Some natural gas producers can opt out of winter preparation under new Texas rule

·4 min read

Some natural gas producers will have the ability to opt out of requirements to prepare their plants for winter thanks to a rule approved Tuesday by the Railroad Commission, which regulates the Texas oil and gas industry. An exemption would result in a $150 fee, an amount officials say is set by state law.

The commission is tasked with mapping out weatherization rules for natural gas producers, which extract and transport fuel to power plants. Power generators are regulated by a different agency, the Public Utility Commission, and are already facing some new requirements for winterizing their facilities this year.

Several lawmakers and energy experts have expressed outrage over a June law that requires natural gas producers to voluntarily identify as “critical infrastructure” to be held accountable for insulating their equipment, amid other weather preparations.

The law has also been under fire for its extended timeline, which allows the Railroad Commission to finalize its weatherization regulations in early 2023 — two years after the February winter storm that nearly brought the Texas electricity grid to its knees. Fuel shortages, mostly driven by frozen equipment, were among the top causes of unexpected power outages, according to federal regulators.

Natural gas companies have also been under scrutiny for enrolling in a state program that paid customers to have their electricity turned off during emergencies. At least 67 electric meters belonging to gas companies were enrolled in the program and lost power during Winter Storm Uri, including five that were later identified as critical infrastructure, according to a UT Austin report released in July.

On Tuesday, commissioners met to vote on amendments that earned more than 900 comments from industry representatives and concerned residents. Matt Garner, who works in the commission’s Office of General Counsel, laid out several changes to the rule that came after public input.

One change narrows which facilities defined as “critical” to Texas’ natural gas supply chain can get an exception from weatherization requirements. Facilities characterized as critical infrastructure by a new statewide group, known as the Texas Electricity Supply Chain Security and Mapping Committee, will not be eligible to apply for exceptions, Garner said.

“Other highly critical facilities, such as large volume producers, underground storage facilities and pipelines that directly serve a power generation plant or citygate are not eligible to apply for an exception,” Garner said.

He noted that paying the $150 exception fee doesn’t automatically guarantee exemption. An applicant must provide “objective evidence demonstrating a reasonable basis and justification to support an application for an exception,” Garner said.

Virginia Palacios, executive director of the advocacy group Commission Shift and a vocal critic of the agency’s ties to the oil and gas industry, said the original rule language could potentially allow any facility to opt out if they were not “already prepared to operate in a weather emergency.”

Now, the commission has adopted standards that make it more difficult to opt out and created categories of operators, including facilities that produce smaller amounts of natural gas but could still be considered critical to the region, Palacios said.

“I would hope that the way that they presented it is accurate, but I still want to read the final rule to be able to say: Is this actually better or not?” Palacios said. “Sometimes they present things as being benign when they actually are harmful, and so we’ll be looking carefully at what the final rule says.”

Another amendment was in response to concerns that the initially proposed rule designated too many facilities as critical. The commission now defines gas suppliers and gas customers separately, Garner said.

“The new subset of critical customer will ensure only those critical facilities that need electric power from a third party to operate will provide information to their electric utilities ... which will help utilities by limiting both the volume of information that they will be required to process and the number of critical facilities that they will have to prioritize as critical load,” Garner said.

Jim Wright, who was elected to the commission last November, said the commission is following through on its mandate to determine which operators are contributing most to the natural gas supply system.

“The challenge is we must keep operators who are supplying large quantities of gas online,” Wright said. “But if we list everyone as critical and maintain their access to electrical power during peak demand, it severely reduces the amount of electricity available to residents and families who need it.”

If a facility is marginal and not producing a high volume of gas, it makes sense to not define it as crucial to keeping the power grid online, Palacios said.

“It was a valid criticism because this (original) rule would have created a lot of paperwork for the Railroad Commission and a lot of paperwork for electric entities,” she said. “The risk here is that it’s going to be too easy for a facility to say that it’s marginal, and we wouldn’t want something like that.”

Palacios urged Texans to remain involved in the rulemaking process because public comments played a significant role in forging changes to weatherizing requirements on Tuesday.

“The public paying attention to this issue ensures that the natural gas industry is not off the hook,” Palacios said. “It would have been if nobody was paying attention.”

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