ERCOT, the operator of the Texas electric grid, has been a problem child since the state’s electricity market was deregulated at the turn of the century.
When it comes to the Electric Reliability Council of Texas, incompetence and lack of accountability and oversight is nothing new.
If you know your history, you shouldn’t be surprised about what happened in last month’s cold-weather catastrophe.
The power to bring us electricity rests in the hands of a nonprofit, mostly invisible group whose leaders claimed we were a mere 4 minutes and 37 seconds from a massive blackout that could have shut the grid down for months.
Texans wonder why it would take months. It takes that long for replacement transmission towers to be built shipped, placed and powered up.
With the help of The Dallas Morning News Archives and a history book by R.A. “Jake” Dyer of the Texas Coalition for Affordable Power, let me show you year by year how bad it has been.
It might make you wonder why we don’t throw up the white flag and join the interconnected national grid.
2001: Tasked with creating a pilot program to handle the new deregulated system that began that year, ERCOT blows it by going over-budget and failing to meet goals. Customers who wish to switch electricity companies are blocked. Bills generated by ERCOT are wildly inaccurate. Its budget, built on fees paid by electricity customers, is hatched in secret.
That year, the first price spike to the maximum-allowed cap hits customers, but ERCOT says it won’t happen again. Yet it happens again and again in the next few days.
2002: About a quarter-million customers do not receive bills, sometimes for months. An expensive marketing campaign promoting the new deregulated system is delayed because ERCOT can’t handle the influx of consumers wanting to switch companies.
A peek at financial statements shows ERCOT’s average salary with benefits is $99,000. Employees receive a $10,000 travel allowance. Critics pounce on ERCOT’s sponsorship of a minor league hockey team as frivolous. After promising to cut back, ERCOT asks that its customer-paid fees get doubled.
2004: This is — aside from 2021 — ERCOT’s worst year. The Dallas Morning News reveals a massive procurement scandal at ERCOT that will lead to criminal convictions. Fake companies are created by several ERCOT managers, and millions of dollars are siphoned from ERCOT funds. Legislators blast ERCOT’s weak financial controls and complain about “perceived arrogance among top officials in the face of these problems,” Dyer writes.
2005: A grand jury indicts six ERCOT managers. They include the chief information officer, director of information technology, data warehouse manager, director of program development and physical security manager. The sixth, a former FBI agent, is responsible for corporate security. The men use the stolen money to buy boats, luxury homes and expensive cars.
“The maze of illicit business dealings going on within ERCOT over a year’s time is simply stunning,” the Texas attorney general says. “This is not about electricity. It’s about corruption at top levels of ERCOT.”
The AG at the time? Greg Abbott.
In response to the growing scandal, the Legislature gives all oversight of ERCOT to the Public Utility Commission.
2006: Running out of power on an April day, ERCOT launches, without public warning, rolling blackouts. Even the PUC, which supposedly oversees ERCOT, isn’t notified. Under fire, ERCOT’s chief executive resigns. On the criminal front, the indicted managers are convicted and some are ordered to pay fines, while others are sent to prison.
One state senator says: “There’s an ongoing, cavalier attitude over there [at ERCOT] that you are a standalone entity and not responsible to the people of the state.”
2009: Bills to rein in ERCOT are introduced at the Legislature, but they do not pass. ERCOT’s CEO resigns, the fourth such resignation since 2000.
2010: A consultant’s report finds ERCOT is hindered by “poor corporate governance, leadership and culture.” The consultant finds that ERCOT has too many employees and recommends that 166 get cut. ERCOT cuts 37. A state report finds poor financial oversight, questions ERCOT’s large debt (more than $300 million) and suggests removing industry representatives from the board.
2011: An icy cold snap hits during Super Bowl week, but ERCOT isn’t prepared, resulting in rolling blackouts. Similar cold weather problems occurred in 1983, 1989, 2003, 2006, 2008 and 2010. Meanwhile, during the summer, the state keeps setting records for hot-weather usage. A bill that gives the PUC even more oversight of ERCOT dies in the Legislature.
2015: New electricity demands break records. ERCOT lifts the regulatory cap to its current $9,000 per megawatt-hour. Originally, until 2011, the cap was $1,000 per megawatt-hour. ERCOT’s cap is the highest in the nation.
2018: ERCOT planners predict that generators will note the state has lower reserve margins of power and build new power plants to make profits and boost energy supplies. Because of this, they say, Texas will have a much stronger system by 2021. Oh, well.
2019: The $9,000 cap for wholesale electricity is hit twice, once in May and once in August. “Such high prices eventually trickle down into home rates,” Dyer writes.
Texas’ population of 29 million people is projected to grow by 2050 to 55 million. Can the current system handle the added power load? Why isn’t anyone talking seriously about joining the national grid?
The Watchdog took the “P” away from the (p)UC because the commission doesn’t care about the public. Watchdog Nation member David P. Bader of Dallas suggests, “Going forward, until some meaningful reforms are made, you should refer to ERCOT as E(r)COT since “reliability” doesn’t appear to be part of their purview.”
Done. Considering its sketchy past and dangerous present times, you have to wonder if E(r)COT can handle the future.