Power Politics

Why we’ll avoid blackouts.

The O Brother soundtrack went gold and shot up the country charts.

With the new of California’s electricity crisis getting worse every day, should Texans worry when this summer brings the first test of a deregulated, competitive electric power industry here? Are blackouts, bankruptcies, and bigger bills in our future? The answer appears to be no for blackouts and bankruptcies—but bigger bills may be a different story.

The law requires Texas’ behemoth electric utilities to transform (no pun intended) themselves into three separate entities—one to generate electricity and sell it wholesale, one to transmit electricity over wires, and one to sell it retail to your home and other local customers. The advantage of the old regulated system was that it was reliable; the disadvantage was that it was inefficient. Utilities could build expensive power plants and hire thousands of repair workers, knowing that they could pass their costs on to ratepayers. Deregulation was supposed to wring the inefficiencies out of the system; competition between wholesalers seeking to sell their power would allow retailers (your local utility) to provide you with cheaper electricity.

So watt (pun intended) went wrong? Should we rethink the experiment here? Not necessarily. Texas is not California, a fact we no longer feel the need to apologize for. State officials say three factors that contributed to the California crisis—a short supply of generated electricity, lack of water that limited hydroelectric power, and political blunders to appease consumers—will not happen here. Here’s how Texas stacks up against California, megawatt-wise:

Short Supply. The underlying cause of the California disaster goes back to Economics 101. What happens when demand exceeds supply? That’s right, class. Prices

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