The Texas Electricity Grid has gained much attention over the past few years, with Texas residents keeping an eye on grid conditions during extreme weather. The Texas electric grid has seen its struggles and successes since its creation. In the decades after Thomas Edison turned on the country’s first power plant in Manhattan in 1882, small electric plants began to pop up across the United States. Galveston became home to the first Texas power plant and was the first city in the state to install electric lights in 1883. Slowly, power plants were built near larger cities, including San Antonio, Houston, Dallas/Fort Worth, El Paso, and Austin. Early power plants ran on steam or the rushing water of dams.
The Federal Power Act of 1935
Congress passed the Federal Power Act in 1935. It gave the federal government the authority to regulate the transfer of electricity across state lines. Utility companies in Texas decided not to send power out of state. By not crossing state lines, Texas utilities avoided federal regulations.
Texas Interconnected System – 1941
During WWI, utility companies began to link themselves together. These ties continued to grow during WWII when several Texas utilities joined together in 1941 to form the Texas Interconnected System. The Texas Interconnected System allowed excess electricity to be transferred to the Gulf Coast region to support the ramped-up factories aiding the war effort.
Electric Reliability Council of Texas (ERCOT) – 1970
On November 9, 1965, the worst power outage in U.S. history occurred. Over 30 million people were affected and left without electricity for about 13 hours. While the power outage did not affect Texas’s electricity grid, it prompted a national policy change, leading to the introduction of new federal regulations. The introduction of new federal regulations ensured the reliability of the power grid. Those new regulations led the Texas Interconnected System to form the Electric Reliability Council of Texas (ERCOT) in 1970.
Public Utility Commission & the Development of ERCOT – 1975 & 1996
In 1975, the Texas legislature established the Public Utility Commission (PUCT), which oversees all electric utilities in the State. ERCOT’s role in Texas later grew under then-Governor George W. Bush. State lawmakers were considering moving electricity and telecommunications into a competitive market to lower prices for customers across the state. ERCOT was appointed to facilitate the power flows and exchanges between emerging utilities. In 1996, it became the country’s first independent system operator (ISO).
Texas Electricity Grid & ERCOT’s Failure – 2021
In mid-February 2021, a winter storm (Uri) devastated Texas. Over 4.5 million households and businesses lost electricity for several days. Before the blackout, ERCOT cut off power to more than 2 million homes. This was the most significant forced power outage in U.S. history, aimed at preventing a catastrophic failure of the Texas electricity grid. Damage costs from the winter storm were estimated at $80-$130 billion, making it the second-most-costly disaster in Texas history. The most expensive disaster was in 2017, when Category 4 Hurricane Harvey made landfall in Rockport, Texas. Hurricane Harvey caused $125 billion in damage, underscoring the importance of staying vigilant and being prepared for weather events such as hurricanes and winter storms.
Changes to Avoid Future Failure of the Texas Electricity Grid
In 2021, the Texas Legislature ordered electricity regulators to require power plants to better prepare for extreme weather events. The Public Utility Commission has imposed some early requirements, including requiring plants to winterize in accordance with previous federal guidance. There are now inspections and fines for non-compliance by those who do not meet the new requirements. Further, ERCOT has adjusted its market pricing mechanisms to encourage power generation during peak demand. Natural gas, renewable energy and battery storage resources have been added to the Texas electricity grid to improve flexibility and reliability, specifically during significant weather events. Equally important, ERCOT has made internal changes to become more proactive in ensuring the grid remains reliable. The new board structure has more oversight from state officials to improve governance. They now also require greater power reserves ahead of extreme weather.
Despite changes to the power grid, there is still concern that if Texas experiences another Arctic winter weather event (like Storm Uri), we could experience grid failure. Despite the near-catastrophic failure of the Texas power grid in 2021, Texas survived, and fear of a grid collapse does not seem to deter people from relocating there. The state of Texas continues to lead the nation in net migration.
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