Last Updated on July 17, 2021 by Mary Pressler

Why Does Texas Have Its Own Power Grid?

During World War II, several electric utilities from Texas merged to support the war effort more effectively, and this created the Texas Interconnected System (TIS). However, these utilities decided to remain interconnected after the war, since this made their service more reliable.

ERCOT was formed in 1970, and Texas had deregulated its electric sector by 1999 – generators compete in a wholesale market, while retailers compete to sell electricity plans for homes and businesses.

Electricity grids that have connections across different states are subject to the Federal Energy Regulatory Commission (FERC). Texas has remained isolated to avoid federal regulation, and all aspects related to the ERCOT grid are managed at the state level.

  • Texas actually has four power grids in operation, but ERCOT covers 75% of the state and 90% of the population.
  • Some western areas of Texas are covered by the Western Electricity Coordinating Council (WECC).
  • Some northern and eastern areas are covered by the Southwest Power Pool (SPP).
  • There are also eastern areas covered by the Southeastern Electric Reliability Council (SERC).

The WECC, SPP and SERC all operate across multiple states and are subject to federal regulation, unlike ERCOT. Being isolated from other US power grids has pros and cons.

Texas makes its own rules with respect to the ERCOT grid, without federal intervention. However, this also means the state depends on internal resources to provide electricity. This is not normally a problem, since Texas is the state with the highest energy production.

  • However, isolation makes Texas vulnerable to events like the February 2021 winter storm.
  • For example, natural gas production was temporarily cut by 50% due to the cold weather, and Texas gets most of its electricity from gas-fired power stations.

The summer months are normally the most challenging for the Texas grid, since air conditioning systems in homes and businesses consume plenty of electricity. However, the February winter storm was an unexpected event that caught the energy industry by surprise. The extreme cold disabled not only natural gas wells, but also wind turbines and conventional power stations.

Texas Power Grid Map

The Texas Interconnection, Source: ERCOT

What Happens to the Electric Supply as More People Move Into Texas?

Energy usage increases with population growth, but also with new technologies and lifestyle changes. For example, US electricity consumption per capita tripled between 1960 and 2010. Power grid operators like ERCOT are responsible for analyzing consumption trends and forecasting future demand, so new power plants and grid upgrades can be completed on time.

Population growth is a serious issue when no power plants are built and the grid is not upgraded. On the other hand, when there is continuous investment in the electric sector, supply can keep up with demand. There are two important factors to consider:

  • Developing an adequate mix of power generation systems is very important. For example, a state that depends too much on solar power can have issues in the evening, when all solar panels stop generating power at once.
  • Identifying the most critical grid upgrades and planning them. Since population is not distributed evenly, some parts of the power grid are more burdened than others. Grid operators must determine which upgrades are the most critical, and plan them accordingly. You don’t need a large-scale grid failure to have a blackout – a single fault in an important substation or power line can leave thousands without electricity.

According to the latest projections, generation capacity in Texas will keep growing faster than demand between 2022 and 2026, gradually reducing the risk of blackouts. There is a reserve margin of 15.7% for summer 2021, but it will increase to 35.1% by 2023. Texas is also working on new legislation for the electric sector, which includes weatherization requirements to protect power stations from extreme cold.

To summarize, migration into Texas and local population growth are not an issue if new power plants are built to meet demand, and the grid’s capacity is expanded as needed. This can be combined with energy efficiency and renewable generation programs for homes and businesses, which reduce the amount of electricity drawn from the grid.

The Texas Power Grid Does Adding Another City Like Lubbock Cause More Strain on the Grid?

Connecting additional cities to a power grid can be compared with population growth, since energy consumption increases in both cases. Lubbock connected to the ERCOT grid on the weekend of May 29-30, 2021, transferring 70% of the city load, which represents around 83,000 consumers. The remaining 30% (around 24,000 consumers) will be transferred in 2023.

  • Lubbock is now part of the Oncor service territory, which has over 10 million users. 
  • Oncor has installed miles of new transmission lines specifically for this purpose.

Lubbock Power & Light is the first municipal utility company that joins ERCOT voluntarily, and the transition had been planned since 2015. Between 2004 and 2019, LP&L purchased its electricity from Xcel Energy through a 15-year contract. When this contract expired, LP&L joined the Southwest Power Pool (SPP) temporarily, before connecting to Oncor. The remaining 30% of customers will continue getting electricity from the SPP until May 31, 2023.

To continue operating independently, LP&L needed to build a power plant that could have cost up to $700 million. Now that this investment is not necessary, LP&L estimates power bill savings of 10% for the average residential customer in Lubbock.

How the Texas Power Grid Works

Having enough power plants for all homes in businesses in a state is necessary, but not enough to achieve a stable power supply. You also need a grid with enough transmission capacity to deliver all the electricity required. 

Blackouts can have multiple causes, but the following are some of the most common ways in which they happen:

  • Having malfunctions at one or more power plants, which suddenly reduce the supply of electricity below the consumption level. As the number of megawatts going offline increases, the risk of blackouts is higher.
  • Having a higher consumption than expected in homes and businesses, exceeding the available generation capacity. This is often the result of poor planning, and a blackout can occur even when all power plants are working properly.
  • Having an electrical fault that affects the grid, which disconnects power plants from consumers. Electricity cannot be delivered to the point of use in this case, even when there is enough generation capacity.

To achieve a reliable power supply, grid operators like ERCOT must do three things: forecasting energy consumption accurately, having enough power plants to meet the expected demand, and keeping the grid in optimal working conditions – this involves upgrades and ongoing maintenance.

Contrary to popular belief, ERCOT is not a utility company, but rather the system operator who coordinates power plants and utilities.

  • Power generators compete to sell their production in the wholesale energy market, while retail electricity providers compete for the end user.
  • The grid itself is managed by six transmission and distribution utilities (TDUs): AEP Texas Central, AEP Texas North, CenterPoint Energy, Oncor, Texas-New Mexico Power, and Sharyland Utilities. Each TDU has an assigned service territory.

After the February 2021 winter storm and the energy conservation measures applied in June, the Texas power grid has received plenty of attention from the public and media. In particular, there are concerns about possible blackouts during summer, when homes and businesses use their air conditioning systems at full capacity. 

In Conclusion

The key to achieve a reliable electric service and prevent blackouts is planning. Electricity consumption grows with population and industrial development, and forecasting the load accurately is very important. With this information, power grid operators like ERCOT can plan the required investments: new power plants, new transmission lines, improvements to the existing grid infrastructure, and adequate maintenance.