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Texas 2022 Electricity Outlook

2022 Texas Electricity Rate Outlook

The Lone Star State isn’t often associated with winter weather crises—snow days, icy roads, and other cold-weather anecdotes are reserved for the state’s northern neighbors. This all changed in winter February 2021 when over 200 Texans died of hypothermia in the aftereffects of a historic freezing event and subsequent power outage. Winter Storm Uri was the most costly weather event in the state’s history. Electricity providers could not meet the sudden demand for heating. Texas electricity rates soared. The entire state power grid, from wind to coal to natural gas to nuclear, was not appropriately winterized for such a weather event. Winter is on its way once more — only this time, are Texas electricity providers ready?

Electricity Related Legislation and Policy

Because Texas has autonomy over its energy supply, lawmakers could quickly adapt following the crisis. In March 2021, Texas senators passed a bill (Senate Bill 3) that included weatherization mandates, an emergency alert system, and a ban on “indexed retail electric plans.” Indexed retail plans fluctuate with the price of fuel and demand; unsurprisingly, consumers who selected this riskier option suffered unmanageable electricity rates after the storm. The market forced some small electric companies out. ERCOT (the Electric Reliability Council of Texas) has new authority to get generators online at the first sign of energy instability. Furthermore, a new field inspection team came on board to ensure the implementation of the required structural fixes.

Winterization Standards For Power Infrastructure

When the temperature dipped into single digits last winter, the energy grid infrastructure stopped functioning. Texas electric companies dealt with failed transmission lines, pipelines, and generators. If energy companies don’t implement winterization recommendations by December 1st, 2021, they could be penalized upwards of $1 million per month. Winterizing can be tricky in Texas because most facilities are designed to withstand extreme heat rather than cold. Nonetheless, facilities are hard at work implementing techniques to keep pipes from freezing, building shelters and windbreaks around exposed machinery, and even adding portable heaters in those shelters.

Communication

Communication breakdowns contributed to the February storm’s devastation. Even with a fair warning from the National Weather Service, citizens were not appropriately advised to prepare for possible power outages that would affect their access to heat and clean drinking water. While state officials advised of resources available following the storm, people had lost the means to connect with those resources, like the internet, cellphone service, or television. Texas citizens must be better communicated to in emergencies. ERCOT is working hard to be more transparent and improve its outreach resources. The Texas Division of Emergency Management is establishing a better emergency alert system. Communication plans have also been improved between energy stakeholders across the grid, allowing companies to respond quickly to issues. Should the infrastructure fail and Texans lose power, they will at least be better informed this winter.

So is Texas ready?

While it’s impossible to predict what Winter 2022 brings, Texas electric companies have no doubt made substantial improvements to their physical infrastructure and communication plans. There is some concern as to whether the Railroad Commission of Texas — the state entity in charge of regulating the natural gas supply — has met its facility inspection goals and winterization recommendations. Nonetheless, ERCOT officials are working closely with the Railroad Commission to be better prepared for the oncoming season.

The disastrous power outage in 2021 exposed some of the limitations of the state-specific electricity grid. However, there are important benefits to an independently-controlled power supply. If one were to compare electricity rates, Texas residents typically enjoy lower energy rates than elsewhere in the nation. Several major companies even offer no-deposit electricity plans. Beyond cheap electricity, state-specific control allowed Texas leadership to enact legislation and mandate facility weatherizations within a month of the epic storm. Major weather events are on the rise around the world, and Texas is working to demonstrate how to quickly respond to failures and make tangible improvements. Emergency preparedness plans take time, however, and Texas hasn’t even had a year to recover.

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