Is There Any Safe Season in Restructured Texas?

For those old enough to remember the year 2021, you may recall that more than a few energy pundits were quick to sweep the Texas Winter Storm Uri blackout disaster under the rug as mainly a problem associated with cold weather.  Their primary solution to Uri was winterizing the equipment and tweaking communications protocols, while leaving in place the state’s basic regulatory structure.  For the true believers in utility restructuring, Texas was still their Shining City on a Hill, and they were more than happy to continue selling it as a model for other states to follow.  That was their story, and they were sticking to it.

Here we sit less than 18 months later, and Texas is again teetering on the brink of blackouts.  But now it is hot weather that is the culprit.  Since we have established that both winter and summer are too much for the Texas market to bear – it is fair to ask, which weeks of the year is ERCOT prepared to handle?  Better yet, perhaps it is time to admit that the Texas electricity story is a lot bigger than just cold weather.

The reality is, even when all or most generation units are available to operate, Texas struggles to keep the lights on, the furnaces running, and the A/C cooling under certain conditions.  As PFT expert Ed Hirs has written about extensively – it is Texas’ flawed attempt at restructuring that sits at the center of the collapsing grid.

Unfortunately, for many the ongoing Texas energy situation is little more than a Rorschach Test revealing single issue agendas.  For some, the blackouts are primarily a story about climate change.  For others, it is all about promoting energy efficiency and demand response.  For others yet, it is a story about intermittent renewables, or, alternatively, a lack of transmission interconnection.  For others still, it is about thermal units that trip offline at inopportune times. 

While there are nuggets of truth to each of these perspectives – they miss the bigger picture.  The Texas “market” is failing its most basic duty.  Rather than placing a premium on reliability, it is designed to drive towards scarcity, sky-high prices, and volatility.  Resource adequacy is undervalued.  Those are its features, not bugs.  Any clear-eyed assessment of the Texas grid will have to come to terms with that reality or it – and any other state that adopts Texas-style restructuring – will continue to endure reruns of the past two years.