This newsletter kicks off a short series on the recent Texas power debacle. We will talk about what happened, why it happened, the noise surrounding the storm’s aftermath, the pros and cons of deregulation and some potential strategies for avoiding future calamities. More detailed commentaries will follow.
Much has been written about the winter storm that hit Texas—and many other states—in February. Most mainstream media outlets have spent far more time chronicling woes and assessing blame than offering solutions.
George Carlin once dismissed our “civilized society” as “fragile,” with only electricity standing between us and barbarism. Last month, Texans received a tragic reminder of Carlin’s prophecy. An energy system, built on ideological fervor, individual choice and short-term thinking, fell victim to a severe winter storm. The allure of free markets, competitive pricing and low costs gave way to the anguish of power outages, water disruptions, inhabitable homes and death. The unwanted, but inevitable result of a system that exalted the individual over the community.
Many have framed this issue as a binary choice between regulation and free markets. As with most public policy issues, the issue is more complex.
Why did Texas’ energy system fail and leave so much suffering in the winter storm’s wake? Many politicians and commentators see the pivotal issue as a simple one: regulation or free markets? This formulation may serve their interests, but not ours. If we want safe, reliable and affordable power (and we do), we must probe more deeply. What is the optimal market model for reconciling individual choice with the public good? How can we promote competition, efficiency, affordability and renewables while, at the same time, maximizing reliability in the face of extreme weather?
America should not abandon deregulation, but rather explore pragmatic strategies for improving it and design a new model for meeting the dynamic energy challenges of the future.
With some exceptions (like the Southeast), our energy system has been transformed since the 1990s, from a state-centric, highly regulated and monopolistic model to a deregulated patchwork of interconnected grids (except Texas), regional wholesale markets, state regulatory schemes and an ever-changing mix of private, public and nonprofit retail suppliers. In the coming years, the environmental, technological and consumer landscape for energy will change dramatically. We must set aside pre-conceived political biases and adapt the current energy system to these likely changes. We will flesh out this strategy in the coming weeks. Our other commentaries on state and local government can be found at Civic Way.
- Allegheny County Airport Authority – construction of new dual power microgrid (natural gas and solar power) is underway with hopes to be Pittsburgh International Airport’s primary source by Summer 2021
- Austin Energy – helping multifamily renters and lower-income consumers cut energy bills awarded with energy efficiency programs (e.g., HVAC Tune-Up and Smart Thermostat programs)
- Brooklyn – Microgrid Project transforms excess energy from solar panels on five buildings into renewable credits for subsequent sale to neighboring buildings or community and uses blockchain architecture to create local community market for renewable energy
- El Paso Electric – after 2011 storm, spent millions to prepare for next extreme winter event, including $380 million for new Montana Power Station and $4.5 million to winterize existing facilities
- Oklahoma Gas and Electric – installed 823,000 smart meters and instituted variable pricing, cutting peak demand energy use by 33 percent during the initial trial; the subsequent rollout trimmed aggregate load demands by 70 megawatts
- Oregon – with renewable energy resources generating over 70 percent of the state’s utility-scale net electricity, Oregon has emerged as a renewable energy leader among states (e.g., hydroelectric and wind)
- Energy Primer, A Handbook of Energy Market Basics, Federal Energy Regulatory Commission (FERC), November 2015
- US Electricity Markets 101, Resources for the Future, March 2020
- Report on Outages and Curtailments During the Southwest Cold Weather Event of 2011, FERC and North American Electric Reliability Corporation, August 2011
- Modernizing the Electric Grid: State Role and Policy Options, National Conference of State Legislatures (NCSL) December 2019
- The Texas fiasco and the global push for green energy, Brookings Institute, Jeffrey Ball and David Dollar, March 2021
- The Electric Grid in the Digital Age, Mark Mills, National Review, October, 2019
- To Rid The Grid Of Coal, The Southeast U.S. Needs A Competitive Wholesale Electricity Market, Forbes, Sarah Spengeman, Energy Innovation: Policy and Technology LLC, August 2020
- US Energy Information Administration (EIA), various studies