Florida’s electrical grid more resilient than Texas’s deregulated model

by | Feb 24, 2021


Late Wednesday, Texas Governor Greg Abbott addressed outrage from Texas residents over the failure of the state’s electric power grid. As temperatures plummeted there last week, causing natural gas lines and wind turbine rotors to freeze solid, millions of Texans found themselves without power in the midst of a winter storm. The predictable political fallout included finger-pointing and a fair share of misleading information about the true cause of the disaster, which experts agree was the Lone Star State’s deregulated and woefully unprepared energy grid.

“Many of you are angry. And you have a right to be,” said Abbott as he announced a formal investigation into the failures. “At at time when essential services were needed the most, the system broke.”

Abbott pointed out that energy experts and regulators, most of which were proponents of the state’s deregulated energy market model, had previously assured Texans they would be prepared for any eventuality. They clearly were not.

Could a similar failure happen in Florida?

STRICTER REGULATIONS 

Unlike Texas, Florida’s energy markets are heavily regulated by the Public Service Commission and by strict federal standards. Those standards require Florida’s utilities and energy suppliers to meet strict safety and weatherization standards to protect the energy supply.

By contrast, Texas’s market is one of the few completely deregulated markets in the nation, which allows energy providers to sell power to consumers at often lower market rates, but those savings come at the expense of investment in protecting the grid’s resiliency. When the weather is good and demand is low, power isn’t in demand and can be purchased cheaply, saving consumers money. But in a crisis, like the one that happened last week, the price of energy skyrockets, the grid experiences deeper and wider failures, and customers get stuck with skyrocketing energy bills.

NPR reporter Christopher Connelly and Morning Edition Host Steve Inskeep summed up the problem perfectly:

CONNELLY: “Texas has a deregulated market for electricity. It is designed so that when there’s a shortage of electricity, the price will go up, and power companies will have an incentive to generate more electricity. That deregulated market also allows for the sale of unusual policies like the ones the Marrses have, plans with variable rates for electricity. And those are the customers who are ending up with these sky-high bills…

INSKEEP: “Does this suggest that this deregulation doesn’t work?”

CONNELLY: “Well, it works great when the weather’s good. But, you know, it appears that there weren’t market incentives in this market system for power providers to make sure that they were prepared to weather a massive winter storm.”

In short, Texas’s deregulated energy market failed its consumers when they needed it to work most. Promises made to consumers that deregulating the state’s energy market would make suppliers more responsive to demand proved empty, as it appears the market failed to incentivize suppliers to protect their own infrastructure.

Last year, some of the same proponents of deregulation in Texas made a similar push here in Florida, however, those efforts appear to have failed. At least for now.

ROBUST INFRASTRUCTURE

Because hurricanes are an annual threat to the entire state of Florida, the state’s utilities have invested heavily in fortifying against power outages and optimizing systems to manage peak demand periods. But hurricanes aren’t the only severe weather threat. The so-called Sunshine State occasionally sees the temperatures drop significantly, and processes are in place to mitigate outages caused by cold weather, too.

“Just like we prepare during hurricane season when temperatures are going up, we are also following through on our winterization processes as well,” said Florida Power and Light spokesman Bill Orlove. “We do get cold temperatures and we make sure our facilities are able to handle the cold.”

A spokeswoman for Tampa Electric Company emphasized the same point.

We work year-round to prepare for extreme weather, including investing in improvements to strengthen our grid, such as the Storm Protection Project,” said Cherie Jacobs, TECO’s media spokesperson. “In addition, we have winter readiness plans for our power plants to ensure we are ready for cold weather.”  

Another key difference is that unlike the Texas power grid, some 90 percent of which sits completely isolated from the rest of the nation’s interconnected systems, Florida can draw power from outside the state in the event of an emergency. If a severe storm took down power lines that directly connect with a primary power source, homes and businesses could still be supplied with electricity from other locations.

Duke Energy, for example, employs a multi-layered system, that the company describes as “backups to our backups,” to ensure power continues flowing to customers.

“We have a system of diverse generation, standby generation and demand response,” says Ana Gibbs, a Duke spokeswoman. “We also have interconnections to ensure we can supply our service area,” which she describes as “the ability to purchase power from neighboring utilities.”

NO GUARANTEES

All of Florida’s major utilities acknowledge there is no magic bullet to prevent widespread power outages in the event of a major storm. The best the state can do is to continue to invest in storm hardening technologies, prepositioning technicians and equipment, and ensuring customers are prepared for the worst.

“It is important to recognize we can’t guarantee uninterrupted power,” says Duke’s Gibbs. “It would be difficult to build a system to withstand all possible scenarios and that would be cost effective for our customers.”

Balancing energy costs against reliability is a major focus for state regulators. Florida’s energy costs per kilowatt hour are lower than the national average. Despite the unique challenges of hurricane season that few other states face, the state ranks 18th, at 10.44 cents per kilowatt hour.

 

 

 

 

 

 

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