Profits over people is what this Texas electric grid meltdown boiled down too. Politics is a slimy business so I will try to stay above that mess and break down what is clear regarding what went south, and how it occurred.
Many people are pointing the finger at the Texas government and government bureaucrats with ERCOT and the PUCT. Many of these people have now been fired or resigned slipping out of sight but that obscures things even further.
You want to be able to hold people accountable not let them slip away into the better paying job somewhere else.
A friend of mine hosted the Super Bowl in 2011 and it just so happened to be a ridiculous level 10 ice storm. Texans looked pretty foolish in the cold icy weather and we were made sport of by the rest of the country. Texans are not great with cold weather.
The power grid failed and an investigation took place soon after. We were promised an investigation in 2021 like for 2011 and we got our investigations both times. Just as in 2011 it was determined for 2021 it had to do with the power generators not being winterized as they should have been. Both investigations revealed that our power generators were susceptible to freezing and going offline. It was the 2021 2nd investigation where the state decided, “hmm maybe we should do something this time.” The Texas Railroad Commission didn’t enforce a requirement that the generators make the needed upgrades because it eats into profits. And, horned toads a fryin’, that was like a 100 year flood type of tragedy, why bother.
As Texas approached late 2020 ERCOT started projecting how much electricity the state would use for Winter 2021. Unfortunately, they just threw out the 2011 data because it was like, “once in a lifetime” type of thing right? ERCOT does what they do every year as the authority in power generation projections, they tell the power generators what amount of electricity is projected to be used for the winter. The rest of the oil and gas gets sold off to other states as the storage facilities can only hold so much.
ERCOT plans for one thing, but just like the weather, things can change and weather often affects energy generation. When we cool and heat our homes due to weather conditions this ends up being the primary projector of energy consumption. The logistics of storing energy fuel is a tight logistics system and so all excesses get shipped off to other states. It would get expensive to keep excess supplies for too long and so there is an impracticality of doing so. The bitter blizzard storm caused excess energy demand but it also caused natural gas, coal, nuclear, and wind to have levels of failure.
ERCOT had too low of an estimate of how much energy would be needed during the 2021 winter. The added stress of the blizzard itself shutting down power generation only added to how little energy Texas had to send out.
In a “HOLY COWABUNGA!” Ninja Turtles moment, ERCOT begins the electric service shell game of shutting down sections of the electric grid one at a time so the whole grid doesn’t go to total blackout. The bureaucrats and politicians generously thanked themselves for their great achievement but many Texans I don’t think got the memo.
Texas is not connected to other state electric grids so we can’t have a plan B like these neighbors of ours. If the Texas electric grid officials are incompetent we citizens have to agree we trusted the wrong folks. We were once our own country, as an independent minded group of people we likely thought this setup is best. In reality there are pro’s as well as con’s worth considering being independent with our grid but now is not the time for that.
Customers Paying For Politician Mistakes
Texas had to buy back power and from the states they had previously sold it too. The price for the power was much higher and the state needed to figure out a way to pay for this mistake. The tax payers ended up paying for government incompetency through a tariff on everyone’s electric bill that adds how much your energy bill will be each month. If you locked into a fixed electric rate agreement it matters not. The state made you pay for a few powerful peoples mistakes. Did the tariff go to power company profits or was it a necessary fee tagged on to a government regulated monopoly pass-through charges? Salaries, credit ratings, ownership structure, remained safe in these government regulated companies but we as power consumers had to sacrifice.
The Texas Railroad Commission and the Public Utility Commission are bailing out the energy companies because of a combination of incompetency. A systemic institutional failure within these institutions that oversee the Texas electric grid led to this failure and at the end of the day people need to be held accountable. Many people were let go in the wake and aftermath of this but tax payers still had to fork over the extra money for their electric service.
A terribly bad forecasting effort by ERCOT led to our generation fuel being sold and sent away with no ability to generate needed electricity when it mattered. Ultimately it was a bad forecast that led to all of this but there was 2011 data that could have pointed out what needed to be done but people looked the other way. Rick Perry believes loyalists will go without electricity for days if it means keeping the federal government out of their business. The sad thing is incompetent fools that call themselves conservatives are just as bad as big government and can be considered the same. Greg Abbott was the governor during this fiasco and so he and those he hired and supported for election with ERCOT and the TRC should all be held accountable.
You really can’t blame the electric providers in Texas as they follow the rules and regulations that the Texas state government gives them. Many of the electric companies do not even own a power generation plant. The energy companies that own power generation plants also simply follow what the state tells them so they are not really a company to put the blame on. The main failure had to do with natural gas power plants freezing up which the TRC and the PUCT was in control of standardizing. The standard needed to consider winterization of power generators in case of a blizzard.
Solar and wind generation outfits were not built for a blizzard like this either. The standard for gearing up for a winter storm would cost more and this would mean less profit. It is normal to think of the profit motive but a risk analysis considers profit. If a proper risk assessment was done it would show that profit could be the most by using appropriate winterization methods even in a place like Texas. A frozen sensor on a water feed line made a Texas nuclear reactor go offline for 38 hours. The offline failure of the Texas nuclear reactor is a live and learn situation that possibly could have been prevented but no one is talking.
At the end of the day definitely don’t blame companies like ONCOR or CenterPoint Energy as they simply provide the poles and electric lines. These companies have a massively effective restore procedure with their linemen and fleets of trucks throughout the state.
Corrupt politicians, lazy bureaucrats, well connected job men in regulated electric power plants all need to go. Fire the bad guys and bring in the good ones.
Donny has been writing about the deregulated energy markets since early 2007. His knowledge has helped consumers lower their electricity cost.