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Power & Pipes

FERC, CFTC, and State Energy Law Developments

On August 16, FERC and NERC issued a joint report on the outages and curtailments that occurred in the southwest during the extraordinary cold snap in early February 2011.

The report summarizes the events that occurred in early February, describing the scope of the generator outages that occurred and the natural gas production that declined due to the extreme cold weather. As noted in the report, the cold weather led to the unavailability of approximately one-third of Electric Reliability Council of Texas (ERCOT) generation at one point during the event, and spot prices in the ERCOT market hit $3,000 per MWh. In addition, the loss of natural gas production resulted in the curtailment of 50,000 customers in the southwest.

The report concludes that many of these failures resulted from poor winterization practices, and makes a series of recommendations that are “reasonable economically” and that “would substantially reduce the risk of blackouts and natural gas curtailments during the next extreme cold weather event.”

The report contains numerous recommendations for the electric and utility industries intended to prevent a recurrence of the events of early February. Read the report.