A major component of Senate Bill 3 was a requirement that electric companies weatherize their facilities to withstand future freezes…. Some researchers have put [this cost] at billions of dollars. (Houston Chronicle, below)

I hope that at least the free-market community realizes what central planning and renewables forcing have done to the Texas grid. Electricity provision in the state is wounded–and the great costs already incurred (and socialized to a large extent) only promise to grow in the future as more renewables ruin the economics of the conventional, reliable power generators, causing price spikes and shortages.

The latest was reported this week on the front page of the Houston Chronicle: “Costs of plant fixes may fall to Texans: Companies seeking to have consumers pay for the upgrades.

Ed. note: This two part series addresses repeated media errors about the role of Charles Koch in the formation of the Institute for Energy Research (IER) in 1989. Part I below covers the history of the Institute for Humane Studies–Texas, the forerunner to IER. Part II tomorrow reviews the formation and early history of IER, then based in Houston, Texas.

Q1. Robert Bradley: A recent article in the Austin American Statesman (since corrected) tied Charles Koch to the founding of the Institute for Energy Research (IER) back in 1989. Since this erroneous association is oft-repeated, I want to develop the historical record with you, the first and only employee of IHS–Texas, the predecessor to IER.

First, Greg, explain how IHS–Texas came to be founded.

A1. Greg Rehmke:  A long time ago, as I remember it, the Foundation for Advanced Studies in Liberty (FASL) and Olin Foundation put up money for three years of Economics in Argumentation.

“You may be right. I have stated earlier that the ERCOT market’s reliance on scarcity pricing did not foresee an environment with high penetration of zero-marginal cost resources. Back in 2005 I generically simulated an energy-only market to demonstrate how scarcity pricing would work. I never anticipated the mass introduction of renewables at that time.”

— Robert Borlick, electricity expert (below)

The once-proud, sturdy Texas electric grid is under severe stress–yet again.

Growing demand (electricity is life!), hot (almost) summer weather, and disappearing renewables (wind in the day, solar at night) have exposed a wounded grid.

The wounds are evident in prematurely retired natural gas and coal generation capacity, as well as a lack of new capacity. Why? Renewable energy severely diminished incentives for baseload generation that would have prevailed without (government-enabled) wind and solar capacity.

“In 2011, even though the market was caught by surprise by one of the hottest summers in Texas history, Texans did not experience any blackouts because of reliable generation. Today, however, the reckless rush toward renewables has changed the situation completely. ”

– Bill Peacock, Energy Alliance (below)

Bradley: How did the just-completed Texas legislative session deal with the February Blackout that caused so much damage to life and property?

Peacock: The session had two issues to address here. One was dealing with the aftermath costs; the other was reform to prevent it from happening again. The lawmakers did poorly with both. 

Q: What did the Legislature do wrong in dealing with the aftermath? 

A: The Legislature failed to appropriately address the massive financial costs of the blackout, most of which came from the Public Utility Commission of Texas’s (PUCT) panicked decision to raise electricity prices to $9,000 per MWh and leave them there for three days.