Simek opined as the Texas Legislature is conducting hearings today to determine what led to last week’s massive power outages. We’ve all learned a lot about how Texas’ energy infrastructure works in week since the historic winter storm, and the story of the failures of the deregulated marketplace has remained at the top of the nation’s headlines.
What is now clear is that last week’s event was brought about by a confluence of factors, ranging from physical challenges in natural gas distribution and power plant operation to market-related issues with how plants are incentivized to prepare for catastrophic weather events. There have also been a lot of potential fixes tossed about, ranging from reconsidering the independence of Texas’ grid from the rest of the nation’s infrastructure to taking to task the Electric Reliability Council of Texas, or ERCOT, which operates and manages the state’s electrical grid.
The legislative sessions hope to bring some additional clarity as to what went wrong, as well as identify ways the state’s leadership can ensure that such a cataclysmal event – which has resulted in the deaths of a still un-certain number of Texans – never happens again. But as the legislature deliberates, keep an ear out for any answers to these four key questions that must be at the heart of any attempt to repair Texas’ broken electricity system.
Will the Legislature Pass Regulations With Teeth?
This isn’t the first time the legislature has tried to respond to the aftermath of a winter storm. In 2011, the state passed new recommendations that attempted to urge power producers to prepare for bad weather. That obviously didn’t work. That’s because every time the Texas Legislature pantomimes reform of its energy sector, it passes laws that recommend – rather than require – companies to make plans to prepare their operations for catastrophic events. Real reform will require Texas to pass legislation that sets new regulatory standards for power generators, the companies that manage the distribution of the resources used in electricity production, and the grid itself.
Will the legislature muster the political courage to do this? I’m not entirely optimistic. After all, it was clear after Hurricane Harvey that the storm’s devastation was worsened because development was allowed in areas prone to flooding. And yet, in the years since, there has been little effort to restrict new development in vulnerable areas.
Who Will the Lege Ultimately Hold Responsible for the Outages?
Over the past week, there has been a lot of blame heaped on ERCOT, the agency that manages the state grid, but ERCOT’s role in the catastrophe is something of a mixed bag. The agency certainly failed to prepare for the event, despite having advance warning that the state was going to experience a crisis, and ERCOT ultimately made the demands that local energy distributors, like Oncor, reduce the load on their grid. But that was because ERCOT was trying to avoid a complete meltdown of the state’s grid – a nightmare scenario that Texas avoided by mere minutes.
The reality is the causes of the outages were complicated and multi-faceted, and they include weather-related impacts on natural gas distribution and power plant operation. Everyone involved in the energy sector shares some of the blame. Power producers were ill-prepared. The distribution grid failed. Electricity providers were unable to equitably manage mandated blackouts. Even some retail electricity providers gouged customers with astronomical prices, even as they froze in their powerless homes. And what does it say about Texas’ energy market that such horrific crisis can also produce huge financial rewards for certain market players?
The responsibility for this chaos ultimately falls on the agencies that oversee this market, including state bodies like the Texas Railroad Commission and Public Utility Commission of Texas. Ironically, what we have now are public hearings being conducted by a legislative body intended to find out who is responsible for the failure of its electricity grid – and yet it is that very legislative body, and the state commissions it oversees, that bear the brunt of the blame.
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[Updates on the Texas Freeze:
March 23, 2021: https://www.youtube.com/watch?v=08mwXICY4JM
March 22, 2021: https://www.youtube.com/watch?v=cwQ-Hp89vuI
March 3, 2021: https://www.youtube.com/watch?v=Zcrsgdl_hP0
February 20, 2021: https://www.youtube.com/watch?v=1Dt1ze_XaNk
April 10, 2020: One year before the Texas Freeze: https://www.youtube.com/watch?v=fUWRyhsutL8
June 25, 2019: Two years before the Texas Freeze: https://www.youtube.com/watch?v=v1BMWczn7JM
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