Another Free Market Failure Accusation About Texas Electricity Deregulation
Mike Norman with the Fort Worth Star Telegram hits on the topic of if
Texas deregulation is really working. I assume he places blame on
deregulation as the reason for the Texas power supply failure because
the title of his article states, “The Texas free market for electricity just isn’t cutting it“.
Maybe he is just meaning that as good as deregulation is it can’t stop
the EPA and other non-governmental organizations from halting all oil
based energy production thereby raising consumer costs. Deregulation
being a failure is a popular argument because any time prices go up or
supply capacity is reached we hear about it from the political side that
benefits the most from this view.
Is deregulation to blame for every time something bad happens in the
deregulated Texas electricity market? No you can’t always blame it on
deregulation but it is a piece of the puzzle so yes it is to blame
sometimes. The main problem with deregulation isn’t inefficiencies
building electric grid infrastructure and power production as this gets
approved by the state and then shutdown by the EPA and federal
government, not deregulation. Texas has broken up the generation
companies and such away to allow new investors to come in and build
power facilities but not many have filled this hole left open for
increased competition. I think new investors have not come in because
you are talking about investing in and building highly federally
regulated things like coal, natural gas, and nuclear power facilities.
What new investors want to do what TXU just got shutdown by the EPA for
trying to do? I see problems with how some retail providers try and use
tricks to market their electric rates but regarding power supply being
built out the bottleneck seems to be in government regulation still
being in the mix too much.
Even if the market was regulated again under one monopoly per
electric utility area you would just as easily be able to blame
brownouts and blackouts on the monopoly regulated electric utilities
just like deregulation gets blamed for things now. I don’t think Mike is
trying to place all the blame on deregulation but he is pointing out
that you will see an electric bill increase regardless of the provider
you choose because of some recent failures in the Texas deregulated
market. You see you very likely will find more non-negotiable ERCOT
related fees on your electric bill eventually because of lack of
electric supply available to meet demand but who is really to blame for
this?
Mike explains that a free market should work in theory because
investors are encouraged to place their money where the highest return
will be received and in so doing offer just enough electricity to cover
the demand as well as spikes in demand. In a perfect system the investor
is rewarded a maximum profit for producing just the right amount of
power with very little waste left over.
The problem Mike sees with the current deregulated market in Texas is
that power plants break down or have to be shutdown to fix or maintain
it resulting in loss of supply. If Murphy’s Law is in effect and a power
demand spike occurs around the same time as a maintenance shutdown all
of a sudden there is not enough power to go around for everyone.
These imperfections are problems that political powers bring up in
order to fault the great electricity deregulation experiment of 2002.
Will this blame game reverse deregulation in Texas? I really doubt that
deregulation can be reversed anytime soon. There is huge public support
for energy choice in Texas. Many people can show you on their electric
bills how they have saved money because of deregulation simply from
using our Electricity Bid website.
Is Deregulation to Blame for Lack of Sufficient Power Supply in Texas?
The problem we are faced with in regards to electric power supply in
Texas for 2012 is unreliable power supply due to not enough power plants
in operation. Is deregulation responsible for this lack of power?
No! In fact TXU was approved for and planning to build 11 new coal
fired power plants that utilized clean burning technology and
significantly reduced pollution from these plants compared to the old
mothballed coal plants from the past. The prior mayor of Houston and
Democratic nominee for governor of Texas, Bill White complained in 2010
that these plants were unnecessary but now they seem all too necessary.
ERCOT predicts very tight power supplies this summer and this has
politicians frantic but I’m sitting here wondering why we didn’t just
get started on those 11 coal plants in 2010?
I think what Pat said has a lot to do with our problems…..Pat Ennis with Priority Power Management
said, “”I’m not the smartest guy around, but I’d be willing to bet
that… we’re not going to have any coal plants built here in Texas for a
long time — between the EPA and the environmentalists, coal is kind of a
no-no.”
The state of Texas has been contending with attacks from the
Environmental Defense Fun and the EPA in regards to an argument that is
mainly about the states CO2 emission levels. Instead of focusing their
argument primarily on pollution like mercury levels and other
scientifically verifiable pollutants they were able to stop 11 new coal
fired power plants from being built by TXU because of a global warming
argument.
Many scientists and climate scientists non-affiliated or backed by
the United Nations IPCC organization disagree that global warming has a
negative environmental impact or that man has anything to do with it.
Over the last decade their has been a decline in average global
temperatures and so to even argue CO2 levels to prevent Texas from
expanding their power capacity only serves to hurt these environmental
activists causes.
What Can Texans Do to Increase Power Supply?
Does anyone remember back a few years ago when TXU proposed building
multiple state of the art clean burning coal power plants? These power
plants would have significantly updated the power infrastructure in
Texas but the plan was shutdown because of environmental nut jobs. Even
though the power plants would have been state of the art cheap coal
power with significant reductions in pollution compared to current coal
power plants in operation the plan did not go through. The state of
Texas must fight the EPA and federal government politically where it
hurts and take back our state and its ability to provide power to our
citizens.
Even with an unsatisfactory amount of power generation plants built
in Texas we have seen a steady increase in large commercial and
industrial facilities building on-site power grid infrastructure that
are little mini power generators for their companies. These miniature
power generators also known as distributed generation systems account
for a large portion of the overall electricity consumption in Texas.
During peak demand periods in the day these generators can turn on
resulting in no need for the state to start rolling blackouts in
residential neighborhoods.
Popout
The Texas demand curtailment program has been a huge success.
Companies are paid to enroll in a program that they do not even have to
participate in when and if they are asked to turn off their power for
maybe only 20 – 30 minutes in the span of 1 month. The program is
enrolled to it’s limits each time Texas opens it back up. What does this
mean? There are likely more than enough large commercial and industrial
facilities that would jump at the chance to shutdown production for a
short interval in exchange for being paid by the state of Texas to do
so. Consider that many large companies like this shutdown once a month
anyway to test their back up generators so why not get paid to do this?
Solar generation at this time is not a good option for solving the
states problems but has limited uses. As we have seen, large federally
backed companies like Solyndra have not even been able to stay a float
because of the expense it costs to produce cheap affordable power using
solar. Hey I am a fan of solar but like most people I can’t afford to
build a solar off the grid system on my home or business. If I can’t
afford the system like most of us why would you think the federal
government can? We are at record breaking tax deficits in the beginning
stages of an economic collapse and those tax dollars are to be used for
things that are considered affordable and have at least a 10 year return
on investment. Wind power is a partial option but is only viable to use
in combination with natural gas power generation as it can share in the
control systems and connections to the grid.
The smart meters, and energy efficiency programs utilities across the
state offer continue to assist in teaching home owners how to make
their homes more efficient and lower their monthly energy bill. These
programs should continue to be encouraged and promoted through local
electric utilities that control the power infrastructure.
I am an Energy Consultant for Ambit Energy. Take your last bill, go to my website www.BestPricedElectricity.com and see if you are paying to much. Jesse Smith
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