The history of ERCOT: How Texas became the only state with its own power grid

State News

High power need across the entire state of Texas could lead to power outages if supply cannot meet demand (Source: MGN Online)


AUSTIN (KXAN) — This month’s devastating winter storm and the mass power outages it brought have shoved the Electric Reliability Council of Texas (ERCOT), which manages most of the state’s power flow, under a big national spotlight.

The long-lasting outages resulted in millions of Texans being in the cold and dark for days. Now, ERCOT may face long-lasting changes as a result of the mismanagement of the state’s power grid.

In the late 1800s, utility companies throughout Texas were formed to generate electricity for ice plants. Those companies then began to sell their excess electricity to businesses and homes around their facility.

But in 1935, Congress passed the Federal Power Act. That legislation gave the federal government the authority to regulate the transfer of electricity between the states.

That’s when the utility companies in Texas all came to an agreement that they would not send any power out of the state. Those independent utility companies later formed alliances during World War Two when there was a need for more power along the Gulf Coast.

This led to the creation of the Texas Interconnected System in 1941 — which allowed for any excess generation to be transferred to the Gulf Coast region.

In 1965, came the worst power outage in U.S. history. While it didn’t impact Texas, it did prompt a national policy change: new federal regulations were introduced to ensure the reliability of the nation’s power grid.

Those new regulations led the Texas Interconnected System to form the Electric Reliability Council of Texas, otherwise known as ERCOT in 1970.

Five years later, the Texas state legislature created the Public Utility Commission, which would now have oversight of all the electric utilities in Texas.

ERCOT’s role in Texas later grew under then-Governor George W. Bush. State lawmakers at the time were considering moving both electricity and telecommunications into a competitive market. The goal was to ultimately provide lower prices to customers throughout the state.

ERCOT was appointed to facilitate the power flows and exchanges between emerging utilities and became the country’s first independent system operator, otherwise known as an ISO in 1996.

Now, in the wake of the internationally recognized energy failures, ERCOT’s leadership and structure faces in-house and also independent, regulated changes. On Wednesday, it was revealed that five board directors who don’t live in Texas — a large point of contention — had resigned, leaving no members of the board who aren’t residents of the Lone Star State.

In their resignation letter, the collective wrote, in part: “We want to acknowledge the pain and suffering of Texans during this past week. Our hearts go out to all Texans who have had to go without electricity, heat, and water during frigid temperatures and continue to face the tragic consequences of this emergency… We want what is best for ERCOT and Texas.”

On Thursday, state lawmakers will question ERCOT leadership at a series of hearings as a prelude to a larger investigation to figure out what happened and how.

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