Economic Sustainability in the Texas Electrical Grid

     The United States has three major power grids: one for the eastern states, one for the western states, and one for the state of Texas. As a result, Texas's government enjoys an unmatched ability to determine how energy is provided to its residents. Up until the turn of the millennium, electricity was provided to Texans by public utilities; local monopolies that generated, transported, and sold power to consumers under the regulatory watch of the state. In the year 2002, Texas's congress finally succeeded in passing deregulatory reforms, privatizing most of the energy market in the hopes that competition between private suppliers would result in lower prices and greater efficiency. In addition, each part of the supply chain was separated and turned into an individual market, meaning the people generating power were not the same as the people selling it. 
     
     Sixteen years later, it is clear that this privatization was a mistake. In order to obtain electricity, Texans have to navigate an overwhelming deluge of power companies and plans that make finding the best supplier near-impossible. The average consumer in Texas pays several times more for energy than they did pre-deregulation, even when accounting for inflation and the general rise in electricity prices across the US. The broken-up supply chain has led to numerous inefficiencies in the market, such as price fluctuations that may result in sellers purchasing power from hundreds of miles away in order to find the cheapest price. The private nature of power companies has caused an unreliable power grid, as exemplified in the common practice of inadequately weatherproofing some power plants in order to use their outages to justify increased electric prices during storms (in part contributing the rolling blackouts many major Texas cities are familiar with). 

     The state must regulate its power grid if it wishes to protect the interests of its citizens. The frequent loss of electricity, sky-high prices, and pushing away of potential business causes significant, entirely preventable, economic hardship for Texans. While a return to the public utilities of the 1900s may fix many of the problems with the current system, the wholesale elimination of a massive market and takeover of all its players may not be politically feasible. However, other, less comprehensive policy could remedy some issues. Establishing strict standards for the construction and operation of power plants, providing greater incentives for producing and purchasing locally, forming a greater public presence in the market, etc. could provide tangible improvements to the economic status of consumers.

Sources:

Baddour, Dylan. “Texas' Deregulated Electricity Market, Explained.” HoustonChronicle.com, Houston Chronicle, 8 June 2016, www.houstonchronicle.com/local/explainer/article/texas-electric-deregulation-ERCOT-TCAP-7971360.php.

Prentis, Eric L. “Has Privatization Failed Texas Utility Customers?” Electric Light & Power, University of St. Thomas, 24 Oct. 2014, www.elp.com/articles/2014/10/has-privatization-failed-texas-utility-customers.html.

Steffy, Loren. “The Generation Gap.” Texas Monthly, Texas Monthly, 11 Feb. 2014, www.texasmonthly.com/articles/the-generation-gap/.

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