Deregulated Texas Gets a Bad Report Card from NERC

The North American Electric Reliability Corporation (NERC) released its 2022-2023 Winter Reliability Assessment, and it should serve as a wake-up call for those still arguing that the deregulated electricity model is a beacon for the nation to follow.

Unlike parts of the country where the electricity grid is regulated with reliability in mind, the model Texas has employed for the last 20-plus years does not have incentives to keep and build dispatchable generation resources.  It is thus chronically at risk of extreme system conditions swamping available supply. 

The results of this policy choice are increasingly clear.  The table below from page 8 of the NERC report shows just how perilous the situation is in Texas.  Under extreme conditions – just the sort of scenarios that are happening with greater frequency – Texas will run a capacity deficit of negative 21.4 percent.  That is multiples worse than any other region of the country.  It’s something to keep in mind when special interests or misguided policymakers start pushing deregulation as a policy prescription.  The fact is, it is a failed experiment, and one no other state should adopt.