While utilities continue to reconnect customers after recent winter distribution outages, concerns about long-term grid reliability remain, according to experts who spoke at a webinar organized by the R Street Institute on January 29.
Gordon van Welie, recently retired CEO of ISO New England (ISO-NE), identified the challenge of growing electricity demand from data centers and other sectors as the main risk to bulk power system reliability. He noted that coordination between gas and electric systems is also a significant concern.
“The biggest secondary factor is this mismatch between planning and paying for the gas system and the electric system, and the mismatch between the reliability standards for these two systems and the lack of recognition that the gas and electric systems have become one interdependent energy system,” van Welie said. “And we’re still regulating these systems as if they exist in independent silos.”
Van Welie emphasized that winter reliability depends on weatherizing equipment, ensuring sufficient fuel during cold periods, having strong performance incentives in wholesale markets, investing in necessary fuel infrastructure, and finding ways to recover those costs.
He explained that after Winter Storm Uri in February 2021, FERC and NERC implemented notable improvements: “The two industries have also worked to improve information sharing, but that has provided only incremental gains.” Van Welie argued more infrastructure is needed because while gas and electric systems are now highly interdependent, regulatory frameworks treat them separately.
“Inadequate gas infrastructure can lead to unreliable electricity supply, which compromises all aspects of the economy, including the ability to deliver gas to heat homes during cold snaps,” he said. He recalled asking regional transmission organization staff after Uri to assess how Northeast systems would fare under similar conditions seen in Texas. “The biggest alarm bell came from the gas LDCs, who said, ‘There’s no way we can tolerate rotating feed outages… We’ll end up with a flameout on the gas system. It’ll take us weeks to restore.’”
Van Welie cited an incident over the 2022 holidays when Consolidated Edison’s local distribution company serving New York City nearly experienced such a scenario. He warned: “I fear we’re going to need another 2003 event to really move the needle on this issue.” The widespread blackout in 2003 led Congress to establish mandatory grid reliability rules through the Energy Policy Act of 2005; Van Welie suggested another crisis may be needed for similar reforms regarding gas-electric coordination.
Electric Power Supply Association CEO Todd Snitchler stated that New England has struggled with these issues for more than two decades. He noted FERC began focusing on them as early as 2011: “Well, that was 15 years ago, and we still haven’t solved it,” he said. “I do think we’ve made progress… I think information sharing has improved dramatically.”
Snitchler added that market rules about cost recovery differ across regions: “Markets treat cost recovery differently. Independent market monitors have different views about what’s eligible for cost recovery… those questions are yet to be fully resolved in a way that helps mitigate volatility… but ensures reliable system.”
He also pointed out that increasing data center demand will require new pipelines and transmission lines.
Beth Garza, former ERCOT Independent Market Monitor and current R Street Fellow, explained how Texas’ unique regulatory structure affects its vulnerability: “In Texas, the majority of natural gas-powered generation is supplied by intrastate pipelines [that] aren’t required to have… unbundling and restructuring…” She contrasted profits gained by pipeline companies during Uri with losses incurred by major generators like Vistra: “That tells a story.”
Garza observed political resistance prevents restructuring of Texas’ oil and gas industry. She noted some improvements since Uri—such as payments for oil storage at dual-fuel units—but called for further investment: “There needs to be an investment in gas storage,” she said.
John Moura from NERC highlighted Florida’s approach as an example: despite being at pipeline endpoints like New England, Florida requires high-pressure contracts for generators and mandates oil backup capacity. “They’ve done things… worked it into their integrated resource plans,” Moura said.
