“It is time to do now what was not done in 1999 in Texas. First, deregulate the electricity market, do not re-regulate it under a new regime. That means removing public utility regulation of rates and other terms of service, as well as end the franchise protection over geographical territory.”
The Texas Electric Utility Restructuring Act of 1999 is approaching a quarter-century. And what a mess has resulted from the misnomer “electricity deregulation.” A monopoly wholesale market under mandatory open-access rules is central planning pure and simple. The idea that a ‘competitive’ retail market rescues a governmental wholesale market from the knowledge problem and politicization (per Lynne Kiesling, Michael Giberson, etc.) has been turned upside down in Texas and elsewhere.
I was reminded of this upon reading a 500-word commentary from Doug Sheridan on LinkedIn. It is worth reproducing in its entirety.
Imagine you’re in charge of the electric grid that services the vast majority of America’s second largest state. You have a problem—demand for power is soaring, and supply is increasingly erratic… even shrinking.
You’re faced with the fact that the wind turbines and solar panels that make up a large chunk of your capacity are often barely producing. And that your underappreciated, overtaxed and undercompensated thermal plants that are supposed to fill the gap are struggling to keep up.
You know you have to do something, but you also know you have to answer to a lot of people who don’t want you to do anything—mostly because they don’t want you drawing attention to the problems on your system, lest their role in creating or enabling those problems makes the front page.
Sheridan continues by identifying culprits.
You have a governor, who has vowed to keep Texas free from a green energy takeover, but seems weirdly happy to help facilitate just that. You have a confused legislature, who’s slashed your budget and oversight after the last blackout fiasco, which was largely enabled by persons of their own ilk.
You have a public utility commission of questionable competence, who appointed your bosses and can fire you at any time. You also have a media who are unabashed cheerleaders for overhyped wind and solar generation. They are also ready to pounce on any hint of mismanagement or corruption.
Finally, you have a demanding public, who are used to cheap and reliable power and who won’t tolerate interruptions.
So what to do? Sheridan ends:
You try to avoid making any hard decisions. You try to squeeze every last megawatt out of the generators on your system, even if it means risking damage or breakdowns. You try to delay any orders to cut power to customers, even if it means risking instability or collapse.
You also position yourself to shift the blame for these circumstances to others than yourself, your organization and your bosses, even if it means ignoring the root cause of your problem—the growing reliance on intermittent and unreliable sources of energy that are incompatible with your grid and its mission.
You hope that somehow, some way, you can get through this crisis without anyone noticing how close things are to the edge. You hope that no one will ask you why you didn’t better plan ahead, why you failed to act with greater urgency, why you didn’t invest in more reliable and resilient infrastructure, why you didn’t stick to reliable, dispatchable, and affordable forms of energy.
You pray that no one will question your competence, your integrity, or your loyalty. Most of all, you hope no one will realize you’re in charge of a massive and growing house of cards—increasingly pressing your luck and that of the state with each passing day.
To Sum It Up: Say hello to Pablo Vegas, president and CEO of ERCOT and the most on-the-spot person in Texas. And wish him luck… he needs every bit he can get.
Commentary
It is time to do now what was not done in 1999 in Texas. First, deregulate the electricity market, do not re-regulate it under a new regime. That means removing public utility regulation of rates and other terms of service, as well as end the franchise protection over geographical territory.
Second, give the asset owners of transmission and distribution the right to use their property without state or federal mandates involving other parties.
Third, end the governmental preferences for intermittent generation (wind, solar, batteries) and related transmission. Private contracting will set the exact terms in a truly free market–the what, when, where of electricity in the home or business or otherwise.
This will require new laws to repeal old ones. Regulators will be demoted; private entrepreneurship promoted. Ideas have consequences–let the debate broaden.