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Texas’s Power Woes Are Just the Latest Reminder of the Danger of Privatization

By Donald Cohen - Truthout, February 17, 2022

Texas dodged a bullet earlier this month when its statewide power grid, operated by the Electric Reliability Council of Texas (ERCOT), held up during a drop in temperatures. But that’s not because state leaders, particularly Republican Gov. Greg Abbott, learned anything from last year’s horrific storm.

As Truthout’s Candice Bernd reported last week, not only did 70,000 Texans still experience power and utility services outages during the recent cold snap, but fracked gas production also saw its biggest dip in production since the February 2021 grid failure, revealing the industry’s continued vulnerability to extreme weather.

Last year, Winter Storm Uri blanketed the entire state with freezing temperatures and snow for several days, causing record energy demand. This forced ERCOT to tell energy providers to cut power as they tried to avoid a total collapse of the energy system. Nearly 5 million people lost power and at least 246 died as a result of the storm.

The latest freeze was a more typical Texas cold front. Local power outages were caused mainly by downed power lines due to trees and ice. Still, Abbott is claiming that the system is more reliable and resilient than it’s ever been.

Experts disagree. “The thing about [this month’s freeze] is, we passed the test, but it was also a really easy test, and we didn’t pass it with perfect scores,” Michael Webber, Josey Centennial Professor in Energy Resources at the University of Texas, told Truthout’s Bernd. “There’s a lot of people who had problems with their power, and there was still the gas production drop, so I think we shouldn’t take away too much false confidence that we’re all good now.”

Texas’s energy system is controlled by a complex mix of public and private actors, including the nonprofit ERCOT, oil and gas companies, the Texas Railroad Commission, and others. The details don’t matter as much as what makes the state’s system unique: It’s independent; not connected to the country’s two other national grids, the Western Interconnection and the Eastern Interconnection; and not subject to federal oversight.

This has allowed it to become one of the country’s most marketized systems, according to Johanna Bozuwa, director of the Climate and Community Project. It’s heavily deregulated, designed to allow for intense competition in the retail sale of electricity. As one portfolio manager at a financial firm put it, it’s a “Wild West market design based only on short-run prices.”

Bozuwa wrote in the aftermath of last year’s storm, “There is no requirement for [energy] companies to make long-term investments into the health and safety of Texas’s grid or build in energy redundancies in case one source of energy fails.”

And therein lies the problem. Texans are at risk every winter because they don’t really control their state’s energy system. It’s as simple as that.

As I explain in The Privatization of Everything, a new book I coauthored with Allen Mikaelian, privatization is more than just outsourcing public services like trash collection to private contractors (though that in itself often leads to poor outcomes for everyone but the contractor). Privatization is ultimately a transfer of power over our own destiny, as individuals and as a nation, to unelected, unaccountable, and inscrutable corporations and their executives.

What Chicago did during the Great Recession is a glaring example. Out of financial desperation, the city took an offer from private investors, including the Wall Street bank Morgan Stanley and a Middle Eastern sovereign wealth fund, to lease out its downtown parking meters for 75 years. In return, the investors paid a lump sum of $1.16 billion. Yet, the city soon realized that it had leased the meters at least $1 billion under their actual value. Worst of all, the contract forces Chicago to pay the investors if the city makes changes that lower parking revenue, such as replacing parking spaces with bike or dedicated bus lanes. According to Chicago-area transportation planners interviewed by sociologist Stephanie Farmer, this is tying their hands in efforts to build environmentally sustainable modes of transportation — and will continue to do so for 60 more years.

Another example: When the pandemic hit, some universities that had hired corporations to finance, build and manage dormitories learned the hard way about the inflexibility of the contracts they had signed. Corvias, a multinational financial firm, sent letters to both Wayne State University and University System of Georgia, warning them about restricting the number of students allowed in dorms to limit the spread of the virus. The letters stated that the universities did not have the “unilateral right” to institute a policy that would limit the number of students or reduce housing fees due to a shortened semester.

In other words, privatization embeds private interests into the public things that matter most, like the schools that teach us and our children, the public transportation we rely on to get around, and the energy that powers our homes and businesses. These private interests have different goals than the public. Social responsibility and preventing negative externalities are priorities only when they improve profits.

That’s why we must insist that, in a democratic society, we get to decide that some things should be free of private interests. We, together, get to decide that some things — like water, housing, electricity — are equally available to all. We get to decide to make certain things public things.

Until Texas takes public control of its power system, the risk of being knocked out by another heavyweight punch is all but guaranteed to remain. Unfortunately, its leaders seem to be headed in the opposite direction. Governor Abbott has been aggressively luring cryptocurrency-mining companies to the state, arguing that they will somehow encourage energy providers to build more capacity.

Yet, crypto mining is an extremely energy intensive industry. As The New Yorker reported, “Crypto-mining facilities in Texas already consume enough electricity to power several cities. By 2023, it is estimated that ERCOT will account for twenty per cent of the global bitcoin network, and, by the end of that year, the state’s crypto-mining facilities’ power demands may have increased by as much as fivefold.”

It’s clear that Texas’s “free market”-obsessed leaders are irrationally and destructively doing the same thing over and over again and expecting a different result.

But there is hope — for energy democracy and stopping our climate crisis. Communities across the country are waking up to the dangers of privatized power and organizing to take control of their energy systems. Coalitions like We Power DC, Public Power NY and Our Power Maine are fighting for clean, affordable and equitable energy for all. The United Mine Workers of America recently broke with West Virginia’s Joe Manchin after the senator opposed climate legislation providing a path for coal workers into the renewable sector. As Olúfẹ́mi O. Táíwò recently wrote, “The climate crisis is already here, and its impacts are accelerating. Our choice is in how to confront it, and whom to put in the driver’s seat.”

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