It’s difficult to deny that competition makes markets economically efficient.
But it’s less clear that this works out well for the public when it comes to the dependability and resilience of essential services like electric power, as the Texas freeze recently proved.
Almost 8 million Texans lost power and 13 million had no water from February 15 through February 19 because of extreme cold weather.
The storm was no surprise yet by early morning on February 15, net generation dropped 15 GW (gigawatt hours) from 68 to 53 GW . By early evening, it had fallen another 9 GW to 44 GW (Figure 1).
Meanwhile, demand stood at more than 75 GW so supply was only about 65% of estimated demand. The result was loss of electric power to millions of homes. Much of the state’s water relies on electric pumps to move it through pipelines. When electric power was lost, pumps stopped working and there were shortages of water. Insurance losses of are estimated at $18 billion mostly from water damage because of broken pipes.
According to critics, a chief cause of Texas’ grid failure was…
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