A Texas Utility Girds For Swift Growth And Extreme Weather

It used to be a standard question I asked utility executives: What keeps you awake at night? That always elicited a standard answer: cyberattack.

Asking the same question now, I get a different answer. When I asked it of David Naylor, president and CEO of Rayburn Country Electric Cooperative, Inc., his answer, which is now a standard one, was, “The weather.”

Rayburn is headquartered in Rockwall, northeast of Dallas. Its service area covers 16 counties, and it has been able to survive some extraordinary weather shocks.

The biggest, of course, was Winter Storm Uri which devastated Texas on Feb. 13-17, 2021.

Uri’s High Economic Price

While Rayburn weathered that severe storm without plunging its customers into the dark, it paid a high economic price. Like other utilities in Texas, it racked up massive debt for inflated gas prices during the emergency.

Rayburn, under Naylor, was the first utility to monetize its debt: It issued a bond so that the impact of the extraordinary charges would be borne by Rayburn customers over a decade.

It was a bold, brave move from a utility which has been able to be both forward-thinking in its planning and yet conservative in its operations. The global law firm Dentons advised.

The wild swings in weather have become a new and consistent concern to utilities, Naylor told me. This winter’s weather — with heavy precipitation in California and Arctic temperatures in the South — has challenged the industry in new and sometimes catastrophic ways.

In the recent Ice Storm Mara, hundreds of thousands of Texans lost power. But Rayburn survived without major load shedding; some of its members had small, limited outages as lines were cleared and repaired. By contrast, many residents of Austin, the state capital, served by the municipally owned Austin Electric, were without electricity for five days.

No one is gloating. Severe weather is a new reality which is unpredictable and can be devastating.

Rayburn’s Naylor explained, “Our load, which is mostly residential, is about 1,200 megawatts. A 1-degree temperature change can change that load by 25 megawatts. During Ice Storm Elliot last December, we had a jump of 400 megawatts.”

In all three winter storms, Rayburn was able to meet its load demands. But the future is unknown.

Rayburn, which borders the Dallas metroplex, has been growing exponentially, as has much of Texas. Naylor said the demand for new hookups and service has been furious, leading to load growth of between 8 and 10 percent over the past several years. “We are anticipating growth of between 3 and 4 percent going forward,” he said.

This comes at a time when national policy and local pressure is aimed toward net zero emissions by 2050. Naylor said “the engineer” in him says that this can’t be done, but he is hopeful that new technology, and especially improvements in batteries, will come into play.

Particularly, he is hopeful that distributed energy will play a big part in the future, and his co-op has laid the groundwork for that. They have a complex rebate structure to encourage the use of electricity in off-peak hours.

“Going forward, we are going to be partners with our customers,” Naylor said. That will require sophisticated communications and an interdependence.

As electric vehicles take over, they must be considered as a capital addition to the utility system, as partners in the enterprise. In the same way that UberUBER
has transferred the capital cost to the car owner, utilities will be transferring part of the storage cost to the EV-owning customer.

Utilities’ Growth Predicament

In the growth predicament, this future shock, Naylor and Rayburn are in the same place as other utilities, big and small: load growing and pressure on fossil fuels increasing.

Nonetheless Naylor is negotiating for additional natural gas ownership and, like other utilities, he sees gas as the bridge, the dispatchable fuel no matter what.

Despite its position as the fossil fuel capital of the United States, Naylor noted that Texas has more installed renewable capacity than any other state and is forging ahead not only with new wind and solar, but also with gas.

For Rayburn, solar has been the preferred renewable option. “With a largely residential load, solar fits the shape of our load,” Naylor told me.

He said Winter Storm Uri — the biggest weather event to date — was a wake-up call for Texans. This led to many installations which will have a role in a distributed generation, from power walls to home generators to more rooftop solar. In addition the Texas grid, operated by ERCOT, is undergoing a redesign, Naylor said.

These additions mean more distributed generation resources, more of the burgeoning utility future so different from the past.

He also said data will play a bigger role in the future of Rayburn and other utilities. “We’ve always had it, but we didn’t know what to do with it,” he said. Now with detailed analysis, data becomes a resource, and is a huge help in managing the load and in planning. For Rayburn, Naylor said, data is a new resource and is very promising.

The one thing which Naylor and other utility chiefs can’t anticipate with accuracy is the weather. But Rayburn, Naylor told me, is as prepared as it can be, and has avoided major outages up to this point in the time of what amounts to the “new weather.”