Sunday, February 28, 2021

The cause of massive power outage in Texas, USA is’liberalization of electricity market


The cause of massive blackout in Texas, USA is’liberalization of electricity market’

Texas transfers supply responsibility to private sector in 1999
Competition to cut prices leads to unreasonable cost savings

Half of the residents suffered water shortages due to power outages
The variable rate system is also hit by an electricity bill bomb

Reporter Yoon Yeo-jin [email protected]


Input: 2021-02-23 07:06:11Revision: 2021-02-23 07:16:53Published: 2021-02-23 07:17:35

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Texas, the US, which is experiencing the worst cold wave, is experiencing great difficulties as electricity cuts and tap water is cut off.  High-voltage wire towers lined up in Houston, Texas.  Reuters Yonhap News

The US state of Texas, which is experiencing the worst cold wave, is experiencing great difficulties as electricity cuts and the supply of tap water is cut off. High-voltage wire towers lined up in Houston, Texas. Reuters Yonhap News

It was pointed out that the root cause of the massive blackout in Texas, which was caused by the record worst cold wave, was’liberalization of the electricity market’.

The New York Times reported on the 22nd (local time) the results of an analysis of the electricity market in Texas, where the most radically deregulated and free marketization in the United States was established.

In 1999, when former President George W. Bush served as governor, Texas introduced a marketization policy that transferred responsibility for electricity supply to private companies. It was made while the residents agreed that electricity providers wanted to introduce it, and that if the competition among companies is promoted, electricity bills will also fall. 220 electricity suppliers operating in Texas competed to cut prices to attract consumers, and residents were satisfied.

However, such competition for price cuts led to unreasonable cost savings, leading to the worst situation of power supply interruption due to an unexpected cold wave.

Wind power, which is known to make up about 7% of Texas electricity production, requires a device to remove ice from the turbines when temperatures drop in winter, but electricity providers who are trying to cut costs have not installed ice removal devices. .

Not only this. In the case of thermal power plants, which account for the majority of Texas electricity generation, it is known that not a few companies have installed facilities outside of the room. When an unexpected cold wave hit, companies whose major parts were exposed to the outside were forced to stop operation.

State administration and supervision are also important for the stability of electricity supply, which is essential for residents’ lives, but they also failed to play a role. Although there is an organization called the Texas Electric Reliability Commission that oversees electricity suppliers, the New York Times points out that it lacks authority compared to other states.

On the 20th (local time), a notice to limit the number of sales per person is posted next to a bottled water stand in a supermarket in Houston, Texas, hit by the worst cold wave.  AFP Yonhap News

On the 20th (local time), a notice to limit the number of sales per person is posted next to a bottled water stand in a supermarket in Houston, Texas, hit by the worst cold wave. AFP Yonhap News

The widespread blackout following the cold wave also affected the public water system. According to CNN, the Texas Environmental Commission said more than 1,300 public water systems in the state reported service outages, and the issue affects more than 141.1 million residents in 197 counties. That’s nearly half of the state’s total population (29 million). CNN reported that the water shortage was part of the impact of the widespread blackout following the cold wave.

Some residents were struck by an unprecedented electric charge bomb, which cost $10,000 (11 million won). It turns out that the residents who received large bills were customers of a wholesale power company that applied a variable rate system that changed prices depending on the supply and demand of electricity. As the power demand surged due to a record cold wave and the power supply ran to the point of a massive power outage, the wholesale price soared, resulting in a toll bomb.

As a result, Texas Governor Greg Abbott banned bills from being sent to electricity providers for electricity bombs, while also banning the interruption of electricity for nonpayers.

Reporter Yoon Yeo-jin [email protected]·Some Yonhap News



#massive #power #outage #Texas #USA #isliberalization #electricity #market

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