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The Energy Island

from The Disconnect: Power, Politics and the Texas Blackout

42m 35s

The Energy Island

Texas operates an independent electric grid, isolated from the rest of the country, which limits its ability to receive or send power during emergencies. This isolation dates back to the early 20th century when states, including Texas, formed self-contained systems to avoid federal regulation. While the state developed a robust energy presence through oil and diverse energy sources, it also built a deregulated market in the 1990s, transforming the Electric Reliability Council of Texas (ERCOT) into a marketplace that manages electricity through supply and demand auctions—rather than a traditional grid operator. This system, while efficient in normal conditions, has proven fragile during extreme weather, as seen in the 2011 and 2021 winter storms. In both events, the state’s grid collapsed due to insufficient winterization, poor preparedness, and a lack of coordinated emergency response. Despite decades of warnings and prior outages, Texas failed to implement critical safeguards, revealing a deep disconnect between its energy industry reputation and its actual resilience. The 2021 blackout, which left millions without power for days and possibly caused hundreds of deaths, intensified public skepticism about the reliability of Texas's energy system. The root causes—deregulation, lack of investment, and underestimation of climate risks—are now central to a national conversation about energy security. The story highlights how a system designed for efficiency and market competition can fail catastrophically when environmental stress exceeds engineering and policy preparedness.

Transcription

6499 Words, 35621 Characters

English
so this is the beginning a couple weeks after the big blackout I found this video in my phone what might be a historic winter storm here in Austin it's from the night before the power went out and when I found it I didn't even remember recording it just started down here or exactly who I was recording at before I know I was really excited about the snow I love this but when I listen back this sounds corny but I get chills because of this last thing I say right here big question for a lot of people right now is whether the electric grids gonna hold up a lot of people knew a blackout was possible but the really strange thing for me the thing that kind of bugs me is how casual I was about it I make it sound like the power grid falling apart or at least the risk of that is just a part of being in Texas and as we'll see it kind of is my name is Mos Bouchel I'm a reporter at KUT the public radio station in Austin I've been covering energy in Texas for more than a decade and around the time I started on this beat there was another blackout in fact it was almost exactly a decade before this years more than 50 generation units across Texas failed in last night severe cold weather so our caught the state's grid operator told utilities to start shedding some usage this is from back in 2011 the characters may have changed but the story is the same governor Rick Perry is urging people to conserve energy the outages also got Lieutenant governor David do her stocking back then there was a winter storm power plants froze up gas lines froze to some people's power was turned off but it was for like a couple hours Austin Energy General manager Larry Weas spoke to the council Thursday this was an emergency situation where the planes in a dive and we've got to get we've got to pull it out real quickly and and that that's what happened at that time it was seen as this huge disaster a total failure there were investigations finger pointing and the thing is everyone knew exactly how to fix what went wrong they could start by winterizing the grid we've got to figure out a way to somehow incentivize the generators to to be prepared this is you know 82 outages I think is unacceptable they knew what to do they just didn't do it so when this year's winter storm rolled around almost the same thing happened again and it was much much worse see all these head lights you see all these people these are people that have had no electricity for 13 hours and they don't have anywhere else to go they don't have friends the hotels and motels are sold out look at this this isn't some third-world country this is the US of A this is Texas look at this this is ridiculous I am so heated y'all Greg Abbott what the fuck are you gonna do about this power grid really 2021 no fucking power day five in the bathroom I have lights on well candles and nothing millions lost power for days according to at least one estimate more than seven hundred people may have died but I'm not sure people really understand what happened or why I started talking about this project with my colleagues at the public radio station in Austin a couple days after the end of the blackouts and I heard all these questions about how our power grid works and how something so catastrophic could happen in a state that's literally known for its energy industry like it's baked into the whole persona of the state this is the stuff about which thousands of stories have been written in which almost invariably at least once the author refers to it is black gold over half the oil that has been produced in the whole world was produced in the United States mainly in the state of Texas in recent years Texas has come to be accepted practically as the universal gauge of the ultimate of everything oil production and reserves to stagger the imagination but even with all that oil and gas and coal nuclear wind solar and hydro power the electricity grid in Texas lives on this nice edge I mean just since the February blackouts there's been two more close calls to and it seems like people have lost faith in this story of Texas as this beacon of energy the power grid here has become a national joke so Texas had a decade to prepare and it just didn't and you can get a lot done in 10 years look at Beyoncé in the last decade she now she was pregnant in the coolest way possible performed at two super bowl half times watch salons kick the shit out of her husband and then made a whole album about it invented the color yellow and founded the Coachella music festival and was in a film with the world's greatest actor she got a lot done she probably could have winterized Texas's power plants as well if anyone had just thought to ask her I mean has anyone asked Beyoncé for the past few months a team of reporters at KUT and I have been looking into some of the big questions about the power grid in Texas we wanted to know how we got the grid we had and why it keeps failing the way it does and there's a word that keeps coming up when you talk about this it's deregulation deregulation what they call deregulation deregulation deregulation deregulation the deregulated electric market in Texas but the answer isn't that simple like the grid itself it's complicated and in this podcast we're going to try to make it make sense we're going to take you from the very early days of the Texas grid to the big push to deregulate in the 1990s right up to now when maybe the lights come on but sometimes maybe they don't I'm Mosbushel and this is the disconnect power politics and the Texas blackout episode one the energy island in February after the initial shock of being without power started to sink in I think one of the things that really surprised people was the realization that we in Texas were all alone our state energy system fell apart in this big winter storm we did not have the power to keep ourselves warm but more than that the cavalry was not coming even if there was power in other parts of the country to send our way to save us from this day's long deadly catastrophe that was coming there was and is simply no way to get that power to us that's because Texas unlike any other state in the country operates its own independent electric grid now I've got to say there are parts of the state that aren't on that grid and it's worth noting that those places were much better off in February but about 90% of Texans are cut off it's an island that can't bring in or send out very much power even if it needs to a lot of people learn that only after the power went out and KUT's clear macaroni was one of them I sure was I wanted to ask you about this when did you find out the Texas had its own grid like halfway through the storm sitting on my couch and two hoodies and a blanket oh man and at that time my mom who was texting me i'm so confused what you guys are still in a blackout why aren't you just getting energy from other states and i was like well i just learned five minutes to go because we can't right yeah yeah so that's why i wanted to take into this and so that's what this first chapter is about so where did you start yeah so since i didn't know too much about this i went and found an expert and the person i talked to was julie cone my focus has been on energy history and specifically electrification in the united states and north america more generally sounds like you found the right person yeah if you need an electricity historian julie's your girl yeah let's start the very start let's start with like the the beginning of electricity manlo hard yeah you got to promise that it's in ladies and gentlemen those of us who begin our lab labors at the operatives key 50 years ago i've been prepared to see and assist in the whole modern industrial development of electricity you know one thing that they were using electricity for pretty early on in texas what ice making oh because that's how we called off yeah you know making just making big chunks of ice and it's all kind of a novelty for a long time we start to use electricity to power different things people start to use it in their homes utilities i guess starting up and these are mostly in city yeah there's hydro power or uh city or an early electric company could kind of buy a kit like a build your own utility kit you you get a small steam generator to power street lights, industry, maybe street cars. - So you had public utilities and a lot of little private power companies all competing for customers. - Right, and we should say that public utilities are maybe city owned, they're publicly run. The same way that the city might run your water supply system or something else, the city would control and own the electric utility. And then on the other hand, like you say, you had all these kind of tiny little independent utility, if you buy a generator and you start making power and you try to compete for customers. - But for a while, it's kind of just this hodgepodge thing that's existing in the United States. - Starting in 1907, states began to regulate power companies. They said, you know, this is becoming an essential service. We want to make sure that it's provided on a fair basis to the citizens of our state. So we will say, who can operate where and how much you can charge your customers for your electric service? - And this is happening because after a while, electricity starts to become a necessity. And I kind of was looking at it as how we view Wi-Fi. You know, for a long time, it was neat to have in your house and have access to the internet. But now school and business and, you know, interacting with your local government all has to be done on that. - So this is becoming more than a novelty and the first few decades of the 20th century state regulation comes in. So almost every state is regulating their local power companies to some extent. Yes, who was it? - I'm gonna guess Texas. - Yes, exactly. - Okay. - So as electricity becomes more popular and more of a necessity and people need it every day, power companies start to consolidate bigger ones or buying smaller ones. Also, we see them starting to connect and share power for the first time. - So what you're describing here is really the beginning of an electric grid, right? You have all these different electric utilities, companies and urban centers and those utilities start consolidating, growing to sell more electricity to more people. And so the grid is spreading out. - Yeah, that's the whole point is like if the power companies are linked up, they don't have to create it locally. And that's like why people wanted to do this. - I almost picture like a plant growing, starting in population centers and spreading throughout the state, linking up to form what becomes a grid. - And it's based on monopolies. After a while, there's only one company serving any one place. And most of the oversight, if there is any, comes from the state. - So this is growing. It's growing at the state level and then these companies are crossing state lines. So what's happening nationally? - Well, a lot of things changed when this guy became president. - Let me assert my firm belief. - That the only thing we have to feel is feel itself. - Ah, FDR. - Nameless, unreasoning, unjustified terror. Which paralyzes needed efforts to convert retreat into advance. (upbeat music) - So this is a new deal era. People are desperate. FDR has come in saying he's going to help. And the reason for the depression were the excesses of banking, right? Monopoly powers. And I didn't realize this until we started researching this, but these big electric companies were a lot of what they were talking about with the new deal. Like eventually these monopolies utilities became taken over by banks. And I don't want to get too much into the weeds here, but these things were called holding companies. They operated like you said across state lines. You know, they could control the market, charge what they wanted. This was just the kind of thing that FDR railed against. It was very unfair to the consumer, which is why they passed the federal utility holding company act in 1935 was to hold those people accountable, so they couldn't do that. - Okay, so that was a rule that said that if you cross state lines, you were going to be under the regulation of the feds. - It's the first time that the federal government said, electricity is a big driving force in this country. And we want to make it fair to consumers to get it and use it because before that wasn't a goal of many people. - And so what they do is they kind of break up a lot of these monopolies that are operating across state lines. Basically, they limit their market power, right? They limit the amount of power they have over consumers. But the power companies could get around it if they didn't cross state lines. - Exactly. You can imagine why it was very attractive to these Texas power companies to say, okay, forget it. We're not going to sell power to anybody in Louisiana or Oklahoma or whatever. We're just going to form interconnected systems inside Texas and operate as we wish. - And they weren't the only ones though. So that's important to remember. Texas didn't become an outlier in the 1930s when this federal law was passed. A lot of states were doing the same thing. So main power companies were creating power and keeping it within their state lines was sconsented the same thing as well. So Texas wasn't unique there. - It wasn't just that we were like a bunch of cowboys out here. - Texas is exceptional, but not in this case. But eventually, we were the only ones that could continue to do that. - Texas as everyone who lives in Texas knows is a really big state and not only are we big, but we're wide, we have two time zones. So the sun rises an hour later in West Texas than it does in East Texas. And we also have virtually every type of energy resources that's used nowadays to generate electricity. We have oil, we have gas, we have coal, we have uranium, we have sunshine, we have wind. You know, literally we have an abundance of all types of energy resources. So for the power companies, this worked out really well. - So it's not just that we're big. - It's that we're wide. - That we're wide, right? (laughing) - California is a big state, but it's skinny. - Exactly, not as wide. As we learned during the storm, a grid is kind of a fickle creature and you don't want it to come out of balance and when everybody needs energy at the same time, you throw it off balance. So what makes us unique in Texas is everybody isn't using electricity at the same time. East Texas neighborhoods, at a certain point in the morning, their street lights turn off, people wake up, turn on their coffee, all of that movement, yeah, it gets going. And then that moves slowly across the state in an hour later in West Texas, that starts happening. So we never typically overload the grid. And as she was saying, we have all these different sources that feed into it. And most states have to depend on each other to bring in more wind or more hydro or things like that. So we just were kind of set up in a perfect way that we never had to connect where other states eventually felt like they had to connect to these bigger grids. - Yeah, because staying within state lines helped the power companies, right? They got to avoid federal oversight. But now a lot of people are saying, hey, this is maybe not worth it. - Which is why when we started talking about this project, I said I wanted to work on this part because it was the question I wanted to answer personally. You know, why are we on our own grid? It didn't make sense to me that week when I was in two hoodies, wrapped in blankets, running out of food. I looked around the country and not every other state was dealing with a storm as bad as we did. We could have gotten electricity from places more north from us where the storm didn't hit us hard. And if we could have just turned on the lights and turned on the heat, so much of the bad stuff that happened that we could have been avoided. (gentle music) - Claire, thank you so much. - You're welcome, those. (gentle music) (upbeat music) - So Claire just told us how smaller electric systems linked together in the first half of the 20th century. The idea was to make electric service more reliable. At some point, each smaller energy grid decided it needed to join up to ensure a steady supply of power to its customers. Texas is the one state that did not. But in 1965, something happened that did force the state to focus more on reliability. It was a huge blackout. But it didn't happen in Texas. It happened in the Northeast. Now, I'm going to play you the sound of that blackout. (gentle music) This is Everyone's Gone to the Moon by Jonathan King. It was a big hit in 1965. ♪ Street swell of people ♪ ♪ All alone ♪ - On November 9th of that year, it was playing on the radio station, W-A-B-C in New York City, when this blackout hit. (gentle music) Here's the tape of that broadcast. (gentle music) ♪ Everyone's Gone to the Moon by Jonathan King ♪ This tape is going to teach us about blackouts because a lot of people don't know this, but the electric grid has a beat. It's 60 hertz or 60 cycles per second. It's the frequency that electricity runs over transmission lines. Almost everything electrical in your house is built to run on 60 hertz, your toaster, your TV, and at this radio station in New York, the turntables were synced to that. frequency. So when the beat starts to slow on the grid, the DJ starts to notice the music and he doesn't know this yet but something has gone very wrong on the power grid around Niagara Falls. That's caused a chain reaction that resulted in not enough power getting to New York City. The beat is dropping. You can actually use this tape to figure out when electricity is falling off the system. Around 30 million people on the East Coast lost power. This was the worst blackout in US history up to that point. When the grid gets out of balance like that, it can fry the entire system like literally break the grid. So to save the system, grid operators cut power. The idea is it's better to intentionally go dark than to let the system crash. On the East Coast 1965, the power was back up the next day and soon big utility companies started creating what they called reliability councils across the United States to protect against grid failures like this. Texas, still in Ireland, electrically disconnected from the rest of the states, got its own. In 1970, the Electric Reliability Council of Texas, Urcott, for short, was born. It simply put, its job was to keep that balance of electricity stable, to keep that beat, that 60 Hertz constant. The first Urcott was just composed of two people, volunteers at that, but over time it grew, becoming what some would call the traffic cop of the power grid in Texas. And by 1975, the state had also established the Public Utility Commission of Texas to set electric rates. And I'm telling you all this because we just heard about how Texas had not enacted state rules for its energy system. But by the 70s, that was different. The creation of these two groups really ushered in an era when Texas was a lot like other parts of the country. That's to say, it had a regulated electricity system. So what does that mean? And what did it look like in Texas? What can it tell us about what we have now? Joining me to help answer those questions is a man who actually grew up in that environment. Katie's Jimmy Moss. Yes. It was a strange time. Luckily I was pretty much ignorant to a lot of it as a child, but so you were paying the bills. I was not paying the bills then, but you know, I think by and large, most people saw their electric company as these, you know, whomever they were paying the check too, whether it was a municipal utility, a co-op or an actual company. They saw them as sort of benevolent entities that provided this great technology that just shortly before all of our lives was not available to everyone. And this is sort of a golden era for the electric company. They can almost do no wrong. They always produce these glowing jingles that they would play no matter where you live. There's probably something that you heard that sounded similar to this. When you flip that switch at any hour, what comes on it? People power. People working for you just to see that you live better, electrically. You know, and who doesn't feel good about the electric company when they're doing this? I mean, I mean, this is great stuff, you know? I feel that kind of post-war American optimism. We're a country that's come out of World War II with great wealth and a sense, as you said, that there's a kind of benevolence perhaps in government and even in industry and in these companies that are bringing us this service that, you know, our parents maybe didn't have access to. Let's talk a little bit about how this actually looked on the ground, like in Texas. I almost hesitate to use these terms. And you know, I've interviewed enough people that tell me that the terms are meaningless, that's something that we might have to get into a little bit more. But we're talking about a regulated system, a regulated utility system. You mentioned publicly owned utilities and privately owned utilities. But what both of those had in common is that they were essentially a monopoly, right? Right. These are big companies that own the power plants, they own the transmission in many cases, and they sell the electricity to consumers. All that was taken care of by one sort of entity that you knew of as the power company, or electric and light, or power and light. You know, whatever, they have a monopoly over the region, right? You can't go to a different electric company. We're going to get to this, but in Texas, it's still like this in a lot of places too. And you paid what they asked you to pay. That was it. This is your only option. This is the regulated part, or at least a big part of the regulated part. You paid what they asked you to pay, but they had to go to the government to get approval for that. Essentially, it was a deal that was made between regulators at the state level and these companies. You have access to this pool of customers that are going to be yours. But the government, the public, is going to give oversight to make sure essentially that the people aren't getting too much of a raw deal. In an exchange, they had a steady stream of customers. They could just call themselves the power company, and then that'd be it. In an age of such a distrust, where we're at now in history, it's hard to think about a time when arrangements like this could be taken for granted and generally viewed as just kind of a positive. Yeah, it is very strange now, especially when we have choices for a lot of options, no matter what our utility is, whether it's phone or Wi-Fi or whatever. The idea that just without question accepted a bill, accepted a hook up really to our home and expected it, and then we didn't question it in any way. Okay, so what happened? Well, things changed culturally in America in the 60s and 70s. We had some major shifts from Dallas, Texas, the Flash, apparently official. President Kennedy died at 1 p.m. Central Standard Time. For it seems now more certain than ever, that the bloody experience of Vietnam is to end in a stalemate. Therefore, I shall resign to presidency effective at noon tomorrow. People began to lose faith in government. On the energy side, we had two major events that sort of had to solve question this utility that for so long, we just, we were singing songs too, you know. There is NBC News Washington correspondent Robert Abernathy. Good evening. The Northeastern United States tonight suffered its worst electric power failure in history. We had this blackout on the East Coast in 1965, which you talked about earlier. And then we had the oil crisis in the early 70s. And when several circuits break at the same time, we have an energy crisis. Spoke with historian Sarah Stamford McIntyre, she's an assistant professor at the University of Colorado Boulder. She got her undergrad at University of Texas, by the way. The Arab members of OPEC embargo oil to the United States. And by this point, oil production has shifted out of the United States into the Middle East. And so these nations know that they have a political weapon here, which is oil supply. This had sort of a huge public impact, not only in policy, but then also sort of political consciousness and sort of public understanding of sort of America's place in the world. And see what happens after this is the people of Texas in the oil industry. They sit up in their seats and they start seeing themselves as part of the solution in this whole puzzle that is energizing America, whether it's in our cars or in electric transmission. Yeah, because she's talking about oil, but this really went beyond that. This was a question of energy writ large. And in the 70s, you have a president and Jimmy Carter coming out and like literally asking people to conserve, you know, if you're cold in your house put on your sweater, don't turn your thermostat up. Many of these proposals will be unpopular. Some will cause you to put up with inconveniences and to make sacrifices. The most important thing about these proposals is that the alternative may be a national catastrophe. And you know what? He was right. Right, those proposals were very unpopular, and a lot of people began to wonder whether we had it quite as good as we thought we had. Our decision about energy will test the character of the American people, and the ability of the President and the Congress to govern this nation. So in the late 70s, the Carter administration is facing sort of the fallout of all of these crises, and it's on his administration to come up with a solution, and among those solutions that they managed to find was the Public Utility Regulatory Policy Act, known in the biz as the purple. And what this did was start to ratchet up the tone for deregulation in the energy industry. Some of it opened up the energy industry into other sources of energy. It stands to reason that we would not have developed solar, wind, and other renewable sources of energy within Texas without the act being passed in the late 70s. So the deregulatory push went hand-in-hand with a push for energy alternatives, essentially renewables? Over time, it laid the foundation for what Texas is now the biggest producer of wind energy in the United States. So then with purple, you have this sort of, hey, the deregulation is a good idea. The sort of sets this tone where both parties are just eager to find things that they can deregulate. Yeah, and we're talking about, like, telecom, we're talking about airline. Airlines got deregulated. Many industry experts say that actually saved the airline industry. See, before they were regulated on what cities they had to fly to, what came out of deregulation of the airline industry is, what you commonly see today, the hub and spoke system, which allowed airlines to more efficiently use aircraft. See, you have a list? Yeah, there's, let's see, there's, but transport. These are all things that were deregulated. That were deregulated since Nixon, transportation, agriculture, finance. Awesome. Yeah, that helped that a lot. Really did a bang-up job on that one. That worked out. Telecommunications, natural gas, oil. I mean, they're literally 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, regulatory acts from 1976 to 1999, all trying to undo something that has been in place for a decade. And again, I just want to make it clear, we're not saying that there's no regulation involved in any of this stuff anymore. But what we're talking about is a specific market arrangement, where the government decides it's going to step back and that free market competition is going to begin to fill the void left by the government's absence. Essentially, the attitude was and the philosophy was, and many economists were saying, let's let the market decide. Through a new top-level review process, we will do a better job of reducing government regulation that drives up costs and drives up prices. That was President Jimmy Carter again, and that derogatory attitude continued under the Ronald Reagan administration. That brings me back to regulation. In this case, regulation of natural gas. I'm convinced, and I believe that the evidence backs me up, that just as deregulation of oil has led to a better deal for the American consumer, a freer market in natural gas will have the same beneficial effect for you. And then that continues all the way up into the Clinton years, when Sarah describes a key change to a law in the Clinton era. There is this kind of new piece of legislation out of the Clinton administration, which revised what this organization called the Federal Energy Regulatory Commission, how they're supposed to regulate industry. These are famously the laws that in these regional monopolies, ending the vertical and horizontal integration that dictated the old system. There's one thing that I'm still confused about. We've established the broad historical sweep of this whole thing. We know, in the '70s, there was a shift in people's mentality about government. Their attitude towards government, perhaps, there's a big recession, and people started thinking that perhaps the future was not going to be as bright as the past. And that was harnessed, in part, by a political push to deregulate. But who really was asking for that? I mean, were people coming up and clamoring and saying, "Hey, we got to deregulate telecom. I'm sick of regulated airlines." I believe, in the end, no customers were asked whether or not they wanted any of this to occur. I think, in the end, there was one motivator. I think there was a lot of profit potential there for energy companies and for folks who wanted to invest in energy companies. It wasn't so much concern necessarily for consumers, but it had a lot to do with this realization that if there isn't sort of a government-backed monopoly, then there's all kinds of potential for investment. So we're talking about the whole country. And in a certain way, Texas is in the same boat, right? We're still dealing with these big power company monopolies, some of them are publicly owned, like, for example, in Austin, in San Antonio. Some of them are privately held, or they're investor owned, right? What they have in common is that they're these big companies, they own power plants, mostly coal power plants, and they sell electricity, they make in those power plants to the customers who have no choice but to buy from them. That power comes over the lines that they own, and they set the market rate. Under the regulation of the state. Right. Until the 90s, when finally, this deregulation wave comes to the Texas energy market. A market that lets remember is an island within the country. The one state that still has its very own grid, where the process of deregulation, the great experiment of deregulation, can happen to a level unheard of anywhere else in the United States. Thanks, Jimmy. Always a pleasure, most. Now, at the start of this segment, we talked about the creation of the Electric Reliability Council of Texas, ERCOT, how it became the traffic cop of the Texas grid, balancing the flow of electricity through the state. Now, this year, because of that role, it was the first group to be blamed when the blackout hit, but amid all that anger and frustration, there seemed to be a lot of confusion about ERCOT's real job is, and how it does that job. Because the fact is, ERCOT's main job is not to keep your power running at home. Like we said before, its main job is just to keep the grid balanced, to keep it all from breaking down. Sometimes that means disconnecting the power at your home. And what's more, ERCOT doesn't own any of the stuff that makes up the grid, owns no power plants, no transmission lines, nothing like that. So how does it operate this big complicated system without any of those tools? Well, to explain how I'd like to take you there. Because ERCOT is a place, the headquarters are in Taylor, Texas, about a half hour drive from Austin, and up until this year, they used to invite reporters there every spring. To answer the question, does Texas have enough juice to get through the year? I went a few times, there were presentations, you'd meet executives, but the highlight of these trips was always the visit to the control room. It's very quiet, this is me inside that room. A lot of people here at desks just surrounded by computer screens and then up on the wall are facing a huge screen. It's impressive, it looks like mission control at NASA. This staff 24 hours a day by the people who manage all of the electricity going on and off the grid. Now, remember, they need to keep that completely balanced or the whole thing breaks down. You see maps of the weather conditions where there's a generator operating, but managing that flow is not nearly as simple as directing traffic, especially after deregulation happened. There's maps of Texas showing transmission lines, different counties with the pricing of energy in each place. See, the truth is, Urkot is not a traffic cop, it's really a big marketplace. The way the people here manage the flow of electricity is by overseeing who's buying and who's selling that electricity, kind of like an auctioneer, but a very quiet auction. So say there's a private company that owns a power plant and wants to sell the electricity it's making. Under Texas rules, it cannot sell that electricity directly to consumers, so it's got to sell its power to another company. And that company doesn't own power plants, so it can sell to people in their homes. You with me? Erkott takes bits and handles those transactions between power generators and middlemen that then sell to people like you and me. Erkott literally holds the debt on the transactions between different players in the market, and that's how it controls the flow of electricity by overseeing those sales. The state doesn't set the price of power. There is a cap on how much generators can charge, but most of the time the price is just determined by how much power is available and how many people are buying, classic supply and demand. And in Texas, the market also decides other things, things like how much you pay for electricity at your house, like when it's profitable for a company to run a power plant, how many get built and weather to insulate them against the cold? It all rests on a series of complex transactions between electricity generators, power traders, retail electric providers, and consumers. One thing triggers another thing, triggers another thing, and it all needs to work very smoothly to keep the lights on. Most of the time, it does work smoothly, except when it doesn't. Next time we're going to tell the story of this transformation, how Erkott went from traffic cop to auctioneer and how the Erkott grid became the most competitive market for electrons in the country. We'll hear from the people who hatched the plan to remake the Texas energy grid. The Disconnect is a production of KUT and KUTX Studios in Austin. It is produced by me, Claire McInerney, Jimmy Moss, Andrew Weber, Nadia Hamdon, and Audrey McGlenchi. Matt Largy is our editor, thanks to Todd Callahan for technical support, engineering help from Jake Perlman. Stephanie Federico is our digital editor. I'm Mosbou Shell.

Podcast Summary

Key Points:

  1. Texas operates its own independent electric grid, isolating it from other states and preventing reliable power sharing during emergencies.
  2. Historical patterns of energy regulation, especially federal oversight in the 1930s, led to states forming isolated systems, with Texas remaining disconnected for decades.
  3. The 1965 Northeast blackout and the 1970s oil crisis shifted public trust in energy systems, prompting a national push toward deregulation.
  4. Texas implemented deregulation in the 1990s, transforming ERCOT from a grid "traffic cop" into a marketplace that manages electricity through supply-demand auctions.
  5. Despite the market-driven system, the grid remains vulnerable to extreme weather, as seen in the 2021 winter storm, which exposed failures in winterization and preparedness.
  6. The Texas power system lacks federal oversight and has long relied on state regulation, creating gaps in resilience and emergency response.
  7. Key failures in previous blackouts—like 2011 and 2021—stem from a lack of investment in winterizing infrastructure and a failure to act on known risks.
  8. The deregulated model promotes competition but removes centralized control, making grid stability depend on complex market dynamics rather than coordinated planning.

Summary:

Texas operates an independent electric grid, isolated from the rest of the country, which limits its ability to receive or send power during emergencies. This isolation dates back to the early 20th century when states, including Texas, formed self-contained systems to avoid federal regulation. While the state developed a robust energy presence through oil and diverse energy sources, it also built a deregulated market in the 1990s, transforming the Electric Reliability Council of Texas (ERCOT) into a marketplace that manages electricity through supply and demand auctions—rather than a traditional grid operator.

This system, while efficient in normal conditions, has proven fragile during extreme weather, as seen in the 2011 and 2021 winter storms. In both events, the state’s grid collapsed due to insufficient winterization, poor preparedness, and a lack of coordinated emergency response. Despite decades of warnings and prior outages, Texas failed to implement critical safeguards, revealing a deep disconnect between its energy industry reputation and its actual resilience.

The 2021 blackout, which left millions without power for days and possibly caused hundreds of deaths, intensified public skepticism about the reliability of Texas's energy system. The root causes—deregulation, lack of investment, and underestimation of climate risks—are now central to a national conversation about energy security. The story highlights how a system designed for efficiency and market competition can fail catastrophically when environmental stress exceeds engineering and policy preparedness.

FAQs

Texas operates its own independent electric grid because it chose to stay within state lines to avoid federal oversight. This decision was made in the 20th century, allowing power companies to maintain control and avoid regulations, and it has persisted despite the risks of isolation during extreme weather events.

The 1965 Northeast blackout caused a massive power failure affecting 30 million people due to a grid imbalance. This event led to the formation of reliability councils across the U.S., including ERCOT in Texas in 1970, which was created to manage grid stability and prevent future failures.

ERCOT’s primary role is to balance the electricity supply and demand across Texas to prevent grid collapse. It does not own power plants or transmission lines but oversees transactions between generators and retailers, acting more like a marketplace than a traditional traffic cop.

After deregulation, electricity prices and supply are determined by market forces, not government setting. Generators sell power to middlemen who then sell to consumers. Prices fluctuate based on supply and demand, and ERCOT manages the transactions to maintain grid balance.

Texas companies avoided federal regulation by staying within state lines, as federal oversight applied only to entities crossing state borders. This allowed them to operate as monopolies without federal interference, a strategy that helped shape the state’s independent grid.

The oil crisis made consumers more aware of energy dependence and led to increased scrutiny of power systems. It fueled a push for energy diversification and deregulation, which eventually paved the way for Texas to become a leader in wind energy production.

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