After last winter’s deadly failures, regulators promised solutions.
But who would profit?
By Rachel Monroe
By Rachel Monroe
NEW YORKER
February 9, 2022
Last February, a storm knocked out power to nearly five million Texans,
and, according to the state, two hundred and forty-six people died.
Photograph by Ron Jenkins / Getty
On Wednesday, I woke up, in Marfa, to steely skies and tension in the back of my skull, a sign that the pressure was dropping and a cold front was moving in. Not that I needed to be reminded: the winter storm was all that anyone could talk about at the bank, at the post office, at the unusually busy liquor store. It would be the most significant statewide cold snap since Winter Storm Uri, last February, which overwhelmed the electrical grid and left millions of Texans without power for days. “I can guarantee the lights will stay on,” Governor Greg Abbott had told an Austin television station in November; now he was backpedalling, saying that “no one can guarantee” that rolling blackouts wouldn’t be necessary. On Twitter, where “PTSD” was trending in Texas, people tweeted images of long lines and empty shelves at HEB grocery stores. This time, thankfully, the grid held up—not, however, because of any substantive change taken by state lawmakers.
Last year’s disaster stemmed from a confluence of extreme weather and systemic weaknesses. On February 10th, a severe and prolonged cold front moved into Texas. Within days, temperatures had plummeted thirty to forty degrees below normal, and stayed below freezing in parts of the state for nearly a week. Many natural-gas facilities—the largest source of electricity in Texas—were inadequately winterized and began to fail as wells froze and equipment seized up. On the night of February 14th, as temperatures dipped and Texans cranked up their electric heaters, demand surged beyond the worst-case expectation of sixty-seven gigawatts, as estimated by the Electric Reliability Council of Texas, which manages the state’s grid. The grid can typically generate around ninety gigawatts of power, but nearly half that capacity was inaccessible, owing in large part to the natural-gas failures. The disparity between supply and demand was extreme; to restore equilibrium, ercot ordered “load shed,” or intentional blackouts, for large swaths of the state.
In the end, nearly five million Texans lost power, many for several days. The state reported that two hundred and forty-six people died as a result of the storm. (Other sources say that this is drastically underreported.) Some died of hypothermia, and others died trying to keep warm—from running a gasoline-powered generator indoors; from setting a fire that seems to have escaped the fireplace and burned the house down. In the storm’s aftermath, we learned that, as bad as things got, they could have been far worse. The system was so thoroughly overwhelmed that we were minutes away from an automatic shutdown of the entire grid, which would have taken months to get back online.
In the aftermath, Governor Abbott blamed the grid failure on renewable energy. (He later walked this claim back.) But iced-over wind turbines weren’t the villain. Wind turbines supply a fraction of the grid’s winter power supply, much less than the similarly icebound natural-gas processors. Instead, blame rested with Texas’s unique energy structure, and its lax approach to regulation.
In 1935, as the federal government moved to regulate electricity sales across state lines, Texas opted to fend for itself and avoid regulation. Uri also plunged Oklahoma into frigid conditions, and that state similarly struggled with frozen turbines and disrupted natural-gas processing. There were rolling blackouts there, too, but for a fraction of the population, and only for an hour or two at a time; Oklahoma, part of a multistate grid, could pull power from elsewhere. A decade ago, when a similar storm caused similar problems, the Federal Energy Regulatory Commission called on Texas to winterize its natural-gas facilities. But Texas’s grid, since it is independent, is not subject to federal oversight.
Sufficient winterization didn’t happen then, and not much substantively changed after Uri. Abbott called for legislative hearings about the grid failure, but, when it came to actually passing laws, the state legislature seemed largely focussed on issues that animated its Republican base: tightening the state’s restrictive voting laws; allowing unlicensed handgun carry in public, despite significant opposition from law-enforcement leaders and a majority of Texas voters; and enacting a ban on abortion after roughly six weeks, along with a trigger law that would completely prohibit abortion in the state if Roe v. Wade were overturned. I had the sense, watching the legislative session, of an enormous amount of energy being expended in exactly the wrong direction.
The legislature did pass a bill setting new weatherization standards, with regulations applying mainly to electrical plants. But natural-gas facilities, whose failure was a driving factor in last year’s crisis and in previous blackouts, were treated with much more deference. In Texas, the oil-and-gas industry is overseen primarily by the Railroad Commission. The state has no effective conflict-of-interest rules against regulators’ maintaining a financial interest in the industries that they oversee, and the elected members of the Commission regularly have business ties to the energy industry. Unsurprisingly, the Railroad Commission has been persistently reluctant to impose anything like fines or rules on one of Texas’s most powerful industries. It’s unclear what weatherization requirements natural-gas plants will have to meet by what deadline, and what, if any, enforcement there will be if they don’t comply. As Russell Gold pointed out, in Texas Monthly, winterizing all the wells in Texas would cost up to two hundred million dollars annually according to some estimates, equivalent to one or two days of revenue for the gas industry, which profited enormously from Uri-related price surges. Abbott claimed that necessary actions had been taken to shore up the grid. But, when temperatures fell below freezing in January, gas supply dropped by nearly twenty per cent in the Permian Basin, a key region for the state’s oil production. Last week, with even colder weather forecast, residents began to panic; it was clear that winterization efforts are far from complete.
Abbott has seized on a different strategy for shoring up the grid: cryptocurrency. After China banned the mining of cryptocurrency, last June, a number of crypto-mining companies established or expanded their presence in Texas. The state’s deregulated electricity market means that Texans pay some of the lowest prices for electricity in the country (at least, when extreme weather doesn’t distort the market), making the state a natural choice for cryptocurrency mining, which essentially converts electricity to money. Crypto-mining facilities in Texas already consume enough electricity to power several cities. By 2023, it is estimated that ercot will account for twenty per cent of the global bitcoin network, and, by the end of that year, the state’s crypto-mining facilities’ power demands may have increased by as much as fivefold. This would seem to be a questionable move for a place with a demonstrably fragile grid. But Abbott has aggressively courted crypto companies, arguing that the energy-hungry industry will make Texas’s grid more resilient by encouraging energy providers to build more capacity. That capacity hasn’t yet arrived. In the meantime, some crypto-mining companies have arrangements with ercot that allow them to benefit from the fragility of the system: when heightened demand sends electricity prices soaring, the miners agree to shut off their servers and get paid for funnelling power back into the grid. Last fall, Abbott met with Texas’s major cryptocurrency companies and asked them to help him get through the winter, according to reporting from Bloomberg.
Texans have good reason for internalizing the idea that state officials aren’t going to look out for our interests. The wait for a home generator is months long. A recent ad for the Ford F-150 Lightning, the electric version of the best-selling pickup, showed a house’s lights ominously flickering during a storm. But the menace doesn’t last long: a family uses the truck as a kind of battery on wheels, plugging it in to re-illuminate the house. The commercial struck me as an invocation of a distinctively Texan dream, or nightmare: a public utility that can’t be trusted; a gleaming forty-thousand-dollar pickup that can. Unfortunately, there’s a multiyear waiting list for those trucks. In the meantime, Texans can hope that the worst of the winter is over. If not, we can always huddle next to the crypto facilities, seeking whatever warmth can be spared.
On Wednesday, I woke up, in Marfa, to steely skies and tension in the back of my skull, a sign that the pressure was dropping and a cold front was moving in. Not that I needed to be reminded: the winter storm was all that anyone could talk about at the bank, at the post office, at the unusually busy liquor store. It would be the most significant statewide cold snap since Winter Storm Uri, last February, which overwhelmed the electrical grid and left millions of Texans without power for days. “I can guarantee the lights will stay on,” Governor Greg Abbott had told an Austin television station in November; now he was backpedalling, saying that “no one can guarantee” that rolling blackouts wouldn’t be necessary. On Twitter, where “PTSD” was trending in Texas, people tweeted images of long lines and empty shelves at HEB grocery stores. This time, thankfully, the grid held up—not, however, because of any substantive change taken by state lawmakers.
Last year’s disaster stemmed from a confluence of extreme weather and systemic weaknesses. On February 10th, a severe and prolonged cold front moved into Texas. Within days, temperatures had plummeted thirty to forty degrees below normal, and stayed below freezing in parts of the state for nearly a week. Many natural-gas facilities—the largest source of electricity in Texas—were inadequately winterized and began to fail as wells froze and equipment seized up. On the night of February 14th, as temperatures dipped and Texans cranked up their electric heaters, demand surged beyond the worst-case expectation of sixty-seven gigawatts, as estimated by the Electric Reliability Council of Texas, which manages the state’s grid. The grid can typically generate around ninety gigawatts of power, but nearly half that capacity was inaccessible, owing in large part to the natural-gas failures. The disparity between supply and demand was extreme; to restore equilibrium, ercot ordered “load shed,” or intentional blackouts, for large swaths of the state.
In the end, nearly five million Texans lost power, many for several days. The state reported that two hundred and forty-six people died as a result of the storm. (Other sources say that this is drastically underreported.) Some died of hypothermia, and others died trying to keep warm—from running a gasoline-powered generator indoors; from setting a fire that seems to have escaped the fireplace and burned the house down. In the storm’s aftermath, we learned that, as bad as things got, they could have been far worse. The system was so thoroughly overwhelmed that we were minutes away from an automatic shutdown of the entire grid, which would have taken months to get back online.
In the aftermath, Governor Abbott blamed the grid failure on renewable energy. (He later walked this claim back.) But iced-over wind turbines weren’t the villain. Wind turbines supply a fraction of the grid’s winter power supply, much less than the similarly icebound natural-gas processors. Instead, blame rested with Texas’s unique energy structure, and its lax approach to regulation.
In 1935, as the federal government moved to regulate electricity sales across state lines, Texas opted to fend for itself and avoid regulation. Uri also plunged Oklahoma into frigid conditions, and that state similarly struggled with frozen turbines and disrupted natural-gas processing. There were rolling blackouts there, too, but for a fraction of the population, and only for an hour or two at a time; Oklahoma, part of a multistate grid, could pull power from elsewhere. A decade ago, when a similar storm caused similar problems, the Federal Energy Regulatory Commission called on Texas to winterize its natural-gas facilities. But Texas’s grid, since it is independent, is not subject to federal oversight.
Sufficient winterization didn’t happen then, and not much substantively changed after Uri. Abbott called for legislative hearings about the grid failure, but, when it came to actually passing laws, the state legislature seemed largely focussed on issues that animated its Republican base: tightening the state’s restrictive voting laws; allowing unlicensed handgun carry in public, despite significant opposition from law-enforcement leaders and a majority of Texas voters; and enacting a ban on abortion after roughly six weeks, along with a trigger law that would completely prohibit abortion in the state if Roe v. Wade were overturned. I had the sense, watching the legislative session, of an enormous amount of energy being expended in exactly the wrong direction.
The legislature did pass a bill setting new weatherization standards, with regulations applying mainly to electrical plants. But natural-gas facilities, whose failure was a driving factor in last year’s crisis and in previous blackouts, were treated with much more deference. In Texas, the oil-and-gas industry is overseen primarily by the Railroad Commission. The state has no effective conflict-of-interest rules against regulators’ maintaining a financial interest in the industries that they oversee, and the elected members of the Commission regularly have business ties to the energy industry. Unsurprisingly, the Railroad Commission has been persistently reluctant to impose anything like fines or rules on one of Texas’s most powerful industries. It’s unclear what weatherization requirements natural-gas plants will have to meet by what deadline, and what, if any, enforcement there will be if they don’t comply. As Russell Gold pointed out, in Texas Monthly, winterizing all the wells in Texas would cost up to two hundred million dollars annually according to some estimates, equivalent to one or two days of revenue for the gas industry, which profited enormously from Uri-related price surges. Abbott claimed that necessary actions had been taken to shore up the grid. But, when temperatures fell below freezing in January, gas supply dropped by nearly twenty per cent in the Permian Basin, a key region for the state’s oil production. Last week, with even colder weather forecast, residents began to panic; it was clear that winterization efforts are far from complete.
Abbott has seized on a different strategy for shoring up the grid: cryptocurrency. After China banned the mining of cryptocurrency, last June, a number of crypto-mining companies established or expanded their presence in Texas. The state’s deregulated electricity market means that Texans pay some of the lowest prices for electricity in the country (at least, when extreme weather doesn’t distort the market), making the state a natural choice for cryptocurrency mining, which essentially converts electricity to money. Crypto-mining facilities in Texas already consume enough electricity to power several cities. By 2023, it is estimated that ercot will account for twenty per cent of the global bitcoin network, and, by the end of that year, the state’s crypto-mining facilities’ power demands may have increased by as much as fivefold. This would seem to be a questionable move for a place with a demonstrably fragile grid. But Abbott has aggressively courted crypto companies, arguing that the energy-hungry industry will make Texas’s grid more resilient by encouraging energy providers to build more capacity. That capacity hasn’t yet arrived. In the meantime, some crypto-mining companies have arrangements with ercot that allow them to benefit from the fragility of the system: when heightened demand sends electricity prices soaring, the miners agree to shut off their servers and get paid for funnelling power back into the grid. Last fall, Abbott met with Texas’s major cryptocurrency companies and asked them to help him get through the winter, according to reporting from Bloomberg.
Texans have good reason for internalizing the idea that state officials aren’t going to look out for our interests. The wait for a home generator is months long. A recent ad for the Ford F-150 Lightning, the electric version of the best-selling pickup, showed a house’s lights ominously flickering during a storm. But the menace doesn’t last long: a family uses the truck as a kind of battery on wheels, plugging it in to re-illuminate the house. The commercial struck me as an invocation of a distinctively Texan dream, or nightmare: a public utility that can’t be trusted; a gleaming forty-thousand-dollar pickup that can. Unfortunately, there’s a multiyear waiting list for those trucks. In the meantime, Texans can hope that the worst of the winter is over. If not, we can always huddle next to the crypto facilities, seeking whatever warmth can be spared.
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