The blackout that left 50 million people without power is now one of those events that dominates the news and shapes our thinking in fundamental ways. The dust is still settling on the final costs, but it is clearly in the billions. We have a remarkably efficient economic system, but it is based on the premise of a highly effective infrastructure. We expect the boats to be unloaded, the trains to run on time, and the lights to come on when we flip a switch. Anything that interferes with the smooth flow of goods and services can quickly grind large chunks of business activity to a halt. We are quite fortunate that the disruption occurred toward the end of the week as the day was winding down. Just by sheer timing, things could have been much more difficult (and expensive).
The largest blackout in history has, not surprisingly, led to many questions and concerns. There is a massive effort underway to blame individual companies or even employees. Some are taking the opportunity to say it must be the result of electric competition. I can only say that the first one is irrelevant, and the second one—that opening up markets could have caused the problem—is ludicrously incorrect. Even if the specific circumstances that caused the breakdown are ultimately found to rest squarely on the shoulders of some poor soul, the bottom line is that the Northern US has not built and maintained the type of transmission system necessary to accommodate growing economic needs in a reliable manner.
Although the situation has somewhat improved in the West since the California crisis a few years back, similar risks remain a source of concern. The primary obstacle has typically been the resistance to locate facilities in areas of high demand due to environmental and aesthetic concerns. From a more global point of view, this overburdened mechanism is indicative of a general short-sightedness in our efforts to invest in the infrastructure required to support a growing economy and society.
In Texas, we are fortunate because the vast majority of the state is located in a self-contained power grid managed by the Electric Reliability Council of Texas (ERCOT). This largely independent system evolved out of security measures several decades ago and has remained intact through the integration efforts that began after the system failures in the 1980s. We also have an excessive supply of power in the state, with reserves running at 25% or so even with the very hot temperatures and record usage of the past few weeks. We are self-sufficient and do not import power from other regions (unlike most of the areas impacted by the blackout). These facts combine to make for a much more reliable electric power framework, with disruptions being infrequent and temporary.
The technical side of this issue stems from the fact that electricity supply and demand must be constantly balanced. For all practical purposes, power is produced and consumed at the same instant. From what my engineering friends tell me, the Texas grid looks a lot like a bowl of spaghetti, which is a good thing (no matter what your feeling is about Italian food). When one part malfunctions, it is relatively easy to find another path. Other regions of the country often have more of a loop system; when it’s broken, it’s broken. We have also had a more balanced attitude about constructing needed facilities, thus further promoting system integrity.
As to the role of competition in the recent blackout, I can only say the failure occurred in the “wires.” The transmission mechanism is fully regulated as a public conveyance. It was that way before retail electric competition, and it remains so now. The wire couldn’t care less whether the power traversing it is purchased in an open or restricted market. In fact, the impacted area has a variety of regulations and market mechanisms in place, as does the remainder of the country where no failure occurred. The attempts to blame competition for this problem are utterly void.
Despite our relatively strong situation in Texas, we can ill afford to be complacent. A growing economy has escalating power needs, and we must continually invest in our infrastructure to ensure safety and well-being and to take advantage of the comparative benefits inherent in our plentiful supply and effective transition to competition. The best thing that can occur as a result of this massive shutdown is a wakeup call to political leaders and their constituents regarding the need to restore and enhance all of our vital infrastructure. Although Texas fares better than most in this particular arena, ultimate economic success demands ongoing and increasing investment in our ability to move people, things, and power from where they are to where they need to be. Otherwise, our capacity for growth and prosperity is needlessly limited.