Meltz: Will Lubbock have buyer's remorse of ERCOT?
The Lubbock City Council recently approved moving all residents away from the local municipal power company, Lubbock Power & Light, to the nearly statewide deregulated system known as the Electric Reliability Council of Texas or ERCOT.
I am not an expert on Lubbock Power & Light, and I don’t pretend to know more about the situation than the local lawmakers who took this step to join ERCOT. But, I am the head of an organization that has taken a critical view of ERCOT, and for good reason.
Foremost, ERCOT is both unreliable and does not save customers money through a so-called competitive market.
In fact, just last year ERCOT collapsed during Winter Storm Uri that left millions of people without power across the state, cost billions of dollars in infrastructure damages and tragically left hundreds of people dead across Texas.
The Texas governor and state lawmakers have sought to assure people that the ERCOT shortcomings -- which caused last winter’s disaster -- have been remedied. But this winter ERCOT has issued multiple warnings that it was at near capacity for power output. In other words, ERCOT could run out of electricity and people across Texas would be exposed to power outages.
The reason ERCOT is vulnerable to destructive power shortages is because the organization has no ability to mandate that local power suppliers spend money on ensuring that the power grid can withstand extreme weather events.
When it was created, ERCOT’s supporters hoped that the free market would incentivize electricity suppliers to invest in resources to supply power when electricity is in high demand. But the money that these companies must spend to provide power on a few cold days a year isn’t worth their investment.
In fact, due to skyrocketing electricity rates during Winter Storm Uri, residents of the Lone Star State were billed $16 billion for their electricity. For just a week’s worth of shoddy power, ratepayers are being forced to pay back those power companies on their electric bills for the next few decades.
But ERCOT’s systemic shortcomings are not limited to extreme weather events. According to the Wall Street Journal, over the last decade, Texans paid $28 billion more than they would have without deregulation. In other words, if the Lone Star State had just kept its incumbent power companies, Texans would have paid tens of billions of dollars less for electricity in the last decade alone.
Lastly, ERCOT was intentionally not connected to power grids outside the state to ensure it was not subject to federal oversight. But this also means that when there are shortages in Texas, ERCOT can’t purchase power from neighboring states. This proved cataclysmic during Uri, when prices shot up due to a lack of supply, before the entire system collapsed.
My organization, which is supported by energy experts, power companies, labor unions, Democrats and Republicans and consumer advocates, believes that ratepayers are best served when there is sensible government regulation of the electricity supply. ERCOT scorned regulation for free markets and created a system ripe for failures. One day soon, Lubbock may have buyer’s remorse for signing up with ERCOT.
Gary Meltz is the executive director of Power for Tomorrow
This article originally appeared on Lubbock Avalanche-Journal: Gary Meltz will Lubbock have buyer's remorse over ERCOT?
