Electric Reliability Council of Texas

Based on Wikipedia: Electric Reliability Council of Texas

The Island Grid That Almost Killed People

In February 2021, as temperatures in Texas plummeted to minus two degrees Fahrenheit, an eleven-year-old boy named Cristian Pavon died of suspected hypothermia in his own home. The power had gone out. It stayed out for days. Across the state, somewhere between 194 and 978 people died—the exact number depends on how you count the cascading effects of a grid that catastrophically failed.

This wasn't supposed to happen. Texas has its own electrical grid, deliberately isolated from the rest of America. The organization running it, the Electric Reliability Council of Texas—known by its acronym ERCOT—has "reliability" right there in its name.

So what went wrong? And why does Texas, alone among the lower forty-eight states, operate as an electrical island?

A Grid Born from War

The story begins in 1941. As America entered World War II, several Texas electric utilities agreed to connect their systems and operate together as the Texas Interconnected System. The military needed reliable power for Gulf Coast industries churning out metal and war materials. Connecting the utilities meant they could share excess generation and cover each other's shortfalls.

It worked. The utilities discovered they were more resilient together than apart. After the war ended, they kept the arrangement going, eventually establishing two monitoring centers—one in North Texas, one in South Texas—to coordinate the shared grid.

But here's where Texas took a different path from the rest of the country.

The Federal Power Act gives the federal government authority to regulate electrical grids that cross state lines. The Texas grid, by design, does not cross state lines. It touches neither Mexico nor any neighboring state. This makes it, legally speaking, an intrastate grid—beyond the reach of federal regulators.

Some utilities weren't happy about this isolation. On May 4, 1976, a company called Central Southwest Holdings tried to force the issue in an event that became known as the "Midnight Connection." For a few hours in the dead of night, they connected the Texas grid to Oklahoma. Lawsuits followed. The legal question: did this brief connection subject Texas to federal regulation?

The courts said no. A few hours of connection wasn't enough to bring in the feds. The Texas grid remained an island.

What ERCOT Actually Does

ERCOT was formally created in 1970 to meet requirements from the North American Electric Reliability Corporation, or NERC—the continental body that coordinates grid reliability across North America. Despite Texas's regulatory independence, ERCOT works with NERC's regional entity, the Texas Reliability Entity, to maintain standards.

Think of ERCOT as an air traffic controller for electricity. It doesn't own power plants or transmission lines. Instead, it dispatches power across more than 46,500 miles of transmission lines connecting over 610 generation units. When you flip a light switch in Houston, ERCOT has already ensured that some power plant somewhere in Texas is generating exactly enough electricity to keep that light burning.

This is harder than it sounds. Electricity is peculiar: it must be generated at the exact moment it's consumed. You can't really store it at scale—or at least, you couldn't until recently. So ERCOT must constantly balance supply and demand across a state bigger than France, every second of every day.

ERCOT also runs the wholesale electricity market, handling the financial settlements when power generators sell to retail providers. And it manages retail switching for about seven million premises—when you switch from one electricity provider to another in Texas, ERCOT makes that happen behind the scenes.

The organization is structured as a nonprofit, a 501(c)(4) corporation. Its members include everyone with a stake in the Texas electricity system: consumers, electric cooperatives, generators, power marketers, retail providers, investor-owned utilities, and municipal utilities. It's governed by a board of directors and overseen by the Public Utility Commission of Texas, whose three commissioners are appointed by the governor.

Deregulation and Its Discontents

Texas deregulated its electricity market in two waves. The wholesale generation market opened up in 1995. The rest of the sector followed in 1999.

The rationale for the 1999 deregulation was a shortage of generation capacity. The old system, where power was generated and consumed locally by vertically integrated utilities, seemed insufficient for Texas's growing needs. Under the new regime, retailers could contract with generators anywhere in the state, creating a complex marketplace where competition would supposedly drive efficiency and innovation.

There was a catch. Deregulation also dropped limits on rate increases.

Before deregulation, residential electricity rates in Texas were significantly below the national average. After deregulation, they climbed. Between 1999 and 2007, residential rates rose sixty-four percent. The promise of cheaper power through competition didn't materialize for ordinary Texans.

But something else changed too, something more subtle and dangerous. Under the old regulated system, utilities had an obligation to maintain reliability. Under deregulation, the incentives shifted. Power generators and retailers operated in an unregulated market, focused on profit margins. The transmission lines remained regulated, but the generators feeding power into those lines did not.

This would matter enormously when the cold came.

The First Warning: 2011

In early February 2011, a major winter storm swept through Texas. Freezing temperatures hit natural gas pipelines and wells. Coal-fired power plants struggled. Even some wind turbines froze up. Power outages spread across the state, affecting 3.2 million customers.

This was bad. But what happened next was worse—or rather, what didn't happen.

The Federal Energy Regulatory Commission and NERC investigated. They produced a 357-page report with detailed recommendations. The core message was simple: Texas needed to winterize its electricity infrastructure. Power plants, natural gas facilities, and pipelines needed to be prepared for extreme cold.

ERCOT and its regulator, the Public Utility Commission of Texas, declined to adopt mandatory winterization standards. The recommendations remained recommendations. The report gathered dust.

Ten years later, it would read like prophecy.

February 2021: The Catastrophe

The winter storm that hit Texas in mid-February 2021 was severe. Temperatures dropped to levels rarely seen in the state. But it was not unprecedented—the 2011 storm had demonstrated exactly this vulnerability.

The difference in 2021 was scale. ERCOT faced a 34,000 megawatt shortfall in generation. To put that in perspective, a megawatt can power about two hundred Texas homes during peak demand. This shortfall was equivalent to losing power for nearly seven million homes, all at once.

At 1:25 in the morning on February 15, ERCOT began requesting blackouts from service providers. The initial plan was rotating outages—brief blackouts of ten to forty minutes, spread across the grid to reduce demand while preserving overall stability.

That's not what happened. Some customers experienced outages lasting many hours. Others lost power for more than forty-eight hours. Meanwhile, millions of Texans in other areas experienced no outages at all. The distribution of suffering was arbitrary and inexplicable.

The electricity market went haywire. On February 16, wholesale prices spiked to over nine thousand dollars per megawatt-hour. The week before, power had been selling for less than thirty dollars per megawatt-hour. That's a three-hundred-fold increase.

Some retail providers faced bankruptcy. Customers of Griddy, a company that passed wholesale prices directly to consumers, received electric bills in the thousands of dollars—for a single week of partial service during a crisis that left many of them without power anyway.

Approximately four million customers lost electricity at various times during the multi-day storm. In homes without power, temperatures plummeted. Pipes froze and burst. People burned furniture to stay warm. Some never warmed up again.

The Death Toll

On February 16, as the crisis was still unfolding, reports linked at least ten deaths to the power outages. By late March, the official count had reached 110.

But the official count was almost certainly wrong.

A team of Houston journalists conducted a comprehensive review, examining news reports, death certificates, and lawsuit filings from every county in Texas. They set the death toll at 194. Later, journalists at BuzzFeed analyzed excess mortality data—comparing deaths during the storm to typical death rates—and estimated the true number of deaths at somewhere between 426 and 978.

The uncertainty is itself revealing. Texas, for all its grid independence, couldn't accurately count how many of its own citizens died when that grid failed.

The Contrast at the Borders

Not everyone in Texas lost power. And the geography of who kept the lights on tells its own story.

El Paso, in the far western corner of Texas, is not part of the ERCOT grid. It's connected to the Western Interconnection, the grid that serves most states west of the Rockies. El Paso Electric had invested millions in cold weather upgrades after the 2011 storm. During the 2021 crisis, only about three thousand El Paso customers lost power, and for less than five minutes.

Beaumont, in eastern Texas, is connected to the Eastern Interconnection through Entergy. They too had winterized after 2011. They too experienced relatively few outages.

The message was stark. The parts of Texas connected to the national grid, subject to federal regulation, had prepared for cold weather. The independent ERCOT grid had not.

Accountability and Its Limits

The political response was swift, at least rhetorically. Governor Greg Abbott declared ERCOT reform an emergency priority for the state legislature. Investigations were launched. The 357-page report from 2011 was suddenly being read again, with new and bitter attention.

On March 4, 2021, ERCOT's board fired CEO Bill Magness, giving him a sixty-day termination notice. Magness had been president and CEO since 2016—through the entire period when winterization recommendations were ignored.

But then a strange detail emerged. Five of ERCOT's board members—including the chairperson and vice-chair—didn't even live in Texas. Sally Talberg, the chair, lived in Michigan. Vice-chair Peter Cramton lived in California and worked for universities in Germany and Maryland. Three other board members lived in Toronto, Illinois, and Maine.

These were the people overseeing the reliability of Texas's grid. They had no personal stake in whether that grid worked. When the cold came, they were warm in other states.

The revelation drew fury from the public and from elected officials. The board members' names and photographs were removed from the ERCOT website after they received death threats. On February 23, ERCOT announced that all five out-of-state board members would resign.

There was also scrutiny of how the board had spent its time. Days before the storm, they had held a meeting lasting more than two hours. Less than a minute of that meeting was devoted to storm preparations and readiness.

The first lawsuits against ERCOT were filed on February 19, just four days after the blackouts began. Cristian Pavon's family sued both Entergy Texas and ERCOT for gross negligence. Many more suits followed.

What Changed—And What Didn't

After 2021, Texas did pass laws mandating weatherization of power plants against cold. The state streamlined emergency communications and provided some aid for backup fuel supplies. These were real changes.

But much remained unchanged.

Texas took no action to improve energy efficiency standards, which would reduce demand during crises. It added no connections to neighboring states, which would allow power to flow in during emergencies. It did not regulate natural gas to ensure availability to power plants—a critical gap, since natural gas generation provides over half of Texas's electricity.

The grid did improve in other ways, but largely through private investment rather than regulatory mandate. Solar capacity expanded dramatically. By 2023, solar installations on the ERCOT grid had increased thirty-five percent from the previous year. Wind remained the largest renewable contributor at 108,000 gigawatt-hours. And grid-scale battery storage grew from two gigawatts in 2022 to eleven gigawatts by 2025.

Batteries are a game-changer for grid reliability. Unlike traditional power plants, they can respond almost instantaneously to fluctuations in demand. They can store solar power generated at midday and release it during evening peaks. They can provide backup during emergencies. Texas's rapid adoption of battery storage may prove more important than any legislative reform.

The Demand Problem

But Texas faces a challenge that even batteries may struggle to meet: explosive growth in electricity demand.

In 2023—the hottest year ever recorded in Texas—energy demand on the ERCOT grid reached a record eighty-five gigawatts. The grid's all-time peak came on August 20, 2024, when demand hit 85,931 megawatts. By 2024, ERCOT was projecting that demand could reach 150 gigawatts by 2030.

That's nearly double current peak demand, in just six years.

Where is this demand coming from? Data centers are a major driver, as artificial intelligence requires vast computational resources. Cryptocurrency mining operations consume enormous amounts of electricity. And paradoxically, oil and gas production—Texas's signature industry—is increasingly switching from gas and diesel generators to grid electricity.

ERCOT projects adding twenty-four gigawatts of solar capacity and thirteen gigawatts of battery storage by 2025. Wind and natural gas are each expected to add only about three gigawatts. The future of the Texas grid is increasingly renewable, not by policy mandate but by economics.

The Deeper Question

Texas's grid independence was never really about reliability. It was about freedom from federal regulation—the freedom to set your own rules, to build your own market, to do things the Texas way.

But freedom from regulation turned out to mean freedom from accountability. When federal regulators recommended winterization in 2011, Texas was free to ignore them. When the cold came in 2021, Texas was free to fail.

The irony is that ERCOT exists precisely because reliability requires coordination. Individual utilities, operating alone, are vulnerable. Connected utilities can share resources and cover each other's weaknesses. This was the lesson of World War II, when Texas utilities first joined forces.

But Texas drew a line at the state border. Coordination within Texas, yes. Coordination with Oklahoma or Louisiana or the rest of America? That would mean federal oversight. That was unacceptable.

Now Texas has an island grid in a time of unprecedented demand growth, climate volatility, and technological transformation. The data centers powering the artificial intelligence revolution need reliable electricity. They're coming to Texas, drawn by cheap land and cheap power and friendly regulators. But they're betting that the grid will hold.

Will it?

The batteries are charging. The solar panels are spreading across West Texas. The wind turbines keep spinning. Private investment is transforming the grid faster than regulators ever could.

But the gas pipelines still aren't weatherized. The connections to neighboring states still don't exist. And when the next crisis comes—whether from cold or heat or something no one has predicted—Texas will face it alone, by choice, on an island of its own making.