On Sunday night, February 14th 2020 (Valentine’s Day), a winter storm blew through the State of Texas and wreaked havoc on the electric grid, leading to millions of homes without power for days during sub-zero temperatures. I was in one of those homes, but that story is for another article.
Who is to Blame for the Texas Blackouts
ERCOT has officially become the scapegoat for the disaster in Texas. The governer of Texas has called for an investigation into ERCOT and the events leading to the Texas Blackouts. This is a distraction from the real problem. Texas politics, republican leadership, campaign contributions from the energy industry and GREED are to blame.
Dave Lieber blames ERCOT, the PUC, and the Texas Legislature for the disaster, but these entities are just pawns owned and controlled by campaign contributors. His focus on PUC and ERCOT is a distraction from the real problem: corruption in politics and the greed of the energy industry and lack of oversight.
Texas Politics
In Texas, there is no cap on campaign contributions. Large donors have huge sway in state elections that usually have a small voting turnout. According to an article in the Texas Observer from 2012:
Rich individuals and corporations can spend unlimited cash on lobbyists, too, and use the legislative session to fete state lawmakers—who earn a measly $7,200 a year—with food, drinks and gifts. They can contribute to the Texas Public Policy Foundation (TPPF), a conservative think tank with close ties to Gov. Rick Perry, that’s largely funded by the corporate interests that benefit from the free-market policies it advocates. And thanks to the U.S. Supreme Court’s Citizens United ruling, wealthy individuals and corporations can now fund third-party groups that influence elections without ever disclosing their donors.
This means energy moguls, and investors can buy the legislators. Therefor the legislators wont make laws that require energy corporations to do things that hurt their bottom line, such as weatherizing and maintaining equipment.
The Governor – Greg Abbott
The Republican Governor, Greg Abbott was elected in 2014, 3 years after the 2011 winter storm that caused similar, but less catastrophic damage to the grid. After the 2011 storm, the state urged power generators winterize their equipment, but the Governor never required it as mandatory. So it never happened.
Greg Abbott has received $26 million in campaign contributions from the Energy and Natural Resources in. So it is no surprise that he would not require utility companies and power generators to winterize their equipment. That would be costly to the energy companies and hurt their bottom line.
I worked in the energy industry for 10 years as an auditor and I can tell you that profits are their #1 concern. The industry is greedy. I attended several conferences in the industry and the #1 goal is how to squeeze the most money out of the consumers, and how to make the most profits, how to predict the price fluctuations so you can make a buck. Oncor itself is severely under-employed for the amount of people they serve. Oncor has only 4,165 employees, yet they serve more than 10 million Texans. Their annual profits are half a billion dollars each year.
Greg Abbott blamed ERCOT and windmills – which make up less than 24% of the generation in Texas. He also blamed the Green New Deal, which isnt even in effect yet. All of this was said to distract from his corrupt oil and gas overlords – the root cause of the problem.
Investors
There are many corporations involved in the energy industry in Texas. Utility transportation and distribution companies such as Oncor, CenterPoint, AEP, and Entergy. There are power generation companies such as Luminant and Vistra. There are also Retail Electric providers such as TXU and Reliant. All of these companies are owned by investors. For example Oncor was previously owned by Energy Future Holdings, which was bought out partially by Goldman Sachs. The primary goal for these “investors” is to make a profit. Meaning, cutting costs anywhere they can and milking the consumers for every last drop. They are greedy and they buy politicians to cut back regulations so their power plants don’t have to follow EPA rules or other maintenance rules such as weatherization.
Utility Companies
Utility companies have to report their expenses to FERC each year. At the company I worked for auditing utility bills, we did an analysis to see how much money was spent on maintenance. We analyzed about 10 to 20 different utility companies and in EVERY case, the percentage of money spent on maintenance out of the total operational expense was lowered each year… by a lot. This goes to show that the investor rules over the customer and that the utility companies will do whatever it takes to crank out more profits. Maintenance expenses have been lowering every year since deregulation started in 2002.
Power Generators
Power generators are their own companies, and are not owned by the utility companies. The main reason the power went out was because of the generators freezing up. The owners of the power generators did not heed the advice of the state after the 2011 storm and didn’t winterize their facilities. These companies are as much at fault as the governor himself. They had the abilities to improve their facilities, but chose money over safety and reliability. One of the power generation companies is Luminant who generates over 8,324 MW of power throughout Oncor territory using coal and natural gas power plants. Luminant used to be owned by TXU – which was broken up after deregulation. I suspect that Luminant has a large portion of the blame, owning the generators that once belonged to TXU. I suspect that the leaders of Luminant chose not to winterize so as to milk every penny they could out of their power plants. Although I was not able to find Luminant’s revenue, they are owned by Vistra Energy Corp., which touted a profit of $6 billion of financial capital to their stakeholders over the last 4 years.
Energy Future Holdings (Wall Street)
Before deregulation, Oncor, Luminant, and TXU all used to be one giant energy monopoly cthat generated the power, delivered the power and billed the power to the customers in Texas. After deregulation, they were broken up into 3 entities and all 3 were owned by Energy Future Holdings (EFH). EFH eventually filed for bankrupcy and was bought out by Goldman Sachs and other investors. However in EFH’s hayday, they were major players in Texas’s political scene. From 2011 to 2012, EFH and its Wall Street investors invested more than $840 million in Texas political action committees and politicians.
Oncor, Luminant and TXU are all corrupt companies that rely on bribery and greed to get their agenda’s passed. The reason why I include Luminant, is because they used to be part of TXU and I am sure their company culture hasn’t changed much. I have dealt with Oncor and TXU and both of them used back-handed tactics to get out of paying for their wrongdoings. With Oncor, I found over $70,000 in overcharged to City of Grand Prairie’s guard lights. A set of lights had been removed 10 years ago, but Oncor continued to bill the city. The city had proof in construction contracts showing the date the lights were removed. PUC rules say that utility companies have to reimburse customers for overcharges covering the full period of the overcharge. Oncor fought this and pressured the city to take less than they were due. They went behind our backs and contacted the city to make a deal. The deal was a lot less than what was due. Oncor also threatened to go to the courts and “have the law changed” so they wouldn’t have to pay. This is just one example. I have dozens of similar stores. Oncor keeps close relationships with cities by sponsoring events and rubbing elbows with city leaders. This way they are not held accountable for their mishaps.
The problem with blaming ERCOT & PUC for Texas Blackouts
ERCOT is essentially the engineer that allows all of the different parts of the grid work together. They don’t have any control over grid maintenance. That would be the PUC. The PUC regulates the utility companies, power generators, and retail electric providers. They write the rules that the utility companies have to follow. The problem with the PUC is that they have no clout and are “regulating” giant monopolies that make billions in profit per year. What power does a PUC attorney have? They can work for PUC for a year and then go work for the utility companies for 10x the pay. The energy companies buy the politicians who make the rules. The real problem is greed. The greed of the investors and the greed of the politicians. ERCOT and PUC are scapegoats taking the blame while the greedy politicians and greedy electric companies are the root cause of the failure.
Look at the money involved:
- ERCOT Budget: $222 million (2020)
- PUC Budget: $15 million (2021)
- Oncor Annual Profit: $651 MILLION
- CenterPoint Energy Annual Profit: $6.6 BILLION
Based on the money involved, which entity has the power to create the most influence? The utility companies themselves! They have the PUC and ERCOT in their pocket. Oncor’s website says:
The reliable delivery of electric service rests on a dependable transmission system. Oncor, the PUCT and ERCOT work hand-in-hand to forecast growing demand and build additional infrastructure to meet it.
Notice that Oncor is listed first. It doesn’t say Oncor follows the laws and recommendations of ERCOT, the PUC and the State of Texas. Au contraire! They work “together”. Oncor influences the other 2 just as much if not more than the other way around. There is no level of hierarchy. Yes it would make sense to blame ERCOT and PUC if they actually had any power to regulate, but in reality they don’t. And it is so convenient for the governor to blame the powerless ERCOT for the problem, while HE HIMSELF has been the problem all along! Taking money from big energy, selling out the state, skimping on regulation, and screwing the population. Greg Abbott is the worst crook in the nation. The death and despair of the ice storm are on his hands, not to mention the investors, power generators, and utility companies hands.
