Opinion | Et Tu, Ted? Why Deregulation Failed
No one is fully prepared for a natural disaster. They always reveal weaknesses when hurricanes, blizzards or tsunamis strike – failure in planning, failure to invest in precautions.
However, the disaster in Texas was different. The collapse of the Texas power grid did not reveal some deficiencies. This showed that the whole philosophy behind the state’s energy policy is wrong. And it was also revealed that the state is run by people who resort to lies instead of admitting their mistakes.
Texas is not the only state with a large-scale electricity market. However, it has pushed farther than anyone else. There is an upper limit on wholesale electricity prices, but it is higher in the stratosphere. And there is essentially no prudential regulation – no requirement that utilities keep things like insulation in reserve capacity or investment to limit the effects of extreme conditions.
The theory was that no such regulation was necessary, because the magic of the market would take care of everything. Ultimately, an increase in demand or supply disruption – both of which occurred in diesel freezes – will lead to higher prices, and therefore to larger profits for any electricity supplier that manages to keep operating. So there should be an incentive to invest in robust systems, just to take advantage of events like Texas that are experienced only.
The Texas energy policy was based on the idea that you could treat electricity like avocados. Do people remember the great Avocado deficiency Of 2019? Prices rose in California due to demand and poor harvest; But no one called for special inquiries and new regulations on avocado producers.
In fact, from what happened in Texas last week, some people see nothing wrong. William Hogan, Harvard professor, is considered the architect of the Texas system, Insist on That drastic value increase, while not “convenient”, is how the system should have worked.
But kilowatt-hours are not avocado, and there are at least three big reasons that show that they are a recipe for disaster.
First, electricity is essential to modern life in the way that some other objects can be matched. To go without avocado toast will not kill you; Going without electricity, especially when your home relies on it for heat, can.
And it is highly doubtful whether the possibility of sky-high profits during shortages also provides sufficient incentives for energy suppliers to bear the heavy human and economic costs in a long power supply.
Second, power is supplied by a system – and it is not good for a player to make a precautionary investment in the system if other players fail to do so. Even if the owner of a gas-fired power plant insulates and cools its turbines, the gas pipeline, which supplies its fuel, or the wellheads that provide the gas, does not freeze, can not do.
So does the free market ensure that the entire system works under stress? Probably not.
Last but not least, a system that relies on incentives given by extremely high prices in times of crisis is not practical or politically feasible.
First, those Texans who did not lose power in the big freeze considered themselves lucky. But then the bills arrived – and some families found themselves charged up Thousands of dollars for a few days of electricity.
Many families probably cannot pay those bills, so we are seeing a wave of potentially personal bankruptcies. And even those who do not face wastage, obviously, resentment.
Perhaps the most revealing comment of the Texas crisis ever, was a tweet by Senator Ted Cruz (R-Cancun) of all people, well damn That “no power company should get any wind due to natural disaster” and that “state and local regulators” are called “to prevent their injustice”.
The senator, not known for self-awareness, may not realize what he did there. But if Ted Cruz – Ted Cruz too! – believes that regulators should prevent power companies from reaping beneficial benefits in a disaster, which makes any private sector financial incentive ready for such a disaster. And this, in turn, destroys the entire premise behind radical overgrowth.
So will Republicans who hold all of Texas’ statewide offices learn from this debacle, and rethink their overall view of energy policy? Not at all His immediate response was to justify the crisis on wind energy and sarcasm at the advocates of the Green New Deal – even if something resembling the Green New Deal, i.e. public investment in energy infrastructure, is really what Texas needs.
And one thing we have learned in the last few months is that once politicians commit themselves to the Big Light, whether it involves epidemiology, economics or election results, there is no retreat.
But the right-wing political-media complex cannot and will not learn anything from the Texas power debacle, the rest of us can. We are offered a clear view of the dark (and cold) side of free-market fundamentalism. And this is a lesson we should not forget.
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