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Tag: texas power crisis

How Gov. Abbott Is Helping Power Companies Rob Texans Of Billions

Reprinted with permission from DC Report

The pocketbooks of electricity customers across America are under renewed assault by politicians and friends in the electric power generation business.

Unless America restores a sound economic and legal principle that has protected both consumers and electricity companies for more than a century, Texans and the rest of us can expect bigger and bigger electric bills and possibly more ruinous price gouging.

Odds are you haven't heard that in the news. No one announced it, and most journalism is about covering official announcements. At DCReport we look at facts and decide what we think you need to know. Policies and facts affecting how much you pay for electricity each month are typically news only after a crisis, not as an ongoing news story.

Regulation of electricity is based on the principle of "just and reasonable" rates. That means consumers pay prices they can afford while investors are assured a reasonable profit, typically a ten percent or so return on their assets. Half the states still follow this principle, but half do not.

'Unjust, Unreasonable'

This principle is so thoroughly enshrined in American law that courts have held that when a utility banks a single dollar more than earned, the profit is "unjust and unreasonable."

Texas politicians last week delivered the latest blow to this sound economic principle following the winter freeze debacle that left millions without power and, eventually, water.

Texas electricity producers charged an extra $47 billion during the February 14-19 freeze. Only $10 billion of extra charges were imposed in all of 2020.

It turns out that a third of these extra charges were bogus. Yet amazingly, Texas regulators plan to let power producers keep the $16 billion they improperly overcharged.

The overcharges average $550 per Texan. Steal that much just once in the Lone Star state and you can get a fine of up $2,000 plus a six-month stay at the local sheriff's gray-bar hotel.

Harsh as Texas is on criminals, it goes all soft and fuzzy when it comes to businesses ripping off millions of people for $550 each.

The mistake enabling the overcharges was made by the grid operator, the Energy Reliability Council of Texas. Six of the council's seven members, who do not live in Texas, said they were resigning.

The $16 billion of improper overcharges took place during the final 33 hours, the company that monitors compliance with the Texas rules revealed. Not correcting this "will result in substantial and unjustified economic harm," wrote Chris Bivens, a vice president of Potomac Economics, the Texas market monitor.

Ironically, about $1.5 billion of the overcharges were paid to electric generating station owners to produce electricity in freezing weather, according to Potomac Economics.

For those 33 hours producers sold power at the maximum allowable price of $9,000 per megawatt-hour. The average cost of producing each megawatt ranges from roughly $11 to $37 dollars depending on what fuel is used.

During the freezing weather, the costs of generating power did not go up much or at all. But so many power plants shut that those still running were allowed to boost their prices sky-high.

The typical residential customer in America uses electricity by the kilowatt. For a megawatt, a unit 1,000 times greater, the typical residential cost is in the range of $130.

But Texas electricity generators charged almost 75 times that much. Price markups on that scale are so one-sided that the law treats them as unconscionable, and judges often refuse to enforce such contracts.

Correcting the overcharges would just be too complicated, said Arthur C. D'Andrea, the Texas Public Utilities Commission chairman. "It is impossible to unscramble this sort of egg," D'Andrea said last week.

That's nonsense. It's actually easy.

Letting the excess charges stand would also be bad for attracting digital industries to Texas, a major goal of Gov. Greg Abbott. His administration is courting Silicon Valley firms because California housing prices are so high it's hard to attract young workers. But digital industries require electricity that is both reliably available and predictably priced and Texas just proved it can't deliver.

Electricity shortages are almost certain to worsen in the next few years, as we reported on February 19.

Evidently, PUC chairman D'Andrea didn't get the governor's memo on bringing digital firms to Texas.

Regulation is a dirty word to Abbott and other top Texas officials, Republicans all. But because of its unique nature, electricity regulation is crucial because the modern world runs on it and it is created and used in the same instant.

Electricity is what most distinguishes us from the ancients. People in ancient Athens, Rome and other cities had paved streets, lodging houses, restaurants, retail shops and even resorts. What they lacked were the electrons needed for automobiles and jetliners, night lighting, elevators, refrigerators and computers.

Some Texans are faced with depleting their savings, drawing money from their retirement savings, mortgaging their homes or filing for bankruptcy even though they used the same or less power during the freeze as on other days.

The Texas rules, which I've warned about for 15 years, are clear, the failure to follow them was blatant and the plan to let producers keep the $16 billion of overcharges is unfair, unnecessary and, if litigated, likely to be found unconscionable.

It's reasonable to wonder whether the regulators, all political appointees, made a convenient mistake, in effect subtly telling generating plant owners:

"Fellas, stuff your saddlebags with all you can and ride over to the bank with your ill-got gains while we sightless sheriffs take a nap."

That may sound cynical, but utility regulation is a revolving door everywhere. Commissioners who set electricity rates and grid rules overwhelmingly come from the executive offices at utilities where they return after their stints as public officials. Consumer advocates are as rare as snow in Houston.

The Ghost of Enron

The problem with electricity overcharges extends far beyond Texas, but it began there in the mid-1990s with lobbying by Enron, the fundamentally corrupt energy price manipulator that later went bankrupt.

Enron persuaded the Texas legislature in the mid-1990s to fundamentally change the way electricity is financed and sold. The idea was that while distributing electricity is best done by a monopoly so multiple power lines are not needed everywhere, there's no natural monopoly in generating power. That's more than reasonable — on the surface.

Eventually, half the states decided to replace vertically integrated electric utilities which generated, transmitted and distributed electricity. Instead, independent firms would generate power and bid to sell it to distribution companies in so-called single-price auctions.

Enron argued that when there was more demand for power than expected prices would spike and those spikes would attract new investors who would build more power plants and in the long run prices would come down.

I've yet to meet a businessperson eager to invest in a business where it takes years to go from concept to operation with the expectation that future profits will be smaller than today.

The biggest flaw in the Enron idea, however, is that idea is that doing the opposite is faster, cheaper and comes with less risk while virtually guaranteeing fat profits. You can read our DCReport stories here and here as well as here and here.

Enron sold Texas lawmakers on "single price" electricity auctions.

Here's how a single-price electricity auction works. The grid operator, in this case, the Electric Reliability Council of Texas, calls for bids to supply power for periods that can be as long as a year and as short as a few minutes. Bidders offer to sell power at whatever price they chose.

When bidding closes, everyone whose bid is at or below the price needed to supply all the juice the market needs wins. The winning bidders also get the highest price bid. So even if the average bid was, say, $100, if the highest winning big was $9,000 then every winner gets the $9,000.

Lose-Lose Deals

That means a hydroelectric dam operator with costs of maybe $120 per megawatt-hour can bid one penny to ensure their bid is a winner and then collect thousands of dollars. So, when they throw open the floodgates to make turbines spin, it's almost as if greenbacks instead of water flow like Niagara Falls.

What Wall Street investors figured out, as I did, was another flaw in the Enron plan.

Owners of a single power plant must bid low enough to make sure their electricity is purchased, but owners with a fleet of electricity generators can bid strategically to jack up prices.

Experiments with college students, simple bots and actual bidding records showed years ago that this is exactly what happens, as explained in my 2007 book, Free Lunch.

There are rules against this kind of manipulation, which is why grid operators hire independent market monitors like Potomac Economics. But some market monitors have been less than diligent while others have had their advice ignored as right now in Texas.

On top of this, in one of his first official actions as president in 2017, Donald Trump signaled to Wall Street that fleet owners were pretty much free to manipulate electricity markets, the subject of the second story DCReportpublished.

As for unscrambling that egg, the task that Texas PUC Chairman D'Andrea says is too hard, here is one of several ways to restore fairness.

The Texas PUC can reject charges that exceed the pre-crisis price during those 33 hours. The independent power producers all keep detailed time and price records and can issue revised invoices. They can also sue the state if they want, knowing they risk being tossed out for trying to enforce unconscionable contracts.

Undoing the improper excess charges involves accounting and math but since, unlike the ancients, we have electricity to power computers it's not all that hard to make the calculations necessary to uphold the just and reasonable principle.

Poll: Public Rejects Blaming Clean Energy For Texas Power Failure

Reprinted with permission from Media Matters

A poll released this weekend by the progressive strategy firm Data for Progress found the American public did not buy into a relentless propaganda campaign from right-wing media, which attempted to blame the Texas blackouts on renewable energy sources.

Instead, the public understood the reality of what went on: All power sources in the state had failed, including the state's primary fossil fuels.

The poll asked respondents which of the following options caused the power outages in Texas:

  1. Unusually cold winter weather conditions caused Texas power plants, including coal, natural gas, nuclear, and renewable energy sources, to go offline. This caused power outages across the state.
  2. Texas invested too much in renewable energy like wind and solar energy. Wind turbines froze because of the cold weather which led to power outages across the state.

In response, 64 percent of surveyed people correctly picked the first option, compared to only 28 percent who thought that Texas had over-invested itself in wind turbines. Even 50 percent of self-identified Republicans chose the correct answer, while 41 percent blamed renewable energy. The poll was conducted from February 19 to 22, surveying likely voters nationally via web panels.

poll graphs

Among self-identified Republicans who watch Fox News, the percentage was slightly lower: 47 percent picked the correct option. Finally, Republicans who watch Fox's far-right competitors Newsmax and One America News were even more divorced from reality — with an actual majority believing that the blackouts were because of wind turbines.

poll graphs

An earlier Media Matters study had found that Fox programming lied 128 times over less than 48 hours, falsely attributing the power outages to failures in renewable energy sources such as wind turbines.

For example, Texas Republican Gov. Greg Abbott told Fox host Sean Hannity that his state's catastrophe "shows how the Green New Deal would be a deadly deal for the United States of America." (Of course, the Green New Deal is not currently the law in Texas.) Meanwhile, Abbott had admitted in other settings that the state's natural gas and coal infrastructure had also frozen over.

Other right-wing media outlets pushing this campaign included Fox's corporate cousin The Wall Street Journal and the Sinclair Broadcast Group and its local TV stations across the country.

By contrast, local media in Texas widely debunked the misinformation, explaining that natural gas infrastructure was freezing over and more to blame than wind power, and that the root problem was from the state's failure to require utilities to winterize.

What That Deep Freeze Revealed About Texas

It's written that Nero, the debauched ancient emperor, fiddled while Rome burned. Whether or not that's true, it certainly is true that Ted Cruz, the self-indulgent Texas senator, fiddled around while his state froze.

While Ted fled Texas for the sunny clime and luxury of the Ritz-Carlton resort in Cancun, Mexico, dozens of his constituents died in the five-day deep freeze, and millions more suffered physically and financially. They had no heat or water, thanks to the 25-year failure of Texas Republican leaders like Cruz to protect the state's electric grid from such a predictable weather crisis. This deadly, frigid, multibillion-dollar chaos in energy-rich Texas was not the result of a polar vortex but a small-minded vortex of right-wing political hokum that puts the interests of a few corporate profiteers over the well-being of the people.

Among those who now must pay the price of the GOP's fealty to corporate interests is a hard-hit group that gets little media notice: small, local farmers. As a regular customer of farmers markets, I know many of these hardy, innovative people, and I've had the privilege of working with them since my days as Texas Agriculture Commissioner. They are America's most productive, most ecologically conscious and most community-spirited ag producers, yet state and national farm policies work against them, even trying to displace them with industrial farm giants.

For example, massive federal farm programs pay tens of billions of our tax dollars each year in crop insurance and direct subsidies to offset the vagaries of agriculture, but they don't cover local organic and sustainable food producers. Indeed, the bulk of payments go to those least in need — the multimillion-dollar agribusiness operators, including Wall Street syndicates.

So, in my area of central Texas, such efficient, enterprising farms as Boggy Creek, Eden East, Green Gate and Hat & Heart had row after row of veggies turn to greenish-black glop by the killer storm. Through no fault of their own, they lost the money they invested to produce those crops, lost the money they would've gotten by selling them, and will have to find money from somewhere to put in a new crop and then tend to it for six weeks or so with no income.

Not only must our corporate-controlled electric grid be replaced; so must our corporate-controlled ag policy — and our corporate-controlled elected officials.

There is a weasel word that politicians have taken to using in the past few years whenever something goes wrong on their watch: "unacceptable."

We just heard it slither out of the mouth of Texas Gov. Greg Abbott. Responding to withering public criticism of the state's chaotic and disastrous response to a killer winter storm, Abbott fumed, "What happened this week to our fellow Texans is absolutely unacceptable." Well, gosh, Guv, it surely is, but wait — aren't you the governor, the guy in charge? But a detail like that can't get in the way of a weaselly political rant, so Abbott pointed his outrage at ERCOT, the Electric Reliability Council of Texas, the agency charged with maintaining a reliable flow of electricity to Texas homes, schools, businesses, etc.

But wait again: ERCOT merely administers policies set by the Public Utility Commission, and that corporate-cozy body has failed for years to mandate that the state's privatized, for-profit electric utilities weatherize their power generators to prevent freeze-ups. And who appointed the three members of that commission? Why, Greg, it was you! In fact, the chairwoman and one of the two other members of PUC are former top staffers of the governor.

Also, Abbott has been governor for six years, and not once has he proposed legislation to require that the corporate owners of electric utilities protect the grid from freezes, as is commonly done in North Dakota, Vermont and other subzero, icy places.

Oh, he also claims that the 2021 winter vortex was unprecedented and therefore couldn't have been anticipated. Oops ... wait again. A notorious rolling grid failure in a 2011 snowstorm left millions of Texans in deadly darkness — a disaster that was also called "unacceptable." But then, Abbott and other GOP officials did accept it, quietly refusing to require winterization, even as they accepted big campaign donations from those corporate giants that caused the breakdown.

We're now treated to the clownish spectacle of Abbott, other GOP politicos, and even the PUC fulminating about the "unacceptable" failure of the state to provide power, demanding a legislative investigation and calling for heads to roll!

But wait once again: Aren't they the heads?

To find out more about Jim Hightower and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at www.creators.com

#EndorseThis: Seth Meyers Scrubs GOP Lies About Texas Disaster

The devastating winter storm in Texas, with its cold blast of death and destruction, is still fresh in the minds of many Americans. So is the way thatTexas Republicans mishandled the situation, with their focus on brazen political attacks rather than humanitarian action.

With grace and humor, Seth Meyers closely inspects the outrageous lies about the crisis -- from Republican officials and Fox News hosts alike -- that they all blurted out at the most inappropriate time. It's "A Closer Look," and it only hurts if you're one of those bozos.Otherwise it's grimly funny.

Click the link and enjoy!


Fox News Lies About the Texas Blackouts as GOP Lies About the Election: A Closer Look www.youtube.com

Danziger Draws

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons and one novel. Visit him at DanzigerCartoons.

#EndorseThis: Daily Show Unveils New Texas Energy Source, Powered By Hate

How ridiculous are Texas Republicans? Facing a disastrous winter storm and a power outage that left millions frozen, the GOP responds by falsely blaming the Green New Deal. At a dire moment when leaders are needed, they play partisan politics -- topping with a helping of Big Lie.

The Daily Show brilliantly satirizes their despicable attitude in this (fictional) Texas power company ad. Powered by the hatred of Alexandria Ocasio-Cortez (AOC), the Green New Dealer who raised $5 million to help Texas, this outfit's energy source is abundant in Texas and evidently renewable.

Click! You'll laugh!

Frozen Texas Proves The Perils Of Denial

In an era of global climate change, Texas has retained an unshakable allegiance to fossil fuel production and use. It brings to mind the joke about the man who tells his psychiatrist that his brother thinks he's a chicken. The psychiatrist asks why the family hasn't gotten him help. "We need the eggs," the man replies.

Texas has long been vulnerable to climate change. It's always been hot: Gen. Philip Sheridan said that if he owned hell and Texas, he'd rent out Texas and live in hell. It's always been prone to drought. It's always gotten hit by hurricanes.

Texans may have figured that at least global warming would mean pleasantly milder winters. But this winter, millions of them have been freezing in the dark.

The reasons are complex. The Texas power infrastructure was not designed for extreme cold. This freeze was broader, more severe, and more prolonged than anyone can remember. It was a natural disaster that overwhelmed the usual protections.

Republican Gov. Greg Abbott made a fool of himself by blaming the shortfall on wind turbines that froze up. Plenty of frigid places — Finland, Nova Scotia, Alaska, Illinois — have no trouble relying on wind power.

The real problem is that ensuring the availability of energy, whether from fossil fuels or renewables, requires investments to make supply systems functional in extreme weather. After a 2011 storm, the Federal Energy Regulatory Commission urged the state's utilities to winterize equipment, but little was done. Why not? Because such an effort would have required officials to ask residents to pay more. The inaction fits neatly with the state's prevailing approach to climate change, which is to whistle past the graveyard.

The buildup of greenhouse gases in the atmosphere was already making life harder in the Lone Star State. A report last year by the Office of the Texas State Climatologist at Texas A&M University found that the number of 100-degree days has more than doubled over the past 40 years and predicted it would nearly double again in the next 15. The state is likely to grow more parched — but also to get more extreme rainfall and more flooding. Hurricanes will be worse.

They already are. Hurricane Harvey, which in 2017 displaced some 30,000 people and killed 106 in Texas, was the wettest storm on record in this country. A study by scientists at Rice University's Severe Storm Prediction, Education and Evacuation from Disasters Center concluded that global warming played a part.

"Harvey was more intense because of today's climate, and storms like Harvey are more likely in today's climate," said Antonia Sebastian, one of the authors.

This winter storm may also have a connection. A thawing North Pole may disrupt the jet stream, occasionally allowing giant blasts of cold air from the polar vortex to roll southward. (In 2019, one of these events sent temperatures in Chicago down to minus 23 degrees.) As global warming persists, it increases the chances of extreme weather of every sort.

Texas politicians, however, refuse to give up their romance with petroleum. Land Commissioner George P. Bush recently vowed to "fend off threats to the Texas oil and gas economy." Abbott visited the Permian Basin to declare, "Texas is not going to stand idly by and watch the Biden administration kill jobs in Midland, in Odessa, or any other place across the entire region."

But fossil fuel use is largely responsible for the warming of the planet, which is certain to kill jobs, not to mention people. Dozens have died from this storm. Texas already faces the prospect of chronic water shortages. Excessive heat is bad for crops and livestock, which are a significant share of the state economy.

Parts of the state can expect more wildfires. Dollars spent to cool buildings as summers ramp up are dollars that can't be spent on other goods and services. Oh, and let's not forget the risk of extreme weather conditions, which demand costly investments to prevent catastrophes like the current one.

The natural impulse of politicians is to spare voters from sacrifice today, even if it means greater pain later on, after those politicians have moved on. That attitude, which has delayed federal action on climate change, is subsiding as Americans become more aware of the reality and the danger of global warming. But it has remained dominant in Texas.

Denial can be a comforting pastime. But eventually, it runs into cold, hard reality.

Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

How Many Texans Died In Power Disaster Won’t Be Known For Weeks

By Shawn Mulcahy, The Texas Tribune


As snow blanketed much of Texas on Sunday, an 11-year-old boy in the Houston area gleefully played outside. Seeing the snow was a first for the boy, who came to the U.S. from Honduras two years ago with his mother, she told the Houston Chronicle.

Less than 24 hours later, as temperatures plunged to near single digits and homes across the state lost power, the boy died.

Early that same morning, a San Antonio man left his house for a dialysis appointment — but he never arrived. His wife found him unresponsive nearly two hours later in the frigid weather, according to KSAT. Local authorities said the man's death could have been from exposure to the cold.

In Abilene, first responders found a 60-year-old man dead in his home on Wednesday. His wife, who was taken to a nearby hospital for treatment, said they hadn't had power for three days. Fire department members told KTXS that it felt as cold inside the home as outside.

Across Texas, deaths related to the winter storm continued to mount this week amid freezing temperatures, widespread power outages and a scarcity of clean water. While there have been reports that dozens of deaths are tied to the storm in Texas, experts say the death toll is likely far larger. And it could be weeks or months before the true magnitude is known.

"It's a slow process. We may have preliminary information in weeks, not days," said Chris Van Deusen, a Texas Department of State Health Services spokesperson. A statewide survey of deaths caused by the storm is underway, he said. But the state won't have a good indication until death certificates are filed.

A spokesperson for The Harris County Institute of Forensic Sciences, which conducts autopsies, could not provide the total number of deaths associated with the storm on Thursday, and had no idea when that information would be available.

Likewise in Travis County, a spokesperson estimated a tally of storm-related deaths could be available in 30 to 90 days.

The Houston Chronicle reports that more than two dozen people in Harris County alone have died from events related to this week's icy weather. And the threat is far from over. Thousands of Texans are still without electricity, food and clean water.

As with any natural disaster, this week's storms have left a "disproportionate effect" on homeless people, said Eric Samuels, president of the Texas Homeless Network. He urged Texans with the means to provide help to support local shelters and advocacy groups, which have already been stretched thin by the coronavirus pandemic.

"Unfortunately, in a lot of our communities, [local organizations] are ones who take the lion's share of the responsibility and the burden of assisting people during these times," he said.

Officials reported an uptick in hypothermia as power outages meant people lived for days in below-freezing temperatures. A handful of deaths have already been attributed to hypothermia, including three people who died in their Harris County homes, the Harris County Institute of Forensic Sciences said on Thursday.

Hypothermia is caused by prolonged exposure to cold temperatures, when a person's body loses more heat than it produces. The low body temperature affects a person's brain and can lead to confusion, memory loss or death.

Public officials are also warning Texans about the dangers of carbon monoxide poisoning, citing an alarming spike in emergency room visits due to the dangerous, scentless gas.

Most cases were caused by the indoor use of heating sources like charcoal barbecues and gas-powered generators. These machines release carbon monoxide that, if not used in a well-ventilated area, can be fatal in minutes.

Two people in Houston died, and another two were rushed to the hospital, after the family ran their car for warmth inside a closed garage, NPR reported.

Harris County Judge Lina Hidalgo called the spike in cases of carbon monoxide poisoning "a disaster within a disaster."

Dr. Justin Fairless, a board member of the Texas College of Emergency Physicians, also cautioned that the transmission of COVID-19 remains a real threat as people gather in shelters and at the homes of friends and family. He urged Texans to continue taking precautions like wearing masks and socially distancing when interacting with people outside your household or when in large gatherings, such as water distribution sites.

Above all, Fairless warned Texans not to delay seeking treatment if they feel ill.

"If you think you have something going on medically, don't just sit at home and hope it passes," he said. "Get medical care."

Disclosure: The Texas College of Emergency Physicians has been a financial supporter of The Texas Tribune. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune, a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy.