Tag Archives: regulators

US

Federal Regulators Plan to Investigate Massive Texas Power Outage – NBC 5 Dallas-Fort Worth

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Federal regulators have opened an inquiry into what caused the massive power outages across Texas. The Federal Energy Regulatory Commission (FERC) confirms it will investigate along with the North American Electric Reliability Corporation. FERC is the same agency that examined the last major winter power outage in Texas in 2011, and then offered recommendations aimed at preventing a repeat in the future.

On Wednesday, a group of North Texas congressmen sent a letter demanding answers from ERCOT, the agency that manages the state’s power grid. The letter asks what ERCOT did to prepare ahead of this major storm?

Meanwhile, NBC 5 Investigates has uncovered new information showing, less than a week before the storm, ERCOT officials gave assurances that the state’s power plants were ready to weather the elements, raising more questions about how such a massive failure of the state’s power system could happen.

During the storm ERCOT said, 40% of the state’s generators – four out of every 10 – were knocked offline. Those generators account for 46,000 megawatts of power, enough electricity to power roughly 9.2 million homes.

“I think it’s safe to say that the weatherization efforts have failed, they’ve not been able to keep capacity online during this extreme weather”, said Jesse Jenkins an energy expert at Princeton University’s Center for Energy and the Environment.

Jenkins said key questions for investigators will include what power plant operators did to protect equipment from the cold, and what ERCOT did to make sure those plants were ready.

“And after the last close calls and rolling blackouts in 2011, efforts were supposed to have been made to weatherize the system against cold. And it’s clear that those efforts were not up to the task,” Jenkins said.

NBC 5 Investigates found ERCOT meeting records on ERCOT’s website showing, just five days before the storm hit, ERCOT CEO Bill Magness assured the group’s board of directors in a meeting, “We’re ready for the frigid temps to come our way”. 

He said the agency had issued a notice to power plants to ensure they were winterized properly.

In September ERCOT’s annual winter assessment designed to ensure the state is prepared, assured the public there would be enough power to meet peak demand this winter.

But then when the bitter cold arrived, dozens of power plants were knocked off-line, putting millions of Texans in danger.

At a news conference Wednesday, NBC 5 Investigates asked ERCOT CEO Bill Magness how he and his agency can be trusted after assuring the public the state was prepared.

Magness responded saying, “The people who folks in Texas really need to trust to lead us out of this crisis are those operators who are working on 24/7 shifts to make decisions that will keep the system safe.”

“The blame can be assessed very soon,” Magness said, “Blame will surely be assessed.”

NBC5 Investigates also tried to reach Sally Talberg, the chair of ERCOT’s board of directors, which oversees the agency.  Talberg did not return the call.  An ERCOT spokesperson also said that no board members will be available for interviews because their priority is restoring power right now.

ERCOT confirmed Wednesday that it has no mandatory rules to require power plants to prepare for the winter, only voluntary guidelines.

ERCOT says power generating companies have incentive to be ready, because they can’t make money if they aren’t able to make electricity.

A group that represents power generators, Texas Competitive Power Advocates, issued a statement saying power plants were in fact winterized and ready for the storm — but that the weather the state has seen has been unprecedented.



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Business

Elon Musk’s love-in with China may be over as regulators go after Tesla

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The electric carmaker has been summoned by five Chinese regulatory agencies to answer questions about the quality of its Shanghai-made Model 3 cars, according to a statement released Monday by the State Administration for Market Regulation (SAMR). It said regulators were concerned about several problems with the cars, including “abnormal acceleration” and “battery fires.”

The meeting is troubling for Tesla. Thanks to Musk’s courting of officials, Tesla had managed to avoid cumbersome restraints imposed on global rivals trying to do business in China. The company opened one of its massive car factories in 2019 to great fanfare in Shanghai, and the country now accounts for a fifth of its revenue.

But for the past few weeks, Tesla has been heavily criticized within China for a series of problems involving its cars, culminating in Monday’s announcement.

“[We will] deeply reflect on the company’s operational shortcomings and comprehensively strengthen self-inspection,” Tesla said in a statement posted on Chinese social media website Weibo in response to SAMR’s remarks.

“We will strictly abide by Chinese laws and regulations and always respect consumer rights,” the carmaker said, adding that it will “better contribute to the healthy development of China’s new energy vehicle market.”

It’s not clear whether regulators intend to punish Tesla or change anything about the way it operates in the country. But the controversy is a sign of just how seriously Beijing takes regulation, even among companies that it appears to favor.

“It’s a slippery slope for Musk,” said Dan Ives, a technology analyst at Wedbush Securities. The CEO “had built strong relationships within the country, but he must play nice in the sandbox in China.”

Strong support

Tesla has been in China since 2013, but in the past few years it has established a strong relationship with the Chinese government.

When the carmaker was negotiating terms with authorities in 2017 for the construction of its Shanghai Gigafactory, it managed to retain complete control — an unusual arrangement, since its peers were typically required to partner with Chinese firms if they wanted to set up a local business at that time. (China announced in 2018 that it would ease up on the automotive sector’s rules on foreign ownership by 2022.)

Since then, Tesla has enjoyed strong government support. It was the only foreign manufacturer without a local partner to win a big tax break for its cars in 2019. The company also resumed production quickly during the coronavirus pandemic in part thanks to local government support.
Musk has also won over authorities and Chinese citizens alike, and is a welcomed guest in the country. He famously danced on stage during the debut of the Shanghai-made Model 3 early last year, which went viral on Weibo. Premier Li Keqiang once even said he would be happy to give Musk a “China green card” after the American entrepreneur said he “loves China very much.”
Tesla’s inroads into China have paid off. The company sold $6.66 billion worth of cars in China last year, contributing 21% of its revenue, according to a recent company filing. That’s more than doubled what it sold in 2019, when it had not yet started making cars there.

A souring perception

But in recent months, the perception of Tesla in China has begun to turn sour. Last November, state news agency Xinhua attacked the company after one of its attorneys wrote to US regulators about a recall in China, blaming “driver abuse.”
“Tesla passed the buck to the Chinese users’ driving habits and regulatory pressure,” wrote Xinhua’s Nan Chen in an opinion piece published in Liaowang, a magazine run by the news agency. “This kind of ‘Tesla-style arrogance’ can’t be tolerated.”
Criticism escalated last month after a video went viral in China that appeared to show a Tesla employee telling a customer that an overload in the state power grid caused a charging accident that damaged the car. A local branch of the power company in charge of the grid denied it was to blame, and told Tesla that it should “carefully find out the cause” of the car’s problems.
Tesla wrote on its Weibo account last week that the video had been edited and that the employee provided “several possible factors” for the car’s issues. Even so, the company apologized.

“We are deeply sorry, regarding the misunderstanding caused to netizens and the trouble” caused to power authorities, the company said.

State media outlets, though, piled on after the power grid incident. Xinhua earlier this month blasted Tesla once more for its “arrogant attitude,” accusing the company of “passing the buck again.”

The Global Times, a state-owned tabloid, also took the company to task.

“Though Tesla is arguably the US company most active in investing in China, the Silicon Valley-born carmaker is far from understanding Chinese consumers, as seen by its attitude in a series of scattered accident reports including explosions, drivers losing control and faulty brakes,” read an article published by the Global Times.

Other challenges

Regulatory pressure is not Tesla’s only challenge in China moving forward.

The company was the best-selling electric vehicle brand in the country last year, with 135,400 Model 3s sold, according to the China Passenger Car Association.

But competition is getting fierce. BYD unseated Tesla as China’s top selling electric car brand last month, and other automakers like Nio, Geely and Xpeng are trying to close in.

While China has welcomed Tesla so far, experts point out that ultimately Beijing has its own ambitions to lead in tech and other fields. In other words: Once homegrown companies are competitive, the country doesn’t have much need for foreign firms anymore.

— CNN’s Beijing bureau contributed to this report.

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Business

Yellen and Regulators Met Amid GameStop Frenzy to Discuss Market Volatility

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Barbara Roper, the director of investor protection for the Consumer Federation of America, said policing that type of behavior will be more difficult for the S.E.C.

“We’re better at regulating professional market participants than figuring out what to do when the investing population itself is driving this,” Ms. Roper said.

The S.E.C. is likely to focus on Robinhood and other technology platforms that enabled the investing, including allowing investors to trade options — a financial product that appears to have exacerbated some of the huge price swings in GameStop. Options are essentially contracts that give the buyer the right to buy or sell a stock at a given price at some point in the future. That type of trading can be both risky and disruptive, market experts said.

“The options trading rules are overdue for review,” Ms. Roper said. “There are supposed to be safeguards in place that limit option trading to more sophisticated traders or at least make sure investors understand the risks.”

Instead, Robinhood and other platforms allowed any investor to buy options with the push of a button.

“The S.E.C. will need a hypothesis. Mine is that the problem is largely a problem of leverage and that leverage comes about by the trading of options rather than individual shares,” said James Cox, a securities professor at Duke University School of Law. “We may need to really think whether there needs to be a limit on how many options a person can have and is able to execute.”

[Read more about how options trading might be fueling a stock market bubble.]

In addition to the risks of options trading, the S.E.C. may also focus on whether any of the incentives and marketing that lured investors to new financial technology platforms was misleading. Many companies, including Robinhood, have touted “commission-free” investing, which many investors may have misunderstood, said Dennis Kelleher, president of Better Markets.

“The reason many of these people are in the trading arena at all is that they were induced into it by a misleading claim that trading is ‘free,’ and now many of them think there’s free money falling all over the place,” Mr. Kelleher said. “The S.E.C. should take the position that anyone claiming directly or indirectly that trading is free is false and misleading to a reasonable investor.”

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World

CGTN: UK regulators pull license of Chinese state-owned broadcaster

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Media regulator Ofcom said Thursday that it had withdrawn the channel’s license after an investigation “concluded that the license is wrongfully held by Star China Media Limited.”

Ofcom said that Star China Media Limited did not have “editorial responsibility” for the channel’s output, and therefore “does not meet the legal requirement of having control over the licensed service.” Star was acting as the distributor, rather than the provider of the news channel, it added.

The regulators also rejected a proposal by CGTN to transfer the license to a new entity after finding that it would ultimately be controlled by the Chinese Communist Party, and therefore be disqualified under UK law.

“We’ve provided CGTN with numerous opportunities to come into compliance, but it has not done so. We now consider it appropriate to withdraw the license for CGTN to broadcast in the UK,” an Ofcom spokesperson said.

The channel will be removed from UK airwaves with immediate effect. CGTN has the right to request a judicial review, according to an Ofcom spokesperson, and they could apply for another license in the future.

Ofcom previously ruled that CGTN repeatedly breached impartiality standards with its coverage of protests last year in Hong Kong.
CGTN was launched in 2016. It says it provides “global audiences with accurate and timely news coverage as well as rich audiovisual services, promoting communication and understanding between China and the world, and enhancing cultural exchanges and mutual trust between China and other countries.”

Headquartered in Beijing, CGTN has three production centers in Nairobi, Kenya, Washington D.C. and London.

CGTN did not immediately respond to a request for comment.

— This is a developing story and will be updated.

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