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Awful lot of bullshit flying around the internet about how Texas's power system works. It's definitely unique in America.
Texas runs its own grid, so it's the only state in the union that doesn't have Federal oversight. Allow me to sketch it out as I understand it:
Texas runs its own grid, so it's the only state in the union that doesn't have Federal oversight. Allow me to sketch it out as I understand it:
The state government's regulatory agency - the Public Utility Commission of Texas ( https://www.puc.texas.gov/ ) ultimately calls the shots, like in most states. But instead of giving different companies regional monopolies, every power generator can sell to the whole state grid.
This creates a wholesale power market, where power can be bought and sold like any other commodity. (You can actually trade on Texas power futures!) This is overseen by the Electric Reliability Council of Texas, which functions as a nonprofit corporation: http://www.ercot.com/about
PUCT oversees ERCOT and ERCOT serves as a kind of miniature stock market for power; they create the "wholesale" part of the market. From here, power resellers can buy energy at market rates, then resell it to consumers.
Naturally, they offer different plans...
Naturally, they offer different plans...
Unlike most Americans, Texans can actually switch power providers. Some Texans have gone for the cutthroat offerings, who resell you power at the flat wholesale market rate with no padding or insulation. So if you use most of your power at night, you pay the lower nighttime price
This apparently works out really well normally, but now, of course, demand has skyrocketed and supply cratered as weather has shut down many power plants. So people buying wholesale, instead of from someone offering more fixed rate plans, are paying out the nose.
The wholesale retailers are actually telling customers to ditch them for the next few weeks and come back when things are back to normal, even waiving cancellation fees. Not all other retailers are taking new customers, though. https://www.straitstimes.com/world/united-states/texas-power-retailers-to-customers-in-face-of-freeze-please-leave-us
Some people are billing this as robber baron capitalism run amok; a crime against humanity. But retailers offering fixed price contracts that insulate people from the vagaries of the market exist and plenty of people use them. Nobody held a gun to their head and forced them.
Personally, I'm envious of Texas's setup. It's unique in the nation. And I rather suspect that the people getting one big power bill this weekend will still be coming out way ahead when compared to the money they saved every month for the last 30 years.
With that said, I wouldn't be shocked if insurance companies started offering add-on plans for black swan events like this to cover power wholesalers, so they can keep their prices lower and have insurance make up the difference.
Or maybe the state government...?
Or maybe the state government...?
