Find The Cost Of Deregulation…

 In February, 2021, people froze to death in Texas because they couldn’t get electricity, because generators across the state failed.  No one has ever been held responsible for that catastrophe. It turns out that was part of the system. Feature, not bug:

This week, Chief Justice Terry Adams issued the unanimous opinion of that panel that “Texas does not currently recognize a legal duty owed by wholesale power generators to retail customers to provide continuous electricity to the electric grid, and ultimately to the retail customers.” 

The opinion states that big power generators “are now statutorily precluded by the legislature from having any direct relationship with retail customers of electricity.” 

That legal separation of power generation from transmission and retail electric sales in many parts of Texas resulted from energy market deregulation in the early 2000s. The aim was to reduce energy costs.  

Before deregulation, power companies were “vertically integrated.” That means they controlled generators, transmission lines and sold the energy they produced and transported directly to a regional customer base. Parts of Texas, like Austin, with publicly owned utilities still operate under such a system. 

But in other parts of the state, deregulation broke up those regional energy monopolies, creating competing energy-generating companies and retail electric providers that buy power wholesale from generators and then re-sell it to residential consumers. 

“One consequence of that was, because of the unbundling and the separation, you also don’t have the same duties and obligations [to consumers],” Tré Fischer, a partner with law firm Jackson Walker who represented the power companies told KUT. 

“The structure just doesn't allow for that direct relationship and correspondingly a direct obligation to continually supply the electricity even if there's a natural disaster or catastrophic event,” he added. 

In the opinion, Justice Adams noted that, when designing the Texas energy market, state lawmakers “could have codified the retail customers’ asserted duty of continuous electricity on the part of wholesale power generators into law.”

This could go to SCOTX. Does anyone expect a different outcome there?

The state Supreme Court has already ruled that the Electric Reliability Council of Texas, the state’s power grid operator, enjoys sovereign immunity and cannot be sued over the blackout.

Before I blame the courts or the Legislature for this situation, I would remind of Molly Ivins’ dictum that it is a representative government. And the idea was that deregulation would save money.

And nobody stopped to ask what that would cost.