Test of Texas: Part 1 - Cold Hard Truth

By Bryan Kaus

The massive polar vortex and its impacts stretched across the nation, Texas and her residents have been enduring an impact of historic proportions, with temperatures dipping to their lowest in more than a century. As the weather system moved in and temperatures plunged across the state, the state’s energy providing infrastructure faced unprecedented challenges to the grid which resulted in more than 4.3 million Texans losing power, according to utility tracker, poweroutage.us and putting lives at risk.

4.3 million Texans were left without power as extreme cold gripped the state

Texas is the largest energy producing state in the nation. It is also the greatest consumer of energy in the nation. According to the Energy Information Administration, The Lone Star State produces more electricity than any other state, generating nearly double the power produced in Florida, the second highest state. Perhaps surprisingly, Texas also leads the nation in wind-powered generation with nearly a third of total U.S. wind capacity. The industrial sector, including its refineries and petrochemical plants, accounts for half of the energy consumed in the state. The system is a deregulated one, in which free market mechanisms drive much of the decision making. Power is generated by private companies that feed into the grid, which is then distributed by regional distribution companies and marketed by local power companies into retail markets. There have been many advantages to this system, but obviously, there are some critical shortcomings; many of which have been on display in recent days.

Rolling blackouts sent order into chaos and forced people to huddle inside their homes. With the lights burning brightly in downtown, Houston's largely empty office buildings, at a time when officials were asking for conservation, meant many nearby without power were left to wonder, why? Especially when public information indicated that residential areas would be prioritized. It's a good question. How does something like this happen in the biggest energy producer in the United States? Well it’s complicated and truth be told, it will take time to fully comprehend exactly how things played out.

What happened here is a failure of systems, processes and procedures. It impacted rich and poor. Is it something that could have been avoided? Perhaps. Governor Abbot has already added ERCOT reform as a special item to the Texas legislative agenda. But truly, it is too soon to tell exactly what happened and there are sure to be inquires, lessons learned and recommendations to mitigate future issues.

To get a better understanding of the whole picture, I’ve dug into the details and will provide a closer look in the course of a four-part series, with subsequent installments: The Grid, The Failure and The Future. 

Join me for this conversation about a truly epic moment in the history of the Lone Star State. See the next installment, Part 2 - The Grid

Twitter: @bryankaus

Disclaimer: Mr. Kaus holds a degree from Pennsylvania State University, certifications from The University of Pennsylvania's Wharton School and Northwestern University and is a member of the American Economic Association. Opinions represented here are solely those of the author and do not reflect the views of any persons, companies or entities referenced within the content or otherwise referenced.

All information, contained within this article, including quotes, is/are sourced from publicly available information (i.e. press releases, regulatory filings, published interviews etc.). Specific attention has been paid to accuracy, however, the author makes no guarantees as to the complete accuracy of the content. Additional attention has been paid to ensuring compliance with all policies, guidelines and laws. This should not be construed as investment advice.

Note: Mr. Kaus is an employee of Phillips 66, however, opinions represented here are solely those of the author and do not reflect the views of any persons, companies or entities referenced within the content or otherwise referenced. All information is public and in compliance with policies, regulations etc. Any and all inquiries relating to this matter should be directed to the company(ies) referenced and its appropriate and authorized person(s).

Source Notes:

Asher Price, Austin American-Statesman. (2021, February 16). More than 4.3 million Texans without power, according to utility tracker. Austin American-Statesman.

PowerOutage.us. (2021, February 16). Texas Power Outages Map. https://poweroutage.us/area/state/texashttps://eu.statesman.com/story/news/2021/02/16/texas-power-outage-impacts-millions-amid-winter-storm/6763521002/

United States Energy Information Administration. (n.d.). Texas - State Energy Profile Overview - U.S. Energy Information Administration (EIA). EIA.Gov. https://www.eia.gov/state/?sid=TX