Hey, half-right is better than the New York Times normally does whenever writing about Texas, so I suppose we should applaud the authors of the piece I’m looking at this morning, titled “Texas Power Grid Run by ERCOT Set Up the State for Disaster.” Like so many other slanted media reports over the past week on this subject, the Times gets some things right while ignoring inconvenient realities that end up causing the writers to miss the fundamental point.
While most of the facts the piece lays out are in fact accurate, the headline gets the fundamental problem wrong: The power grid itself didn’t set the state up for the disaster; the failure of the people who manage the grid to recognize the utter folly of their ways did. Of course, since the folly that those grid managers at ERCOT engaged in was to focus all their efforts over the last decade on incentivizing the building of more and more wind and solar in Texas while refusing to recognize the reality that those sources of energy would fail us in a weather emergency like the one that took place last week, the leftwingers at the Times didn’t want to focus on that reality.
Perhaps the key paragraph in the entire piece is this one, which illustrates the perilous position that the failures of ERCOT had put the state in when the winter storms began to hit the state on February 9:
One example of how Texas has gone it alone is its refusal to enforce a “reserve margin” of extra power available above expected demand, unlike all other power systems around North America. With no mandate, there is little incentive to invest in precautions for events, such as a Southern snowstorm, that are rare. Any company that took such precautions would put itself at a competitive disadvantage.
Though factually accurate as far as it goes, this paragraph is where the entire thesis of the piece falls apart. While the facts presented in the paragraph are fundamentally true, the slant by the writers in blaming it all on the evil (in any liberal’s mind) “de-regulation” is simply not correct. What the authors ignore in this paragraph is the fact that, while natural gas prices were high during the first decade under the de-regulated system, Texas had a boom in the building of new combined-cycle natural gas power plants, which have enabled Texas to retire much of its fleet of coal-fired plants and lead the nation in emissions reductions over that time frame.
See, the part of the system these authors don’t inform their readers about is the fact that ERCOT’s de-regulated system allows power providers to base their rates to consumers – which appears as a “fuel charge” on our bills – on the price for the highest-cost fuel source, which from 2000-2009 was consistently natural gas. It was that higher fuel charge that provided the incentive to build all of those new, clean, natural gas plants in the first ten years of this century.
But the fundamental failure of ERCOT came when the price for natural gas began to collapse to chronic lower levels in 2009, where it has remained ever since. When gas prices began to collapse in 2009, my own summer-time electricity bills quickly dropped from ~$500 per month to half of that. The loss of that income from millions of consumers robbed the market of the incentives to build new baseload power.
Lacking that profit incentive, and with no other incentivization being provided by ERCOT or the Texas legislature, power providers have since chosen to invest their capital dollars elsewhere. Meanwhile, ERCOT’s policies have continued to heavily incentivize the build-out of new wind and solar, both of which failed the state so miserably during this crisis, which I detailed for readers in a piece posted last night:
Just so everyone knows that all forms of power generation in Texas failed us to some extent this past week, I wanted you all to see the chart below. Here is what it shows, in terms of the % of power loss by energy source from 11:00 p.m. Feb 14 [At the peak of the chart] to 11:00 p.m. Feb 17, when 4 million Texans were without power:
Natural Gas fell from 43 mwh to 32 mwh, a loss of 26%
Solar dropped from 1 mwh to ZERO, a loss of 100%
Wind dropped from 8 mwh to 3 mwh, a loss of a whopping 63%
Coal fell from 12 mwh to 8 mwh, a loss of 33%
Nuclear fell from 4 mwh to 3mwh, a loss of 25%
It is also key to note here that, from midnight on February 9, when the first blast of cold weather began to set in across the state, until 11:00 p.m., February 14, when output peaked, Natural Gas rose from 14 mwh to 43 mwh, or roughly 300%. Over that same span of time, Wind dropped from about 30 mwh to 8 mwh, or about 72%.
So, although a relative handful of natural gas power plants did freeze up, either due to the weather or due to lack of natural gas supply as some pipelines also lost pressure, the unarguable fact of the matter is that so-called “renewables” were utterly useless to Texas consumers during this life-threatening emergency, and that without Natural Gas, the entire state would have been left freezing in the dark.
ERCOT has known for years now – and has informed the PUC and the legislature of this on a regular basis – that the Texas grid lacks adequate reserve capacity to get us through a weather calamity such as the one just past. We don’t have enough baseload reserves, and literally everyone has known that (or should have known it), yet no one in a position of authority has had the political will to force that to chance.
Here is where the NY Times writers get the fundamental issue right, in the following paragraph:
With so many cost-conscious utilities competing for budget-shopping consumers, there was little financial incentive to invest in weather protection and maintenance. Wind turbines are not equipped with the de-icing equipment routinely installed in the colder climes of the Dakotas and power lines have little insulation. The possibility of more frequent cold-weather events was never built into infrastructure plans in a state where climate change remains an exotic, disputed concept.
Indeed, the same features of the de-regulated market that have saved Texas consumers billions over the last 20 years have created this lack of incentivization to build new capacity and to properly winterize pipelines and power generation facilities. The heavy competition by power providers to offer the lowest rates to consumers created a cost-cutting and cost-saving mania among the generators, and any costs not required by regulators have naturally been avoided.
Here’s the other fact that the NY Times writers omit: Even with the lack of adequate reserve power generation capacity, last week’s blackouts would have been avoided had pipeline operators and power generators properly winterized their plants. But, as I’ve written several times over the past week, winterization has been suggested and encouraged by regulators, but it has never been required.
Another aspect of all of this that the Times writers leave out of their story is what happened in the cities of Austin and San Antonio last week, and is continuing into this week. Both of those cities run their own, city-owned and regulated power systems, although they do purchase much of their electricity from the same power providers that generate electricity for the Texas grid. The blackouts in both of those “regulated” cities were far more severe than those across the rest of the state, and both cities are still under “boil water” advisories today due to their water systems having lost power for several days.
Bottom line: This was not a disaster that was directly caused by the liberal boogeyman of “de-regulation.” This disaster was caused by the utter failure of the managers of that system (ERCOT) and the policymakers who oversee them (PUC, legislature) to adequately deal with a dangerous situation that they have all been well aware of for more than a decade now.
Blaming the “system” is what biased journalists and regulators do to shift blame and avoid taking responsibility for their own inactions. The “system” in Texas isn’t the problem: The human beings are.
That is all.
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