RTOs In The News

A February 21st report in The Texas Tribune explained how deregulation and RTOs failed Texas and forced the state to import power from Mexico.

Blackouts Revive Debate Over Electric Deregulation

Three weeks ago, dozens of the state’s power generators failed in frigid weather, causing the worst outages in years and spawning multiple investigations. The crisis even forced Texas to import power from Mexico. When full deregulation began in 2002, state officials insisted Texas could craft a smarter system than California, whose deregulation attempt had failed a year earlier amid intermittent blackouts.

A February 18th article in The Washington Post reported 4 million Texans were without power as RTO operators and deregulated power suppliers blamed each other for failing to properly prepare and maintain the power system ahead of an Artic Blast.

Texas, the go-it-alone state, is rattled by the failure to keep the lights on

The regulatory recriminations are coming after cold and snow that blew in over the weekend led to a much sharper spike in demand than the state’s electricity dispatching agency had anticipated, and at the same time the cold caused the equipment needed to run power generators to freeze up. One power plant after another went offline, and utilities had to “shed load,” or cut off customers, to keep the whole system from crashing.  More than 4 million households in Texas were without electricity on Tuesday.

The Washington Post reported on February 19th that RTO operators and deregulated power suppliers were blaming each other for the power outages that led to dozens of deaths and billions of dollars in damage across Texas.

Billions in damage across the South prompts focus on who’s to blame, and who will pay

Millions of people across a storm-scarred South were bracing for one last night of extreme cold Friday following a devastating week in which dozens of people died, homes and businesses sustained billions of dollars in damage and basic services such as power and water catastrophically failed.  The reckoning over why — and who is to blame — was intensifying Friday, even as residents were still coming to grips with the scale of destruction. Across the region, homeowners who had fled frigid, energy-starved houses or apartments were returning after the lights finally switched back on. But once there, they discovered burst pipes, flooded floors, collapsed ceilings — and no water to drink.

A February 19th report in Forbes notes RTOs in Texas’ deregulated energy market failed to require or incentivize power generators to winterize their infrastructure or build backup generation for demand surges during extreme weather events, like February’s Artic Blast.  At the same time Big Tech companies save big on their power bills while residential customers get stuck with higher bills.

Will The Southeast Import The Texas Energy Model?

In the version of the RTO under consideration it’s not even clear that the prices for most consumers would decline. After all, if the big tech firms get dibs on purchasing cheaper renewable energy, that would leave consumers forced to purchase more expensive energy. Such an outcome is precisely the opposite of what occurs in most utility markets, where the big consumers essentially pay a bit more than retail (or residential) customers.

A February 24th investigative report in The Wall Street Journal revealed Texans paid over $28 billion more for power under their deregulated RTO than they would have with a traditional public utility.

Texas Electric Bills Were $28 Billion Higher Under Deregulation

Texas’s deregulated electricity market, which was supposed to provide reliable power at a lower price, left millions in the dark last week. For two decades, its customers have paid more for electricity than state residents who are served by traditional utilities, a Wall Street Journal analysis has found.