D Magazine by Matt Goodman 2/26/2021
Two Men Who Saw the Storm Coming and Sold Their Electric Companies Before Disaster Hit
Ambit's Jere Thompson and Stream's Rob Snyder determined the system was set up to fail.State lawmakers in Austin spent all of Thursday grilling the people responsible for keeping the power on in Texas. They want to know where and how the system broke down last week. But it really isn’t all that hard to figure out. Two former CEOs in Dallas saw this coming years ago, which is why they sold their companies. They’d separately come to the same conclusion: if something like last week occurred, it would put them out of business. One of those CEOs believed a disaster was likely, if not imminent.
Stream Energy and Ambit Energy are electricity retailers. Both companies have, by all accounts, achieved great success. After Stream began registering users, in March of 2005, it took only 10 months to become the fifth-largest retail electricity provider in Texas. This was three years after the Legislature deregulated the state’s electricity market, turning what the rest of the country considered a closely regulated utility into a free-market spree.
For the first time, Texans could choose their energy provider. Upstart retailers didn’t generate their own power but would instead buy wholesale from major generators. They would market that energy to consumers, usually undercutting the retail arms of the larger producers. (The Legislature froze established rates to trigger market competition.) The retail market ushered in creative delivery plans like free usage during nights and weekends. Some credit the proliferation of Smart Meters directly to this free market approach.
The idea of deregulation was to let the market drive energy production instead of any government agency, but that didn’t translate into sufficient reserve power or infrastructure improvements that may have helped keep the plants online in single-digit temperatures.
The Electric Reliability Council of Texas, known as ERCOT, manages the grid. It can order utility providers like Dallas’ Oncor to cut power to preserve the grid during periods of extreme demand, which is what happened last week. But ERCOT is supposed to be overseen by the Legislature and the Public Utility Commission of Texas, known as the PUCT. Neither did nearly enough to motivate generators to winterize their facilities or create enough additional power to fall back on in an emergency. The federal government even warned the electricity grid manager to do this in 2011.
More:
https://www.dmagazine.com/frontburner/2021/02/texas-winter-storm-grid-failure-ambit-stream-energy/
