Are California’s Blackouts a Glimpse of Texas’ Future?

(Originally published in the Lone Star Standard August 28, 2020.)

Californians have recently seen each new day bring the prospect of more rolling blackouts.

Despite warnings from the California Public Utilities Commission that blackouts could affect millions, about only 600,000 homes and businesses have lost power. Nonetheless, people are not happy.

“These blackouts … are unacceptable and unbefitting of the nation’s largest and most innovative state,” said California Gov. Gavin Newsom.

Truth be told, it is the “innovation” of wind energy that is largely responsible for California’s blackouts. Since Texas is even more innovative when it comes to wind energy, today’s problems with California’s electric grid could be a glimpse into Texas’ future.

Texas got into the business of subsidizing wind in 1999 when it mandated that a certain portion of retail electricity sales be powered by renewable energy. It increased that mandate in 2005 while also requiring that Texas build 3,500 miles high voltage power lines to West Texas to transmit electricity from wind and solar farms.

On top of these subsidies, Texas school districts and counties give renewable generators abatements that often reduce their property taxes by 50% or more. Add in federal tax credits for wind and solar generation, and last year renewable generators in Texas received subsidies totaling about $2.4 billion in increased revenue or avoided costs, about 44% of their $5.5 billion of their total revenue and benefits.

These interventions have led to significant distortions and reliability problems in Texas’ electric grid, along with fears of blackouts like California is facing today. Despite these problems, Texas policymakers—like their California counterparts—have refused to eliminate renewable subsidies.

Instead, they made electricity more expensive in order to increase subsidies for generators. Last year, they used an administrative price adder, the Operating Reserve Demand Curve (ORDC), to add $3.6 billion to the wholesale price of electricity. The money from this "electricity tax” on Texans went from their pocketbooks into the coffers of renewable, fossil fuel, and nuclear generators.

It is not surprising in this age of all things renewable that policymakers in California and Texas do not want their constituents to know what they are up to. Out in California, they are acting like the source of their blackouts is a mystery.

The New York Times proclaimed, “Rolling Blackouts in California Have Power Experts Stumped.” Back home, Terrie Prosper, spokeswoman for the California Public Utilities Commission, said, "The question we’re tackling is why certain resources were not available."

The truth is hiding in plain sight. “The abrupt loss of a 470-megawatt power plant as well as nearly 1,000 megawatts of wind power ultimately necessitated” the blackouts, reported SFGate. In other words, the most significant factor was that the wind slowed down.

It has been more than a decade since Texas policymakers had to deal with blackouts because of their support of renewable energy, but they do have to face the inconvenient fact of increased electricity prices. 

In 2019, as wholesale electricity prices in several other major markets declined by 15% to 30%, Texas wholesale prices climbed by 13%. Texas retail prices last year also increased at more than five times the rate of retail prices in the rest of the country. Most of the increase in Texas prices can be attributed to manipulation of the market by the Texas regulators through the ORDC and other measures.

Yet Texas policymakers seem just as eager as those in California to keep the source of the problem a mystery. The 2019 ORDC costs are stashed away in obscure publications. And a recent Public Information Act (PIA) request from this author to the Public Utility Commission of Texas (PUCT) for records related to the 2020 costs was denied, with the PUCT claiming the records are “protected from disclosure under the PIA.”

Underlying the secrecy in both states is an unwillingness to expose the harm being caused by renewable energy. It appears that California and Texas policymakers would rather subject their constituents to blackouts and high energy prices than take on the renewable energy lobby.

It used to be that Texas stood tall when compared to California. Unless the Texas Legislature is willing to end renewable energy subsidies, however, it may not be long before Texans join Californians hunkered down in the darkness.

Bill Peacock is the policy director for the Energy Alliance in Austin, TX.