Texas Is Heading Towards An Avoidable Blackout…Again

With seven people killed and close to a million losing power, the recent storms hit Texas hard. Restoring electricity may take days and may not be completed by Wednesday.

The isolation of the Texas power grid has become a symbol of the state’s independent streak and resistance to federal oversight in recent years. The massive outages during Winter Storm Uri in 2021 were a wake-up call to the vulnerabilities of Texas’ system. But Texas hit the snooze button, resulting in repeated crises in Summer 2022 and Winter 2023. Now it seems Texas is sleepwalking into another avoidable crisis, with record high temperatures approaching and the Energy Reliability Council of Texas (ERCOT) issuing a notice that the grid might reach emergency conditions beginning the evening of Friday, May 17.

The isolation of the Texas power grid began in 1935 when Congress passed the Public Utility Holding Company Act (PUCHA) which targeted energy monopolies to bring down consumer costs as power companies isolated themselves from other states to avoid federal regulation and maintain monopolies, enabled by state size and abundant natural resources. ERCOT was later formed in 1970 to manage the state’s electric grid and the wholesale energy market. Today, ERCOT is regulated by the Public Utility Commission of Texas (PUC) and is responsible for meeting about 90% of the state’s energy demands.

The flaws of ERCOT were put on full display in February 2021 when a perfect storm of disastrous conditions emerged: just as the cold caused energy demands to spike, natural gas production and power plants were buckling, knocked out by weather conditions that energy providers and weather forecasting services had underestimated. ERCOT reported that demand peaked at 69,000 megawatts, far exceeding any planned worst-case scenario. As a result, over 4.5 million homes lost power, and at least 200 people died from conditions caused by the storm.

The isolation of the Texas grid was a key factor in the failure to power the state during such an event. The Eastern Interconnection and the Western Interconnection cover the rest of the US, and stronger links to these two power-sharing networks might have provided more sufficient safeguards and backup energy sources as the cold swept across the state.

The city of El Paso demonstrates the protection provided by power-sharing — it is part of the Western Interconnection and not ERCOT’s network, enabling the city to weather the freeze much better than either Houston or Dallas.

An isolated grid also creates persistent problems even when no foul weather impacts the state. Spot wholesale electricity prices in Texas are $175 per Megawatt-hour (Mwh) for August, up from $90.18 in August 2023. Price increases of this magnitude are not consistent across the United States. California’s spot electricity prices for August are trading for $80 per Mwh, 30% below last year’s average. By allowing these issues to persist, average Texans will continue to bear the brunt of growing costs.

U.S. Representative Greg Casar (D-Austin) recently filed the “Connect the Grid Act,” which would require ERCOT to become interconnected with neighboring power networks and subject the agency to FERC oversight. However, significant Republican opposition signals that it is highly unlikely to pass, meaning interconnection is still a long time coming.

Still, there is a silver lining. The power grid successfully weathered another cold flash this January, thanks to a sharp uptick in battery construction and a surge in solar and wind power, which allowed Texas to diversify and decentralize its energy production to meet increasing demand.

Texas’s decades of isolation from the rest of the country’s power grid have resulted in surging costs to consumers and deadly failures that threaten the health and safety of Texas residents. To accommodate the growing energy needs of the state, Texas needs to end the fantasy of ERCOT standing isolated from the rest of North America.