Public and private failures have struck both California\u2019s and Texas\u2019 power grids in recent years. Why is this? Is this a failure of the marketplace, of public utility commissions, of capitalism, or of our elected officials?<\/p>\n
Many failures combined, along with a series of events, to cause the Valentine\u2019s Freeze of 2021 in Texas.<\/p>\n
Cascading failures also resulted in power outages in California.<\/p>\n
Why does this happen across the United States? Why do our public and private infrastructure projects keep failing?<\/strong><\/p>\n The difficult truth for ideologues is that power generation and distribution have failed in very different states, and within those states in very different local jurisdictions.<\/p>\n The City of Austin owns Austin Energy<\/a>. It\u2019s not a private company. It operates as a public utility, yet had some of the worst production failures. This isn’t an example of privatization gone wrong, at least not throughout Texas. Nor are California\u2019s problems ideologically based.<\/p>\n We can argue about energy markets, regulation, and the best balance between affordability and reliability. We have come to expect, unreasonably, perfect reliability from everything in our lives. We\u2019re living at a time when electricity and water tend to be readily available. We have high expectations, even as utilities regularly meet 99 percent up-time standards. We want 99.99 percent reliability.<\/p>\n How much would another 0.1 or 0.01 percent reliability cost? Is that cost justified? And do people understand perfect is impossible?<\/p>\n I want an open energy market and segmented grid. Regulations are not \u201csocialism\u201d or \u201ccommunism\u201d and open markets need not descend into crony capitalism or corporatism.<\/p>\n As a \u201clibertarian-left<\/a>\u201d classical liberal, I believe natural resources are \u201cowned\u201d by nobody and serve the common good. You can own the intellectual property that converts the resources. You can and should be rewarded for innovation when it comes to the production and distribution of resources that might not otherwise be possible. However, in the end, nobody should be able to \u201cown\u201d water, gas, oil fields, et cetera. Thankfully, nobody is trying to own the sun or wind.<\/p>\n Returning to Texas and California, they are trying different models of production and distribution and both have a history of failing the public good. Worse, the systems have led to property destruction and the loss of life.<\/p>\n Slogans and memes don\u2019t reflect the nuance of our economy or our public infrastructure. We rely on a public-private hybrid model for most utility services in the United States. Curiously, in most of Europe, utilities are privatized, so it\u2019s not a uniquely \u201cAmerican\u201d hybrid model.<\/p>\n What failed wasn\u2019t Texas or California; it\u2019s not as simple as \u201cRed State\u201d or \u201cBlue State\u201d philosophies.<\/p>\n There\u2019s some confusion claiming Texas power is all privatized. ERCOT is not quite a state agency, but it is a Government Sponsored Enterprise and 501(c)4. ERCOT reports to the Public Utility Commission of Texas (PUCT). ERCOT uses some of the latest technology available as it manages the flow of electric power to more than 26 million Texas customers, representing about 90 percent of the state.<\/p>\n The ERCOT board, in theory, includes representatives from academia, consumer groups, and energy companies. The organization is funded by membership fees paid by the power suppliers. (Many state and federal agencies are also supported by fees collected by regulated industries.) The structure of the ERCOT board was intended to keep it independent, but that\u2019s never easy.<\/p>\n Quick example: The Federal Aviation Administration needs to employ aviation experts. Most of those experts have worked or will work within the aviation industry. Likewise, ERCOT board members end up being energy experts who have or will work within private energy companies and non-profit energy advocacy groups.<\/p>\n ERCOT is mandated by state law to balance \u201clowest reasonable cost\u201d with 99% reliability. The state legislature has long held that low energy prices help attract businesses to Texas and employ its residents. We can debate if that\u2019s politicians putting businesses ahead of voters, but the voters keep returning these officials to Austin.<\/p>\n The energy grid in Texas is not an example of deregulation. It is not libertarian. It is a state system with a mandate to emphasize price and a reliability threshold.<\/p>\n It failed, yes, but not because it\u2019s private or some Wild West or Ayn Rand creation.<\/p>\n It failed because they didn\u2019t plan for cold weather after 2011\u2019s failure.<\/strong><\/p>\n Notably, El Paso did fine<\/a> during the Valentine\u2019s Freeze. After experiencing devastating problems in 2011, El Paso\u2019s leaders received voter support to harden their local electricity grid and power stations. The voters understood the need\u2026 after a disaster. El Paso is also connected to the Western Grid, offering extra security when local generation fails.<\/p>\n Weather won in Austin, a progressive city that even owns a power plant<\/a>. Austin\u2019s plant was offline.<\/p>\n People might know this, but Austin owns a power plant. To save money, the city leaders opted to use the plant seasonally, during summers, because that\u2019s when Texans use the most electricity. Power plants cannot be turned on or off quickly, so Austin was unable to activate its biomass plant during the freeze.<\/p>\n The American Society of Civil Engineers monitors the infrastructure of the United States.\u00a0ASCE Infrastructure Report Card<\/a>\u00a0was last revised in 2019, when our national grade was D+. At that time, our national infrastructure needed an estimated $4.5 trillion in repairs, upgrades, and general maintenance.<\/p>\n Our infrastructure is crumbling, and we know it. But, voters don\u2019t want to do anything about the problem and politicians prefer new projects over fixing what already exists.<\/p>\n State reports are updated on a rotating basis. In 2021\u2019s ASCE reported that Texas earned a C, barely surpassing California\u2019s most recent grade of C-. In other words, our two largest states, despite their political differences, are both in serious trouble.<\/p>\n Years of neglect will now require the complete replacement of some infrastructure. If you don\u2019t maintain a system, it rots.<\/p>\n It\u2019s bad enough that we, as citizens of states and the nation, have allowed the infrastructure to rot. Yes, I place the blame squarely on voters. Even if 49 percent supported spending on maintenance (which is not the case), a majority of local and state voters keep rejecting infrastructure bonds. They will often approve new projects on the same ballot rejecting maintenance expenses.<\/p>\n National politicians also favor shiny new projects, like high-speed rail, over fixing water pipes and power grids.<\/p>\n And then, there\u2019s the weather. The climate is changing, and why it is changing matters less than how we adapt.<\/p>\nERCOT and the Public Utility Commission of Texas<\/h3>\n
National Infrastructure Neglect<\/h3>\n
Weather vs. Infrastructure<\/h3>\n