Texas on Own Power Grid

Texas has maintained an independent grid for decades to avoid federal regulation, mainly because of its secessionist inclinations. The Texas grid, known as “Electric Reliability Council of Texas” (ERCOT), was formed in 1970 after the disbandment of the “Texas Interconnected System” that was established in the 1930s. Below are additional insights explaining why Texas is on its own power grid, as well as a timeline of the major developments in the diversion of power.

Reasons for Separation

  • There are three power grids in the contiguous U.S. The Eastern Interconnection and the Western Interconnection cover the states in Eastern and Western United States, respectively. The Texas grid, known as ERCOT, serves over 90% of the residents and covers about 75% of the state’s land area.
  • Not included in ERCOT’s coverage are El Paso, parts of Northeastern Texas (Marshall, Longview, and Texarkana), and some parts of Southeastern Texas (Port Arthur, Beaumont, and The Woodlands). Although the reason for the Texas grid not covering the entire state is unclear, it is presumed that it has to do with the history of “various utilities‘ service territories and the remoteness of the non-ERCOT locations.”
  • Texas has a separate power grid because of its secessionist inclinations. Simply put, Texas has maintained an independent grid for decades to avoid federal regulation, because Texas has a historical “distrust of federal interference.”
  • Also, self-reliance was easier for Texas in the early days because it had substantial natural gas, coal, and oil resources to fuel its power plants.
  • Notably, ERCOT is not completely isolated as it has three ties to the Mexican grid and two ties to the Eastern Interconnection. It is also looking at another tie to Rusk County. However, the U.S. ties do not trigger regulation by the federal government.

Timeline of Major Developments

  • According to an article by Dallas News, Texas has always operated a separate power grid. The separation of the state’s power grid from the national grids has its “origins in the evolution of electric utilities early last century.”
  • In the decades that followed Thomas Edison’s first power plant in 1882, small power generating plants shot up across Texas, and they later began linking together, especially in the World War I era. World War II led to further growth of the ties, and the resulting transmission network, when several of the state’s utilities merged in order to have better access to the dams on Texas rivers, which increased power output to the strained factories. This led to the formation of the “Texas Interconnected System” in the 1930s.
  • Initially, the Texas Interconnected System was operated by two separate entities: the first for Southern Texas, and another for Northern Texas. Its priority was to stay out of the federal government’s reach. In 1935, when President Franklin Roosevelt signed the “Federal Power Act” that put the “Federal Power Commission” in charge of interstate electricity operations, the Texas Interconnected System avoided regulation by restricting itself within Texas state lines.
  • ERCOT was established in 1970 following a major power outage in the Northeast five years before in November 1965. ERCOT was charged with the task of managing Texas’ grid reliability and maintaining national standards. It was granted additional responsibilities after Texas’ electric deregulation almost two decades ago.
  • Texas electric deregulation began in 1995 when the Texan government passed legislation that deregulated the previously wholesale electricity market in the state. This was meant to allow several electricity suppliers into the market, in order to increase competition, and subsequently, lower prices. In 2002, the state began the deregulation process, allowing consumers in over Texas 400 cities to select their electricity providers of choice.

Independence Violations

  • The independence of Texas’ grid had been violated severally in the past. In the course of World War II, special provisions were implemented to link the Texas grid to others.
  • Also, in 1976, a Texas utility deliberately transmitted power to Oklahoma for several hours. The event, dubbed the ‘Midnight Connection,’ violated the Federal Power Act since the utility operated across interstate lines. It caused a major court battle that could have brought the Texas grid under federal regulation, but Texas eventually prevailed and maintained its independence.
  • Presently, ERCOT remains beyond the Federal Energy Regulatory Commission‘s jurisdiction, which replaced the Federal Power Commission and oversees interstate electric sales/transmission. Nevertheless, it has had to adhere to the reliability standards of the North American Electric Reliability Corporation since 1970.
Glenn is the Lead Operations Research Analyst at The Digital Momentum with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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