Texas freeze

The events of February 13 to 19, 2021 devastated Texas, as winter storm Uri swept through the state bringing historically low temperatures and exposing deficiencies in the delivery of power and heat to households and essential services.  The total devastation has yet to be calculated but it includes dozens of people dead from hypothermia, hundreds suffering from carbon monoxide poisoning, illnesses from contaminated water, the displacement of tens of thousands to makeshift and often inadequate warming centers, hundreds of vehicular accidents, millions without access to power or water or heat for several days, and untold losses in property damage.

The Texas Freeze of 2021 has also led to varied attempts, in a series of “what went wrong” articles, to diagnose the problems in the electricity infrastructure. After every disaster of this sort, there is a reckoning with the problems that created the crisis, but almost invariably the explanations and the solutions fall short of addressing the root problems, leaving us vulnerable to disasters in the future.

In this case, the crisis was the result of a grid operating system that was designed, in part, to reckon with earlier crises: the power outages of the 1960s and 1970s, the energy crisis of the 1970s and 1980s, and the disaster with deregulation in California.  Texas avoided these problems and was able to provide historically low electricity rates, in part by leading the national trend towards deregulation (importantly, not unique to Texas).   However, the last series of crises, followed by a (then) new technocratic fix, has now produced the Texas Freeze.

This time around analysts converged on various versions of the “Texas exceptionalism” thesis, namely that there is something strange about Texan Republicans that creates “wild west” conditions in which capitalism uniquely runs amuck.  Without discounting the varieties of ways that Texan Republicans can find new lows in all kinds of policies, the fact remains that Texas was not special—either in its ability to create the conditions for disaster or in fostering a relationship with businesses and corporations that did real harm to its own population.  This is a feature of capitalism everywhere, and the Texas exceptionalism thesis only has the benefit of making the rest of America feel grateful for the fact that they do not live here.

Thus, Jerry Jones is not acting as a Texan in making his new February 2021 fortune as the major stockholder of Comstock natural gas.  As people froze to death, the CEO of Comstock, Roland Burns told investors: “Frankly, we were able to sell at super premium prices for a material amount of production.” This is not a story unique to Texas, rather it is a wholesome American story of capitalist greed. In fact, Texas is just the canary in the coal mine.  The rest of the country would do well to remember what Texans often say—“as Texas goes, so goes the nation.”

Not so exceptional

The new version of the Texas exceptionalism thesis has a few (and importantly, contradictory) features that isolate identifiable culprits and that restrict the problem to Texas.  First, the Electric Reliability Council of Texas (ERCOT)—an entity whose name few knew before 2021—which is supposed to oversee the delivery of electricity to consumers and ensure that supply meets demand even in peak moments.  Its decision to implement blackouts that did not really “roll” meant that millions were stranded without power.

Second, the Republican Party in Texas, whose commitment to deregulation has fostered an environment of “wild west” competition without accountability or planning.  A different state administration (read: Democratic Party) would have, the argument goes, more carefully ensured that plans were in place for crisis events.  Mention is rarely made of Texas’s Railroad Commission that controls and regulates the oil and gas industry of Texas, which the Republicans have controlled for the past 25 years, but which was solidly Democratic before that point.

Third, the lack of oversight in the Public Utilities Commission of Texas to winterize the power generation plants and transmission equipment.  The need to winterize was recognized in 2011, but there was nothing to incentivize power generators and transmission networks to make sure that equipment did not freeze.  These tasks were actively avoided because they were believed to be too costly for the rare weather events they could help alleviate.  Moreover, no plans were in place for storing reserves, since there were no profits to be made from idle facilities.

Fourth, the failure of Texas to move away sufficiently from fossil fuels towards renewables or to have fully municipally controlled utilities.  These might have both vitiated the effects of climate change and made it easier for the state to intervene in moments of crisis.

And finally, a general Texan ideology of separatism, which created an independent grid that was vulnerable to shocks.  In particular, the need to remain free of federal intervention meant that there were not enough high voltage DC transmission lines to the rest of the American grid or variable frequency transformers like the one connecting the Texas Interconnection to Mexico.

All of these explanations are valid, and the solutions contained or implied in them should be implemented.  But they make three mistakes that are worth highlighting if we are to understand the crisis in Texas fully.  They mistakenly assume that the problem:

• Is specific and localized to some special aberration particular to Texas, while the scope of the problem is far larger and not reducible to the Republican Party or its conservative fringes.
• Could have been resolved with more careful planning or better technocratic management, while the problem itself was not a feature of unpreparedness but the logical outcome of cost-benefits analysis.
• Can be resolved without a fundamental reorganization of the economic system itself—a system that will always prioritize profits over human needs.

In short, the problem in Texas was not a result of the system’s failures; paradoxically, it was a product of its fantastic successes.

Market success as the root of the problem

Electricity generation in Texas, in fact throughout most of the U.S., has only secondarily been about getting power to households.  It has primarily been about the creation of cheap and available power for American capitalists and the military.  The delivery of power to households has been the democratic cover that is used to justify what is simultaneously a giveaway of cheap energy to the corporations who need it and a guarantee of massive profits to the corporations that produce energy.

The history of Texas is instructive in this regard.  State-wide electrification really began to happen in Texas with the creation of the Texas Interconnected System (TIS) in the 1940s.  Electricity generation was stronger in the northern and western parts of the state but was needed in the Gulf Coast region to help with the war efforts.  TIS connected existing utilities with new hydroelectric power generators along the Texas river systems and sent them to factories and shipping yards closer to the Gulf.  Manufacturing had increased four-fold between 1929 and 1945, and much of that depended on the ability of the state to provide power.  Rural electrification, for instance, was only mandated later by the federal government and the passage of the Emergency Relief Act in 1935; up until that point, only 2 to 3 percent of rural Texas had access to electricity, despite nearly 40 percent of the population living in rural areas.

Texas’ unique grid, maddeningly, is not the result of a lack of intervention, but of the specific kind of federal intervention made in the 1930s.  First, in order to regulate hydroelectric power generation and interstate power, the Federal Power Act was passed in 1920.  Second, in order to break up the monopolies that utilities had become during the Great Depression, the Public Utility Holding Company Act (PUHCA) was passed in 1935.  By 1932, the eight largest utilities in the U.S. controlled 73% of the market for electricity.  The PUHCA required that utility companies be of limited size and serve geographically contiguous and integrated areas.

It was understood that utilities would be a natural monopoly (because of economies of scale), so private companies were allowed to function with public oversight.  Capitalists in Texas tried to avoid the buying up of their utilities by larger companies in the northern and western states by creating a separate market for them.  While the rest of the country was pursuing cheaper and more reliable energy by breaking up monopolies, Texas tried to create a protectionist market for its own.

In the 1960s and 1970s, however, this model, which had been able to provide cheap electricity, fell apart as energy prices rose, and one of the consequences was the blackout of 1965.  Texas was able to survive that blackout and subsequent ones because of its oil and gas reserves, whose high prices and profits buoyed the energy sector.  Texas’s natural resource wealth has meant not that there is a congenital ideological difference in the blood, but that capitalists pursue strategies differently here than in the rest of the country.

But what happens in Texas is not disconnected from the rest of the country.  It was the federal regulation of natural gas prices in the interstate markets that pushed Texas to diversify its power generation— moving it into lignite, nuclear, and coal—and allowed Texas to grow economically while the rest of the US stagnated.  ERCOT was actually formed because of a federal mandate of the National Electric Reliability Council (later the North American ERC) in response to the blackout of 1965.

So rather than being a unique space for deregulation and separatism (more accurately protectionism), Texas went back and forth between the two strategies depending on how it could best leverage legal power to help the largest energy corporations.  It was not ideology but profitability that governed the shifts in policy.  And this was a bipartisan affair pursued by Governors Briscoe, White and Richards (Democrats) just as much as by Clements, Bush Jr., and Perry (Republicans).

For example, the independence of the grid was never about secessionism even if it had the benefit of aiding Texan separatist ideologues.  Texas was a large enough market with a vast reserve of fossil fuels to be tapped.  Up until the 1990s, for instance, the biggest challenge to ERCOT came from the forces of deregulation who saw in ERCOT inefficiencies and barriers to competition.  As noted, the 1935 federal legislation (PUHCA) was about busting up monopolies in the United States and regulating interstate trade of energy and importantly natural gas.

Texas energy companies opposed this for two different reasons.  On the one hand, Texas utility companies were relatively underdeveloped compared to the rest of the U.S., and so protection was sought for them so that they could earn profits without having to compete with more established firms in the rest of the country.

Second, Texas was now home to some of the best, easily tapped petroleum and natural gas reserves, and subjecting those to regulation by the federal government would hurt capitalists who were investing in Texas to access those very resources.  But once the market was developed enough and the profits were steep enough, capitalists throughout the U.S. and inside of Texas were itching to remove the protections that were afforded to those very same companies.

Nor was deregulation unique to Texas. Beginning in the 1970s, there was a global push towards the policies of neoliberalism, privatization, and deregulation in country after country.  Every industry in the U.S. went through a massive period of restructuring to allow new entrants into once tightly controlled markets like telecommunications, airlines, and banking services, policies pursued equally by Republican and Democratic presidents.  Every place that regulatory policies existed (including Texas) they were battered down and replaced with freer markets.

In Texas, that meant a change in policy to allow energy corporations to grow and develop beyond state borders.  How else do you explain that as these utilities grew, they morphed into some of the largest multinational corporations in the world?  Houston Light and Power, for instance, turned into the energy giant Reliant.  Or how else do you explain how deregulation allowed investment by non-Texan companies?  The Vermont-based Green Mountain Energy is one of the largest Retail Energy Providers (REPs) in Texas.  Chariot Energy, another Texas Utility Commission-certified REP, is owned by the Korean Hanwha Group. Other examples are plentiful.  If the interests of corporations in keeping a separate grid for Texas ran parallel to secessionist goals, they certainly did not ultimately intersect with one another.   The separation of the Texas grid was not about secessionism, but about protecting and nurturing certain capitalist concerns.

Texas Freeze 2021, the intersecting crises

All of this is not to argue that things were not bad in Texas or that there was not real blame to assign.  But it is not helpful to pretend, in an inversion of the Lone Star secessionist fantasy, that the rest of the U.S. is immune to the problems that Texas encountered.    The crisis that hit Texas in the middle of February was really the intersection of multiple different crises that are taking place globally.

First, the climate crisis, which created the conditions for the extreme weather event, whose importance cannot be understated.

Second, the pandemic has taxed an already inadequate health care system that was again unprepared to respond during the Freeze.

Third, the social crisis, which stems from the long legacy of racism in this country and which makes the economic disaster even worse, has as one of its consequences that people of color live farther and farther from essential services.

Fourth, the political crisis created by a combination of Republican leadership in the state that will not act in the interests of the people and the Democratic leadership nationally which would rather let the Republicans hang themselves on their own failures.

Fifth, a crisis in real estate, with a massive explosion in commercial and residential construction for which the infrastructure is barely equipped.

And finally, a fiscal crisis such that municipalities that have spent outrageous sums on policing, now lack reliable social services that they have starved for decades.

There is no Texas-specific solution to any of these problems.  Nor is there a way to pretend as if the problem in Texas is not already connected to the broader economic processes going on in the world.  One impact of deregulation in Texas, for instance, is that the state can no longer rely on high energy prices to maintain its counter-cyclical pattern of economic success.

Not only is the state just as vulnerable as every other part of the country to global changes, but economic and climate crises in Texas affect the rest of the world, too.  And unless we can undo the damage that capitalism does globally,  the problems will not be confined to Texas at all.