'A cautionary tale': Texas’ energy debacle has 'chilled' other states on utility deregulation: reporter

'A cautionary tale': Texas’ energy debacle has 'chilled' other states on utility deregulation: reporter
Texas Gov. Greg Abbott in 2016, Wikimedia Commons

Back in 1999, when he was serving as governor of Texas, future President George W. Bush signed into law a program for utility deregulation in the Lone Star State — and other states have considered a similar utility deregulation program. But author/journalist Paul Alexander, in an article published by The Bulwark on May 25, emphasizes that other states are nervous about following Texas' example in light of the energy disaster that rocked Texas earlier this year.

In February, Texas suffered a bitter cold snap and experienced cold temperatures that wouldn't be usual for Pittsburgh or Boston that type of year but were unusual for Texas — and millions of Texans found themselves without heat, electricity or running water when Texas' deregulated energy system couldn't handle the strain. Gov. Greg Abbott, Fox News' Tucker Carlson and others on the far right claimed that green energy was the problem, which was total nonsense; Sweden, Norway and other countries in Northern Europe known for their frigid, snowy winters do just fine with green energy in January and February. The problem was that Texas' system hadn't been properly winterized.

Alexander explains, "The statistics are daunting. Close to 200 people died, according to the Houston Chronicle. The Dallas Fed estimates the final figure for the storm's damage will be between $80 and $130 billion, which would make it the worst natural disaster ever to hit the state. For Texans lucky enough to have electricity during that terribly cold week in February, they were hit with astronomical rates for power — sometimes hundreds of times the normal rates."

The Texans who signed up for variable-rate energy plans thought they were getting a good deal under energy deregulation, but they realized just how bad a deal they had gotten when they received sky-high bills that wouldn't have occurred in places with carefully regulated utilities.

"The high prices are already the subject of litigation, like a $1 billion class-action suit filed by a customer who got a bill for $9546.84 for 18 days of service," Alexander notes. "And now, it appears that long-term bonds will likely be issued to keep municipal power agencies from going bankrupt."

Before the February debacle, many far-right Republicans and Tea Party zealots exalted Texas as an energy deregulation success story. Now, liberals and progressives are slamming Texas as a glaring example of why utility deregulation is a terrible idea.

The Bulwark is not a liberal or progressive publication but rather, a refuge for Never Trump conservatives who are shunned by much of the right-wing media. And Alexander has written books about well-known conservatives who include GOP strategist Karl Rove and the late Sen. John McCain of Arizona. But Alexander is critical of energy deregulation in his article, writing that many Americans are soured on the idea following the Texas nightmare.

"The sweeping scope of the tragedy may also spell the end of utility deregulation, a policy enacted by several states for at least 20 years and actively considered by others at present — although no state embraced deregulation more than Texas, which in 1999, decided to impose no regulations on the retail or wholesale energy markets," Alexander observes. "The state went so far as to isolate itself from federal and regional power grids to insure independence. Most critics agree that this laissez-faire approach to distributing power produced the economic circumstances that led to a historic crisis that has created untold damage in Texas and rocked the energy industry."

Alexander notes that Anthony Clark, a Republican who served on the Federal Energy Regulatory Commission during Barack Obama's presidency, has joined forces with a group called Power for Tomorrow — a coalition of consumer groups, utilities and labor unions that is fighting efforts to deregulate energy. And Alexander quotes Clark as saying, "There were a number of states that were talking about deregulation, but I think the Texas experience has chilled some of that talk. It's a cautionary tale."

Former Maryland Gov. Parris N. Glendening, a Democrat, supported energy deregulation in his state in 1999. Maryland didn't deregulate to the extent that Texas did, but Glendening now regrets supporting deregulation as much as he did.

Alexander quotes Glendening as saying, "There would be far more choice, prices would go down, and it would be good for green energy too — that was the promise of deregulation. The legislature passed the bill with a veto-proof majority; so, I signed it. I was wrong. Prices actually went up. One study showed that between 2014 and 2017, Marylanders paid $250 million more than if they stayed with the old system. Many of the increases were applied to the poor, the elderly, and minority communities."

Former Nevada Attorney General Frankie Sue Del Papa, a Democrat, is criticizing utility deregulation as well. Alexander quotes Del Papa as saying, "Deregulation is an issue that ebbs and flows. Yes, there has been an attempt to deregulate. But deregulation hurts the little guys and benefits the big guys. Texas affected the movement adversely. I think the experience would make us look at this issue with more caution."

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