Texas Is Experiencing A Self-Inflicted $Trillion Dollar FAIL

slate |   Of all the continental states, Texas alone has its own power grid. (The rest of the continental U.S. is covered by two other grids.) The reason for this is very Texan: The utilities wanted to avoid the oversight from the federal government that comes with interstate business. So Texas developed a massive market governed by the rules of supply and demand that led to low prices for consumers.

But according to Ed Hirs, an energy fellow at the University of Houston, there’s no incentive for Texas power generators to jump in at a moment’s notice, thanks to the way the market is structured. The average wholesale price of electricity for the past decade or so has been lower than what it costs to provide that electricity. He notes that the high-cost generators know they have to be ready to go in the summer, but after that, they “button up and go fishing,” and it can be difficult to bring them back online quickly. For some companies, providing that reserve power in offseason times, such as February, could prove very rewarding if an unusual spike happens. But it’s a high-risk venture, and larger companies are motivated to avoid sinking so much into the cost of producing supply without a reliable demand. So Texas doesn’t have a lot of reserve power.

Julie Cohn, a historian with affiliations at the Baker Institute at Rice University and at the Center for Public History at the University of Houston, added that in Texas there is no law or regulatory entity requiring a power system to have a certain amount of backup in case of a sudden spike in demand, as is the case elsewhere. It’s possible that, because of its isolation, the Texas grid was unable to pull power from the surrounding regions. But as Gürcan Gülen, an independent energy consultant and a former researcher at UT Austin, noted, the surrounding regions were dealing with their own blackouts, so it’s unlikely that would have helped much.

At least one expert has argued that Texas had little reserve power on hand simply because it had little need to worry, given its abundant natural gas resources. But natural gas, which powers a large percentage of Texas electricity plants, was a major culprit in this week’s blackouts. Multiple technological elements in the extraction and distribution of natural gas failed in the extreme temperatures, knocking out about half of its normal output. This would have been a huge problem even if natural gas’s role in the state’s power generation wasn’t taken into account: Texans rely heavily on natural gas for heat and fuel during the winter, and when demand skyrocketed as temperatures plunged, the utilities were forced to prioritize individual houses and hospitals over the power plants. And even then, some of those power plants that received the natural gas were forced to halt operations due to the cold.

The cold was punishing for other power sources as well: At least one nuclear power plant partially shut down in the cold, and some coal generators failed in the frigid temperatures.