power grid

Why Is Texas Not on the National Power Grid?

The Lone Star State got its nickname for a reason. The second-largest state by both area and population, Texas has always marched to the beat of its own drum and sometimes feels like a place separate from the rest of the country. This rings even more true when you learn that Texas has its own power grid separate from the rest of the United States.  Since the states first started to regulate power companies in 1907, Texas has chosen to power itself, and there are some surprising reasons why.

Key Takeaways

  • Since electricity became an everyday commodity, Texas has operated on its own power grid separate from the rest of the country.
  • Having its own power grid allows Texas to circumvent federal regulations on power companies and keeps prices down but also increases the risk of blackouts.
  • Texas is the only state in the continental U.S. with its own power grid.

Texas Isn’t on the National Power Grid. Here’s the Story Behind It.

Famous for its secessionist sentiments throughout history, one modern remnant has kept Texas separate from the rest of the country: the Texas Interconnection power grid.

Originally a novelty, electricity became something Americans relied on in everyday life in the early 1900s. With access to power becoming essential, most states decided to regulate their local power companies. Texas did not, choosing to allow its companies to grow, merge, and share power. This eventually created one big power grid covering all of Texas.

Meanwhile, as electric companies started to form monopolies across the rest of the country, prices soared. To combat this, President Franklin D. Roosevelt’s New Deal created federal regulations in an effort to keep prices down and break up these huge companies. However, these rules only applied if companies were buying and selling electricity across state lines. At that point, in order to avoid dealing with these new federal laws, Texas decided not to buy electricity from or sell electricity to any other state.

This strategy worked so well for Texas power companies that other states tried to follow suit, but none were big enough to produce enough power to sustain their own grids. Texas became the only state in the continental U.S. with its own power grid, which still covers 90% of the state today.

Why Was Texas Able to Do This?

A large part of the reason Texas is able to maintain its own power grid is the state’s sheer size. At 268,596 square miles, Texas is larger than any other continental U.S. state and larger than any European country. Other U.S. states have historically tried to create their own power grids in order to avoid federal government regulations like Texas, but none have been successful. This is because no other continental state is large enough to generate enough power to sustain its own grid.

Another reason that Texas still has its own grid is simply that it always has. Texas built the infrastructure for its grid when electricity first became commonplace over a century ago, whereas other states are subject to the Eastern or Western Grids that each cover half the country.

Finally, Texas does not buy or sell electricity across state lines. This means that, according to the Public Utility Holding Company Act (that was originally passed in 1935 as part of the New Deal), Texas is not subject to federal regulations on electricity.

What’s the Main Source of Energy in Texas?

Texas’s primary source of energy is natural gas, which makes up 47.4% of Texas’s total power as of 2019. Natural gas is followed by coal (20.3%), wind (20%), nuclear (10.8%), solar (1.1%), hydro (0.1%), and biomass (0.1%), with all other sources of energy making up less than 0.1% of the total. 

This breakdown has changed significantly in recent years—as of 2009, coal provided about 37% of Texas’s energy and wind only provided about 6%. Since then, many of Texas’s coal-fired power plants have closed, and the use of wind power has more than quadrupled. Texans’ demand for electricity is also rising, however (consumption rose by about 20% in the past decade), so while Texas’s energy sources are becoming more sustainable in response to climate change, the state will likely use more energy in general in the coming years. 

What Are the Pros and Cons of Having a Separate Power Grid?

Electricity rates are relatively cheap in Texas compared to other states (as of December 2022, the average electricity rate in Texas ranks 38th out of all 50 states, and Texas’s rate increased by only 7.22% over the past year while some other states jumped by over 50%). Since Texas is not subject to federal regulations on electricity, Texas’s Public Utility Commission determines the price of power and balances supply and demand, which keeps prices low.

However, having a smaller grid with less distribution capacity compared to the rest of the country means a higher risk of blackouts and other malfunctions. These infrastructure failures can exacerbate crises like the 2021 Texas power crisis. This is the major drawback of Texas’s power infrastructure: The state is responsible for its own power grid, which is smaller and less regulated than the rest of the country. This means that extreme weather, winter storms, extreme heat, and natural disasters may have a greater impact on Texas’s people than those in other states.

Texas is the only continental state that’s successfully maintained its own power grid, which is partially due to the state’s sheer size (as well as its history and infrastructure). So the next time you pay your electricity bill as a Texan, remember that you’re having a unique experience unlike any American and contributing to history dating back a century.

Questions Others Are Asking

Who owns the Texas power grid?

The deregulated Texas grid is not owned by any particular company. The Electric Reliability Council of Texas (ERCOT), an independent nonprofit, manages the price of electricity and balances supply and demand. (When making these decisions, ERCOT answers to the Public Utility Commission, consisting of members appointed by the governor.) From there, about 127 different independent retailers sell electricity to consumers on an open market. 

Do any other states have their own power grid?

No other state in the continental U.S. has its own power grid. The rest of the continental states are served by the Eastern or Western Grids that make up the National Grid. Alaska and Hawaii each have several of their own grids, covering the islands and rural villages that comprise them.

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