No asshole, Abbott is a home grown tard.
Some of the blame falls on the unique design of the electricity market in Texas. Of America’s 48 contiguous states, it is the only one with its own stand-alone electricity grid—the Texas Interconnection. This means that when power generators fail, the state cannot import electricity from outside its borders.
The state’s deregulated power market is also fiercely competitive. ERCOT oversees the grid, while power generators produce electricity for the wholesale market. Some 300 retail electricity providers buy that fuel and then compete for consumers. Because such cold weather is rare, energy companies do not invest in “winterising” their equipment, as this would raise their prices for consumers.
Perhaps most important, the state does not have a “capacity market”, which would ensure that there was extra power available for surging demand. This acts as a sort of insurance policy so the lights will not go out, but it also means customers pay higher bills.
For years the benefits of Texas’s deregulated market structure were clear. At 8.6 cents per kilowatt hour, the state’s average retail price for electricity is around one-fifth lower than the national average and about half the cost of California’s. In 1999 the state set targets for renewables, and today it accounts for around 30% of America’s wind energy.
This disaster is prompting people to question whether Texas’s system is as resilient and well-designed as people previously believed. Greg Abbott, the governor, has called for an investigation into ERCOT. This storm “has exposed some serious weaknesses in our free-market approach in Texas”, says Luke Metzger of Environment Texas, a non-profit, who had been without power for 54 hours when The Economist went to press.
Read More: https://investorshangout.com/post/view?id=605...z6mpkKUCgS
Some of the blame falls on the unique design of the electricity market in Texas. Of America’s 48 contiguous states, it is the only one with its own stand-alone electricity grid—the Texas Interconnection. This means that when power generators fail, the state cannot import electricity from outside its borders.
The state’s deregulated power market is also fiercely competitive. ERCOT oversees the grid, while power generators produce electricity for the wholesale market. Some 300 retail electricity providers buy that fuel and then compete for consumers. Because such cold weather is rare, energy companies do not invest in “winterising” their equipment, as this would raise their prices for consumers.
Perhaps most important, the state does not have a “capacity market”, which would ensure that there was extra power available for surging demand. This acts as a sort of insurance policy so the lights will not go out, but it also means customers pay higher bills.
For years the benefits of Texas’s deregulated market structure were clear. At 8.6 cents per kilowatt hour, the state’s average retail price for electricity is around one-fifth lower than the national average and about half the cost of California’s. In 1999 the state set targets for renewables, and today it accounts for around 30% of America’s wind energy.
This disaster is prompting people to question whether Texas’s system is as resilient and well-designed as people previously believed. Greg Abbott, the governor, has called for an investigation into ERCOT. This storm “has exposed some serious weaknesses in our free-market approach in Texas”, says Luke Metzger of Environment Texas, a non-profit, who had been without power for 54 hours when The Economist went to press.
Read More: https://investorshangout.com/post/view?id=605...z6mpkKUCgS
