ERCOT Policy Brief

Over two hundred people died, in what is considered to be “the energy capital of the nation” because they lacked the power (Texas DSHS). Besides not having power, Texas infrastructure underwent a complete malfunction. Pipes burst in homes, cell towers collapsed, and counties received boil water advisories. The extreme weather conditions exacerbated a clear issue within Texas infrastructure. The programs and plans designed to help during times of high electricity demand resulted in massive blackouts across the state. Several lawsuits have been filed against the Electric Reliability Council of Texas, ERCOT, and three energy companies declared bankruptcy after the storm (Paxton 2021). The disaster that occurred in February has resulted in the resignation of several ERCOT officials and has led to thousands of Texans calling to restructure the electricity market.

In response, two new bills Senate Bills 2 and 3, have been signed into law by Governor Abbott. The bills have not been fully implemented, however, with the cold weather fast approaching we may have a chance to see what changes have been made thus far and how this will compare with last winter. SB 2 mandates a number of changes to the governance of ERCOT. This creates a system of accountability where the ERCOT board must respond to the government (S.B. No. 2). SB3 requires that the Public Utility Commission, PUCT, electricity providers weatherize their equipment so they can provide electric generation during weather emergencies. It also gives ERCOT the responsibility to inspect for compliance and report violations to the Public Utility Commission, PUCT. Both bills focus on the overall governance and structure of the Texas Energy Industry (S.B. No. 3). The hope is that major changes at the top will trickle down and lead to vastly different outcomes at the end of the consumer. When signing these bills Governor Abbott said, “everything that needed to be done was done to fix the power grid in Texas” (Blackman 2021). However, while the bills are a great first step, they do not adequately fix the issues with the grid.

Senate Bill 2 and 3 are focused on alleviating the damage already caused and set loose requirements that place no incentive or punishments on companies for not following the laws. There is no effective enforcement plan, the bills instead give that power to the Public Utility Commission. The fines included in the bill do not compare to the billions in revenue companies stand to make from inaction. Secondly, the bills do not protect health care facilities and raise rates for consumers. The bills while under the guise of helping consumers provide a back way for companies to receive money and benefits in losses. This has created a loophole where companies can decide to not comply with the laws and gain billions from raising rates to consumers. Then filing, under this bill, for state aid to repair damaged equipment and other financial losses made from the storm. Lastly, the scope and reach of the bills are singlehandedly not enough to fix the issue with the power grid in Texas. Many plants were unable to create a steady supply of electricity because it was impossible to maintain a steady stream of natural gas. Many power plants run on natural gas, and during the storm, many natural gas plants were not weatherized which prevented them from sending gas to plants and homes.

Overall, it seems like lawmakers in Austin have only decided to amend one side of the issue with the Texas Energy industry. Electric and Natural gas plants and companies rely on each other to supply the entire state of Texas with power. While senate bills two and three are a step in the right direction, more must be done to prevent another disaster like last winter. States like New York have already implemented such measures in their electric and natural gas plants and plan to do the same to expand and grow their renewable energy plants (EIA). Texas can learn from New York and implement the following ideas:

• Improve coordination with neighboring grids to ensure backup energy supply if needed

• Identify critical energy circuits needed to send gas through pipes

• Require plants to have dual-fuel capabilities

• Keep extra electricity on reserve

Staying safe during extreme weather should not be commodified. The Texas government should change these bills and pass new ones that are focused on Texas consumers. Future legislation should learn from states like New York and take the steps needed to ensure that Texans are safe and warm this winter.