Cost of last year’s winter storm could reach $300 billion new report says
An association of civil engineers estimates the cost of Winter Storm Uri could reach $300 billion. The new report places part of the blame for the storm’s aftermath on a “run to fail” model adopted by energy companies.
The storm last February that led to the deaths of hundreds of Texans could have an ultimate economic impact of up to $300 billion and was caused, in part, by underinvestment that led to what engineers described as a “run to fail” model, according to a new report from the Texas section of the American Society of Civil Engineers.
The report's release coincided with the one-year anniversary of the days-long storm. It knocked out power to most of Texas and placed the state’s energy grid operator, the Electric Reliability Council of Texas, under widespread scrutiny from consumers and lawmakers.
The catastrophic event was actually a combination of two winter storms — Uri, and the lesser known Viola — said Geoff Roberts, chairman of the Beyond Storms Infrastructure Network Resilience Task Committee, which produced the report.
“To put these amounts in perspective, this is substantially greater than either of the two most costly hurricanes in the U.S. history. Harvey had approximately $145 billion and Katrina approximately $161 billion,” Roberts said during a virtual news conference Wednesday.
A key reason the grid went down, according to the report, was underinvestment due to the desire by energy companies to remain competitive.
“The ERCOT energy-only market structure prioritized low cost over reliability. This has predictably led to chronic underinvestment in reliable generation and is directly responsible for the ongoing erosion of reliability from dispatchable generation,” the report states.
Roberts said the energy-only model leads to shortcomings in two critical areas: reliability and resilience.
“In the energy-only market model, generators are paid when they generate. They're not paid to be reliable,” he said. “The outcome of this approach was that the system defaulted to a run-to-fail model. It was operated until it broke down.”
The ERCOT communications department could not immediately respond to a request for comment on the report’s “run-to-fail” claim and said in an email the agency was fielding “large numbers of media inquiries.”
Roberts also placed some of the blame on the natural gas industry and said it relied too much on electrical output to maintain operations.
“The industry failed to adequately protect its production facilities from severe weather conditions and, over time, significantly increased interdependence on the electric system without mitigation,” he said. “[Interdependence] can be one way, like the water system depending upon electricity for pumping water. Or it can be two way, like when the electric industry relies on the natural gas industry for fuel supply and transportation, while at the same time the natural gas industry relies on electricity to run and maintain its production operations.”
"Increasing interdependence increases the fragility of the network system, and in the case of winter storms Uri and Viola, led to a cascading series of failures like dominoes across infrastructure sectors,” he added.
The report comes after the total number of fatalities caused by the storm remains unclear. As KUT reported earlier this week, the Texas Department of Health and Human Services stated in a final report that the death toll was 246. That included deaths caused directly by the storm (such as hypothermia), as well as “indirect deaths” — people who died later of injuries related to the blackout and freezing temperatures.
But KUT also included in its report an analysis by Buzzfeed that concluded the death toll exceeded 700. A later review of data could put the final tally at more than 800, according to statistician.