Here in UK power companies must pay direct compensation to customers for power outages. 5 days of hard frost after Storm Arwen I got over £500 and could also have claimed for eating out and moving to a hotel.
Bravo Andy for the bare truth. Spent 42 yrs in Tejas, ten in CS, suffered the brutal freeze of 1991 and flooded home and office with TS Allison in Houston. MY nicest view of TX was in rear view mirror. Keep safe and cool.
You have accurately described one of the issues with any public utility - there are fixed costs of operating the system. These issues affect any jurisdiction with utilities. You imply, but don't state, that Texas has uniquely bad problems in this respect. If this is your claim, please make it explicit, and explain why Texas is worse than other states or countries.
Generally, there's a regulator that must approve the operating costs, which are then incorporated in the utility's cost structure, which determines the rates customers must pay. Sometimes regulators insist on less maintenance than the utility proposes. At such times, the politicians blame the utility.
In Connecticut, for example, two storms in August and October 2011 caused extensive service outages; the first was mostly resolved within 4 days, while the second still had major outages a week after the storm. Connecticut Light & Power put a lot of the blame on the regulators for not allowing sufficient preventive measures, such as trimming trees around power lines. Initially, the governor mostly supported the utilities (at least by not directly criticizing them), but after the utilities' inept response was among the loudest critics.
In any case, there is a tug of war between utilities, regulators, politicians, and the public. Utilities have every reason to do preventive maintenance and harden the system, if the regulators will allow the costs to be recovered. Regulators' motives aren't always clear - they may be criticized if they allow rates to rise too much, and they might be pressured by politicians to keep rates low, but most of the blame for rates is put on the utilities. They might be criticized it they block preventive measures that might look good in hindsight, but the politicians will blame the utilities who didn't do the work, rather than the regulators that wouldn't allow it to be paid for.
I don't know how much of this applies to natural gas suppliers, and Andrew isn't clear whether it's the natural gas utilities, the pipeline companies, or the gas producers who are responsible for the infrastructure hardening that might prevent future problems. Can you provide more background on this?
I agree. Regulation by PUC's are not w/o problems. That is why I suggest requiring insurance. A PUC -ought- to require cost effective investments but an insurance company has a financial incentive to require them.
It only multiplie providers, but individual and micro grids are the best practice policy. A nationwide great job replacing the current model is an incredible waste of resources in just another industrial complex. More corporate subsidy
This article from Texas Monthly speaks directly to this topic. Centerpoint actually has filed plans twice to get approval to charge customers for infrastructure upgrades. But it was a pittance compared to what’s really needed. Utilities here have always preferred to repair rather than prevent. They think it’s cheaper to do it they way and don’t care the affect it has on the public.
I also suspect there's political pressure not to raise rates to harden the electricity system. Higher rates make people unhappy (until the power goes out, that is), and cheap energy is a point of pride in TX. I can imagine backroom conversations where politicians tell the energy companies to not aggressively work to harden the grid and keep rates low.
We’re going to have to pay for it one way or another. Let’s do it in a way where fewer people die from these storms. Instead of after the fact. The lack of power in Houston area is really causing problems with people being able to even work right now. No power, stores not open, people can’t go to work. What’s the economic fallout from that aspect going to be on the consumers?
Absolutely agree about the politics. However we, the consumers, are already currently paying for the lack of prevention measures for Uri. Every consumer has a special fee tacked on their utility bills for probably at least the next 20 years to pay those astronomical fuel costs the deregulated market created when prices spike exponentially while people were freezing to death. My portion is $50 a month currently.
Utilities should be required to purchase insurance for the damages that outages occasion. [Insurance companies would then require them to make the most cost effective investments.] It's exactly the rationale for taxing net CO2 emissions.
Yes, no action will be taken to force a hardening of the Texas electrical grid. Having lived there for many years, I know first hand that they care more about corporations than people.
Here in UK power companies must pay direct compensation to customers for power outages. 5 days of hard frost after Storm Arwen I got over £500 and could also have claimed for eating out and moving to a hotel.
Here's an initial estimate from a well known Texas economist - https://www.perrymangroup.com/publications/column/2024/7/22/beryls-billions/
Andrew thank you for this thoughtful analysis. As you and your readers know the 2024 GOP convention is in session. By accident, while reading another essay, I came across this link to the "GOP Platform for 2024", I refer you to page 4 for the itemized list: https://www.documentcloud.org/documents/24795758-read-the-2024-republican-party-platform .
Bravo Andy for the bare truth. Spent 42 yrs in Tejas, ten in CS, suffered the brutal freeze of 1991 and flooded home and office with TS Allison in Houston. MY nicest view of TX was in rear view mirror. Keep safe and cool.
You have accurately described one of the issues with any public utility - there are fixed costs of operating the system. These issues affect any jurisdiction with utilities. You imply, but don't state, that Texas has uniquely bad problems in this respect. If this is your claim, please make it explicit, and explain why Texas is worse than other states or countries.
Generally, there's a regulator that must approve the operating costs, which are then incorporated in the utility's cost structure, which determines the rates customers must pay. Sometimes regulators insist on less maintenance than the utility proposes. At such times, the politicians blame the utility.
In Connecticut, for example, two storms in August and October 2011 caused extensive service outages; the first was mostly resolved within 4 days, while the second still had major outages a week after the storm. Connecticut Light & Power put a lot of the blame on the regulators for not allowing sufficient preventive measures, such as trimming trees around power lines. Initially, the governor mostly supported the utilities (at least by not directly criticizing them), but after the utilities' inept response was among the loudest critics.
In any case, there is a tug of war between utilities, regulators, politicians, and the public. Utilities have every reason to do preventive maintenance and harden the system, if the regulators will allow the costs to be recovered. Regulators' motives aren't always clear - they may be criticized if they allow rates to rise too much, and they might be pressured by politicians to keep rates low, but most of the blame for rates is put on the utilities. They might be criticized it they block preventive measures that might look good in hindsight, but the politicians will blame the utilities who didn't do the work, rather than the regulators that wouldn't allow it to be paid for.
I don't know how much of this applies to natural gas suppliers, and Andrew isn't clear whether it's the natural gas utilities, the pipeline companies, or the gas producers who are responsible for the infrastructure hardening that might prevent future problems. Can you provide more background on this?
I agree. Regulation by PUC's are not w/o problems. That is why I suggest requiring insurance. A PUC -ought- to require cost effective investments but an insurance company has a financial incentive to require them.
Micro community grids and individual power generation are the best policy practice.
It only multiplie providers, but individual and micro grids are the best practice policy. A nationwide great job replacing the current model is an incredible waste of resources in just another industrial complex. More corporate subsidy
This article from Texas Monthly speaks directly to this topic. Centerpoint actually has filed plans twice to get approval to charge customers for infrastructure upgrades. But it was a pittance compared to what’s really needed. Utilities here have always preferred to repair rather than prevent. They think it’s cheaper to do it they way and don’t care the affect it has on the public.
https://www.texasmonthly.com/news-politics/houston-hurricane-beryl-electrical-system/
I also suspect there's political pressure not to raise rates to harden the electricity system. Higher rates make people unhappy (until the power goes out, that is), and cheap energy is a point of pride in TX. I can imagine backroom conversations where politicians tell the energy companies to not aggressively work to harden the grid and keep rates low.
We’re going to have to pay for it one way or another. Let’s do it in a way where fewer people die from these storms. Instead of after the fact. The lack of power in Houston area is really causing problems with people being able to even work right now. No power, stores not open, people can’t go to work. What’s the economic fallout from that aspect going to be on the consumers?
Absolutely agree about the politics. However we, the consumers, are already currently paying for the lack of prevention measures for Uri. Every consumer has a special fee tacked on their utility bills for probably at least the next 20 years to pay those astronomical fuel costs the deregulated market created when prices spike exponentially while people were freezing to death. My portion is $50 a month currently.
Utilities should be required to purchase insurance for the damages that outages occasion. [Insurance companies would then require them to make the most cost effective investments.] It's exactly the rationale for taxing net CO2 emissions.
See [https://thomaslhutcheson.substack.com/p/climate-risk-and-insurance]
Thanks so much for the shout-out!
Centerpoint Energy corporation is listed on the NY stock exchange. They are responsible to their shareholders.
I get my electricity from a Public Utility District, which is a non-profit responsible to their customers.
You know the old saying - follow the money.
Yes, no action will be taken to force a hardening of the Texas electrical grid. Having lived there for many years, I know first hand that they care more about corporations than people.
You can't live here w/o understanding this.
Yep, which is why I live on the West Coast now. Elon, don’t let the screen door hit you in the ass as you leave… 😉