Friday, February 04, 2011

"The energy capital of the world can't keep the lights on"

The cold weather that swept across Houston brought with it the cruel irony of rolling blackouts: the Energy Capital of the World couldn't keep the lights on.

Wednesday's frigid onslaught knocked out 50 generating units statewide, eliminating 7,000 megawatts of capacity and leaving the state about 4,000 megawatts short.

This, of course, isn't supposed to happen. Temperature-related demand, extreme hot or cold spells, largely can be anticipated.

"You would think that the financial incentives would be to be up and ready," said David Cruthirds, publisher of the Cruthirds report, a newsletter that tracks electricity issues in the southern U.S. "It does raise a question of the planning."

It also raises the question of how much customers are willing to pay to ensure it doesn't happen again.

"We don't have enough flexibility on the system today to address the situation," said Brett Perlman, a power industry consultant and former member of the Public Utility Commission. "We in Texas have not invested substantially in demand response and other technologies."

Apparently it's going to cost consumers more -- a LOT more -- to keep Texas from falling into an Iraqi sometimes-the-power-is-on, sometimes-it-ain't situation.

I asked yesterday, I'll ask again: you don't suppose the invisible hand of the free market could be fingering us, do you?

Wall Street investors know how to profit from Texas' deregulation scheme. The largest plants serving the Houston region have already been both bought and sold twice, at enormous gain. Now, electricity consumers throughout the state have been forced to pay billions of dollars to the old utilities for those power plants based on the false assumption that deregulation would make them less valuable. (We have been fighting this absurd payment in court.) And consumers of municipally owned utilities in cities such as Austin and San Antonio, which were exempt from deregulation, get fairer and more accountable rates.

Mexico decided not to help us thaw out after all. Can you blame them, after all the nastiness from the conservative xenophobes?

And now even Paul Burka is cranky. He didn't get a hot breakfast.

I was on my way to Houston on Wednesday to speak to the Greater Houston Partnership when I was caught in the rolling blackout. I made it as far as Elgin on U.S. 290, where the traffic lights were blinking red and cops were standing in the bitter cold, directing motorists. My intention was to stop at McDonald’s for a breakfast sandwich and coffee. The drive-through line was quite long and very slow, and the speaker at which I sought to place my order wasn’t working. As I was contemplating my next move, a young woman who worked there emerged from the building and started walking down the line of cars. She informed me that the only thing they could serve was sausage biscuits and bottled water, because the power was out. And cash only, please; credit cards couldn’t be processed. Eventually I got my stale sausage biscuit and headed on my way.

As I got back on the highway, I reflected that my breakfast experience was the perfect metaphor for the great budget meltdown of 2011. Nothing in state government works. ERCOT, which exists to make certain that the grid function correctly, failed miserably. State officials couldn’t even explain what went wrong, much less fix it. That’s as hard to swallow as my biscuit.

We run state government on a shoestring. We have a $10 billion structural budget deficit and nobody has the slightest interest in fixing it. Is anyone surprised that we can’t even get through a winter storm without having our infrastructure fail us?

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