

Winter Peak 97 MW

Total clients

December 31, 2022 = 16,197

December 31, 2018 = 14,784

GEUS is still waiting for the FY2022 audit, but according to Jimmy Dickey, GEUS manager of key accounts and marketing, last year’s net income was approximately $2 million. However, GEUS’ primary mission is not to ring the cash register, but to keep the lights on while keeping rates as low as possible.

This has been a directive since March 4, 1891, when Greenville became the first city in Texas to produce its own energy. GEUS became completely autonomous from the City Council in 1988.

Today, this “separate and distinct tool of the City of Greenville” employs 127 people (including a cable and internet division) and owns an expanding system built to serve a 92-square-mile service area.

“Every facility you see, every pole, every inch of wire has been paid for at rates the community has been paying into the system,” Hooks said.

According to Hooks, meeting the needs and expectations of these taxpayers is what GEUS is committed to.

“We continue to work hard to provide a reliable service to the community,” she said. “Our employees take responsibility for the work they do for society and are proud of it. We just want to keep evolving to be the utility our customers want and expect from their system. If there’s a message I can convey, it’s that this system belongs to you.”



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