Features

Chad V. Seely – ERCOT

ERCOT legal helping guide regulatory changes to the Texas electric grid

The winter storm that swept across the U.S. and portions of Mexico and Canada over four days in mid-February 2021 was named Uri.

It could just have easily been named Havoc.

The snow and ice that blanketed the ground were followed by a deep freeze rarely seen or experienced in the South and Southwest, closing schools and businesses, devasting citrus crops and leaving residents shivering in below-freezing temperatures, often without heat or electricity and bursting water pipes.

Chad V. Seely | Senior Vice President, General Counsel and Corporate Secretary | ERCOT

Chad V. Seely | Senior Vice President, General Counsel and Corporate Secretary | ERCOT

Texas wasn’t the only state hit by Uri, but it suffered greatly as its independently operated power grid managed a series of controlled outages affecting customers throughout the state. As soon as the weather warmed up and power was restored, the Texas Legislature began looking for ways to improve the grid, nearly all of which is operated by the nonprofit Electric Reliability Council of Texas Inc., or ERCOT.

Chad V. Seely, ERCOT’s senior vice president, general counsel and corporate secretary, says legislators, two sessions removed from Uri, continue to discuss future grid improvements by balancing renewable energy sources with more dispatchable resources and transmission buildouts. He’s working with ERCOT’s leadership to carry out legislative mandates, guidance and directives from the Public Utility Commission of Texas.

“This isn’t just your normal legal department,” Seely says.  “The team I have put together over the last couple of years is top-notch and ready for the upcoming challenges and opportunities facing our grid.”

Powering a state

The grid administered by ERCOT includes more than 52,700 miles of transmission lines that provide electricity to more than 26 million customers. The more than 1,100 generation units deliver about 90 percent of the electricity used in the Lone Star State in a region that encompasses 75 percent of the state’s land area.

ERCOT was formed in 1970, and its members include consumers, cooperatives, independent generators, independent power marketers, retail electric providers, and municipal and investor-owned electric utilities.

Chad V. Seely | Senior Vice President, General Counsel and Corporate Secretary | ERCOT

In 1996, ERCOT became an independent system operator, allowing it to act as a ‘broker’ between competitive wholesale power buyers and sellers. When Texas’ electric utility industry was opened to retail competition on Jan. 1, 2002, ERCOT provided the platform for retail operations.

“Anyone who touches the Texas power grid must work with ERCOT,” Seely says. “Power generators, utilities, retailers—all getting energy to homes and businesses 24 hours a day, 7 days per week and 365 days a year.”

Weatherization inspections, firm fuel & securitization

Seely says the most immediate mandates from the Texas Legislature and PUCT were to weatherize the grid, develop a new winter reliability service and issue securitized bonds to stabilize the wholesale electricity market after Uri.

A couple of months after the 2021 session, a weatherization rulemaking was opened at the PUCT to plan and develop a new standard and process for generation resources and transmission utility facilities that drew on expertise from the stakeholders and third-party engineers.  The first phase finished just before the winter 2021-22 season, and ERCOT was out in the field inspecting facilities that failed during Uri to make sure they were prepared for that winter.

The facility inspections require hiring people with power industry experience to ensure the components can withstand another extreme weather event. ERCOT inspectors look at facility preparedness, such as adequate windbreaks, thermal insulation, and freeze protection equipment, to avoid failing during extreme temperature changes.

“Texas is leading the nation in weatherization standards and inspections, and all eyes are watching.  We have inspected over 90% of the fleet and will continue to inspect them once every three years,” Seely says.

Phase 2 of the rule starts this winter and incorporates wind chill temperatures across the state.  Seely says those vary as areas such as the plains in the Panhandle region to the north have colder winters than the southern Rio Grande region.

Chad V. Seely | Senior Vice President, General Counsel and Corporate Secretary | ERCOT

ERCOT began working with the PUCT and stakeholders on separate yet parallel tracks to develop a new winter reliability service called Firm Fuel Supply Service. This program pays generation resources a premium to meet a higher fuel-security and performance standard—in short, asking them to have backup fuel on-site or off-site to provide additional resiliency during extreme winter weather events.  The program is also starting its second phase this winter with more than 3,000 MW of supply. Further, ERCOT had to move quickly, securitizing almost $3 billion in bonds to help provide liquidity to the wholesale electricity market after Uri.  ERCOT created first-of-its-kind debt financing mechanisms that customers and market participants will pay back over 30 years.

Looking ahead, the focus is on how the grid will be managed with a balanced mix of sources of electricity from power generators and utilities. These new market initiatives recognize the current landscape of renewable energy sources (solar and wind) but target incentivizing more dispatchable resources like natural gas and batteries.

Everyone knows Texas summers are hot, and Texans have lived through some of the hottest summers lately. Seely says there’s an evening gap where the grid demand is high, solar generation decreases, and wind-generated power hasn’t increased until late evenings. Because of this, ERCOT had to issue about a dozen conservation alerts that went to 9 p.m. or later this past summer.

Adding more batteries to store variable energy can help manage this summer risk. However, Seely says that when approximately 40 percent of all generation is renewable, wind, solar and batteries can’t provide enough power to run Texas or anywhere else. So, more dispatchable resources are essential now and over time.

Embracing change

While Seely has seen changes to the grid and expects plenty more as Texas’ population rapidly grows, he adds one constant in ERCOT’s operations is the dedication of its leadership and employees in providing efficient, reliable and affordable power to customers.

“ERCOT employees are steadfastly dedicated to serving the public with a reliable grid. It is an honor to stand side-by-side with them for the past 18 years working on the most complex energy policy issues facing power grid operators worldwide,” Seely says.

He joined ERCOT in May 2005 after serving as an enforcement attorney with the Texas Department of Insurance for a few years.

Chad V. Seely | Senior Vice President, General Counsel and Corporate Secretary | ERCOT

Seely, who married his high school sweetheart and has two daughters, is a lifelong Texan from Irving, a city in the Dallas and Fort Worth metroplex. He earned bachelor’s degrees in political science and French from Texas Tech University and a J.D. from South Texas College of Law Houston, where he won national advocacy awards.

Outside the office, he keeps busy attending his daughters’ sports and performing arts events and says they’ve also been enjoying vacations centered around seeing concerts, including the 90th birthday celebration for Texas icon Willie Nelson held at the Hollywood Bowl in Los Angeles earlier this year.

Seely was promoted to his current role as general counsel in 2016 and says ERCOT is at an inflection point because of more extreme weather events, a changing resource mix with more renewables and less dispatchable resources to serve Texas’ growing demand and the electrification of everything, but he’s eager to take on challenges the future will bring.

“The grid is dynamic and always changing, but rules dictate the policy landscape for planning, markets and operations,” Seely says. “I’ve enjoyed being a lawyer for this one-of-a-kind Texas entity, and I want to grow and provide my expertise as a leader in the industry.”

View this feature in the Vanguard Winter I 2024 Edition here.

Published on: December 8, 2023

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