NCPA - National Center for Policy Analysis

Texas' Electricity Island

May 7, 2001

Unlike California and New York, Texas has an abundance of electric power. One reason, experts say, is that Texans have long maintained a healthy skepticism toward federal regulation -- and have acted accordingly. By confining their power grid to Texas, state utilities avoided oversight by the Federal Energy Regulatory Commission.

As a result, FERC couldn't force Texas to send power out of state in case of an emergency. The state's major utilities went to great lengths to ensure there were no interstate connections.

  • Texas' excess electricity production is nearly enough to power New York City; and by summer of next year the excess may be close to 15,000 megawatts -- enough to power 15 million homes.
  • Texas has 27 new generating plants under construction -- more than any other state.
  • Because the state's low rates and excess power allow it to attract industries, officials are in no hurry to build transmission lines to send energy to other states -- which would take at least three years and cost Texas ratepayers about $600 million.

Another factor which has set Texas apart from energy-hungry states is its business-friendly approach to deregulation.

  • Unlike California, with its stringent emissions and zoning rules, Texas has made it quick and easy for power companies to locate their plants almost anywhere they can find a place to hook up to the grid.
  • Last year, Texas completed a major upgrade to alleviate bottlenecks on the grid and it has six similar projects underway.
  • Whereas California largely failed to bring new plants online even though power demand was growing, Texas began building plants in 1998.
  • Since then, $11 billion worth of power plants have been completed or started -- and more are on the drawing board.

Source: Alexi Barrionuevo and Russell Gold, "Texas May Face a Glut of Electricity, but That Won't Aid Rest of U.S.," Wall Street Journal, May 7, 2001.

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