Almost two months ago, Texas experienced a power crisis that left millions of people without electricity during one of the state’s most severe winter storms. Coupled with icy roads and food shortages, the week spent without water or heat resulted in a death toll of more than 80 people. In the weeks since, power has been restored in the Lone Star State, but the consequences of the crisis are proving to be costly.
So, what exactly happened to cause such a major crisis? There isn’t any particular person or institution to blame. Rather, it was a perfect storm—pun unintended—of various circumstances that could have been individually managed but were critical when occurring altogether.
Texas, Unlike the Other 49 States, Operates Its Own Power Grid
The first piece of information to note is that Texas, unlike the other 49 states, operates its own power grid that is run by the Energy Reliability Council of Texas (ERCOT) and regulated by the Texas Public Utility Commission (PUC). There are pros and cons to operating an independent power grid, with the main advantages being lower electricity costs for Texans and little federal regulation of energy pricing and structures of the state’s energy cooperatives/providers. However, the power crisis last month reflected a significant disadvantage—the major loss of power without any support from neighboring states to support the outage.
Typically, states source their power grids from energy generated within the state but also from other states’ energy sources. Each state, except Texas, essentially has an intrastate network of energy sources that can be used when power grids fail or experience low function.
So, What Does That Mean?
Think of it like reviving a car battery. For traditional cars, getting some jumper cables and connecting to another car’s battery will give the car the energy it needs to run. But trying to use a traditional car to jumpstart an electric car’s battery will likely be ineffective. Electric cars have different battery configurations and voltage that aren’t compatible with those of traditional cars. The same idea applies here. Since Texas is not connected to any other state’s power grids, it could not receive energy from other states during the crisis to “jumpstart” the grid and provide power to Texans. In addition to lacking alternative power sources, ERCOT does not require generators to support the grid during instances of extreme winter weather.
The Record Breaking Ice & Snow Storm
Aside from the technical aspects of the power grid, a major contributing factor to the crisis was record low temperatures across Texas. Some cities had temperatures below zero, which is an anomaly in the usually sweltering state. Normal weather in Texas during February ranges between 40 and 60 degrees, and it’s even not uncommon to see temps in the low 70s. Not only was February’s cold spell drastic, it was also prolonged with temperatures staying below freezing for a week after the outage.
From here, basic supply and demand principles kick in. Because it was so cold outside, there was an exponential demand placed on the grid as people were heating their homes. The grid did not have the supply to meet the demand, so it collapsed. Some areas that did have power experienced rolling outages as the energy companies rationed electricity.
When the demand for power outweighed the supply, ERCOT increased its price from $20-$30 per megawatt to $9,000 per megawatt, per instruction from PUC. This is a standard practice that indicates an increased need for energy supply, but it is only supposed to be temporary. The $9,000 rate was instead maintained for days, creating astronomical energy bills for companies and individuals as power was slowly restored. By the time the rate was normalized, there had been an accumulation of $16 billion in overages.
The Aftermath
Now, almost two months later, the energy industry in Texas is suffering. The CEO of ERCOT was fired the first week of March, Texas’s largest and oldest electricity cooperative filed for bankruptcy due to its inability to pay more than $2.1 billion in bills from the power crisis, and seven ERCOT board members have resigned. This, of course, does not even include individual people whose utility bills were thousands of dollars after the crisis, people who suffered damage to their homes from busted water pipes, or people who had hundreds of dollars worth of food spoil.
Texas Governor Greg Abbott restricted electric companies from suspending customers’ electric services and temporarily restricted them from sending invoices to customers. Seeing the need for winterization of the power grid, legislators in Texas are also exploring ways to prevent a similar crisis in the future. President Biden declared a major disaster in Texas, which will allow the state to receive federal funds aimed at rebuilding and rehousing those in need.
