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Neel Dhanesha
In your podcast, you said something I found fascinating: that infrastructure was just one part of the cause of the blackouts last year. Instead, you pointed to the energy market in Texas and how it works. Why was that so important to you?
Mose Buchele
A little over 20 years ago, Texas deregulated its energy market. And Texas is not unique in that; deregulation obviously has been kind of the story of American policy for decades. And it came to the electricity market in Texas, as it did to other states. But in Texas, it took a form that we do not see anywhere else. Essentially, they created a competitive market where supply and demand are the rule of the day. There’s no one power company that you go to, like there is in a lot of the country.
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Neel Dhanesha
Right, it seems hard to motivate people to build extra power generators if the market disincentivizes them. Maybe this is a dumb question, but are there backup power plants in Texas that could turn on in case of blackouts?
Mose Buchele
Not really the way you might be thinking of them. They have these things called peaker plants that only run when electricity is really really expensive because that’s the only time they can make a profit. A lot of times these are even still coal plants, and these power plants are getting old. It doesn’t make sense to keep these things shipshape for most of the year. But you could go out to some rickety old coal plant around mid-July and get it geared up for August, when you can reliably expect the price of electricity to spike to its cap.
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Neel Dhanesha
If cold was the issue during the blackouts last year, why is heat the issue right now? There’s a lot of talk about winterization of natural gas infrastructure in the wake of the winter storm in 2021. Does heat have a similar effect on infrastructure, or is it just about demand?
Mose Buchele
Energy use is primarily driven through residential heating and cooling. Our highest energy use days in Texas are typically in the summer, when it gets really, really, really hot. But likewise, in an event like the 2021 storm, it can skyrocket when it’s really, really cold. That’s because people are just desperately trying to heat and cool their houses.
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