Above: Witness Kirk Morgan, at table left, testifies as the Committees on State Affairs and Energy Resources holds a joint public hearing to consider the factors that led to statewide electrical blackouts, February 25, 2021, in Austin.
Welcome to the 87th Legislative Session. Since the last session came to a close in June 2019, Texas has been hit by an unrestrained pandemic and a crippling economic crisis—and now the fallout from deadly blackouts. Under unprecedented circumstances, lawmakers are faced with a number of urgent challenges. The Texas Observer is following along every step of the way.
After Texas’ electrical grid failed due to a severe winter storm last week, lawmakers began probing how it happened—and who’s to blame.
House and Senate committees held simultaneous hearings Thursday and Friday that featured testimony from a powerful cast of figures, including the CEO of the Electric Reliability Council of Texas (ERCOT), executives of the state’s biggest power companies, and the state’s top regulatory officials.
An exchange between state Representative Todd Hunter, R-Corpus Christi, and the CEO of NRG Energy, a major power generator and electricity retailer, captured the tenor of the marathon hearings. “Who’s at fault?” Hunter asked. “I want to hear who’s at fault. I want the public to know who screwed up.” Mauricio Gutierrez, the CEO of NRG, responded: “The entire energy sector failed Texas.”
But that failure wasn’t limited to the energy sector. As the hearings illuminated, the governor, the lieutenant governor, the Legislature, and the regulators are responsible, too.
The catastrophic electric blackouts—one of the worst power outages in the country’s history—has prompted lawmakers, energy executives, and policy experts who once worshipped at the altar of deregulation to question their faith.
“This is the largest train wreck in the history of deregulated electricity,” state Senator Brandon Creighton, R-Conroe, said during the hearings.
“I was a big proponent of this market, and my faith has been shaken,” Vistra Energy CEO Curt Morgan said “I used to tout this as the best market, but it didn’t work, and in a big way.”
He defended himself and ERCOT, claiming that they did all they could to avoid a complete system failure. Asked about the nonprofit corporation’s governance structure—which drew scrutiny as Texans learned that many of its board members lived out-of-state—Magness said: “Y’all made us. You should change us.”
Governor Greg Abbott has tried to make ERCOT the scapegoat of the blackouts, but the governor appoints the Public Utility Commission (PUC) members who have oversight of the grid operator—and electric utilities. That fact was not ignored during the hearings, when legislators dragged PUC Chair DeAnn Walker across the coals. In her testimony, Walker repeatedly downplayed the scope of her regulatory authority over ERCOT and the electric markets at large. Legislators grew increasingly angry with her on Thursday as she tried to defer and deflect critical questions. “I’ve got you down as a pretty powerful person,” said state Senator John Whitmire, D-Houston, as he condemned her for shrinking from her responsibilities and not speaking out during the crisis. “I’m disturbed by—would it be fair to call it ‘complacency’?”
During her testimony, Walker blamed state open meeting laws that prohibit her and the other two commissioners from communicating without advance public notice, saying it hindered her ability to act during the blackouts. State Representative Drew Darby, R-San Angelo, pointed out that the Legislature passed a law allowing the commission to hold emergency meetings with one-hour notice during times of an “energy emergency.” Walker said she wasn’t aware of the law. “Don’t you think it’s your job to know that? Don’t you see that’s a failing of your responsibilities as a public utility commissioner?” he said.
State Representative Rafael Anchía, D-Dallas, asked her if she thought Texans deserved an apology from the PUC. When she did not respond, Anchía fired back: “The fact that you’re hesitating is astonishing. It’s astonishing. No further questions.”
For all their scolding of executives and regulators, the Legislature is the one that passes laws. After a 2011 winter storm caused power outages, elected officials passed a law that asked power plants to submit emergency weather plans—but did not mandate that those plants meet winterization standards. Texas Legislators passed budgets that cut funding to regulatory agencies and failed to pass legislation that would have required state agencies to incorporate extreme-weather planning into their operations. That elected body also allowed so-called “variable-rate” electricity retailers like Griddy to sell plans to customers that expose them to wholesale prices—which hovered around $9,000 per megawatt hour during the blackouts.
Nearly a quarter-century ago, lawmakers passed laws that radically deregulated the state’s electricity market and promised that the resulting competition would drive down prices for consumers. It was a false promise. Consumers in deregulated markets have since paid more than $28 billion in higher electric bills, according to an analysis by the Wall Street Journal. Deregulation created an electric grid that operates on a razor’s edge—governed purely by financial incentive. So, when demand for power soars during extreme weather conditions, there are no energy reserves. Last week, Texans saw the catastrophic—and predictable—results.
Now that the lights are back on in Texas, the state has to figure out who’s going to pay for the energy crisis that plunged millions into darkness last week. It will likely be ordinary Texans. / Bloomberg
A fierce debate has erupted about whether the deregulation of the Texas electricity market contributed to the most calamitous week in recent Texas history, one that saw millions of Texans desperate and shell-shocked as they sought out the most basic comforts of modern civilization—food, water, heat. / Austin American-Statesman
Critics and former employees say the Public Utility Commission’s enforcement division was removed precisely because it was working—the state’s most recent move in a 25-year campaign to pare down oversight to favor energy companies and their largest customers, starting when Texas began deregulating its electric market in the 1990s. / Houston Chronicle
All Hat, No Cattle
The Texas Legislature is known for its outlandish members, ludicrous antics, and right-wing flare-ups. Here’s your weekly dose.
The blackout hearings got off to a characteristically narrow-minded start in the Texas Senate. During testimony from a power company meteorologist before members of the Senate Business and Commerce Committee, longtime Houston Senator John Whitmire began to ask a question about whether climate change may be impacting the frequency and severity of winter weather in Texas.
He barely got out the words “climate change” before Committee Chairman Kelly Hancock, R-North Richland Hills, stopped him. Hancock said that he wanted the committee hearing to focus on the blackout events of last week—and whether they could have been predicted and prevented. “This is a discussion where we can chase a lot of rabbits,” he said. He did not want to “get off into a climate change discussion at this point.”
Indeed, climate change couldn’t possibly be relevant to the worst natural disaster in Texas history.