Why Texas Has Its Own Power Grid

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Blackout postmortems have noted that in the continental United States, the electricity system consists of just three regions, the Eastern Interconnection, the Western Interconnection, and the Texas Interconnection. * Why does the Lone Star State have its own power grid?

Partly because of a historical desire for self-sufficiency and partly because of that famous “Don’t Mess With Texas!” attitude. The majority of the state’s residents live within the region regulated by the Electric Reliability Council of Texas, an “island” that generates and supplies all its own electricity—unlike, say, New York City or Detroit, whose residents found out the hard way that lots of their power comes from Canada. (A small sliver of Western Texas gets its juice from the Western Interconnection, while a few customers in the north and the east are hooked into the Eastern Interconnection. Still, ERCOT handles 85 percent of the state’s electricity needs.)

The local utilities that comprise ERCOT have pledged not to sell their power to interstate customers. As a result, the interconnection is exempt from most regulation by the Federal Energy Regulatory Commission, the Beltway agency that governs the transmission of electricity from state to state—say, by mandating transmission standards, or requiring that prices be listed in public forums. ERCOT’s resistance to federal regulation plays well in President Bush’s native land, where meddling from Washington, D.C., is generally abhorred.

The isolation of the Texas grid also has roots in World War II, when ERCOT’s precursor, the Texas Interconnected System, was created. At the time, the state was home to several factories vital to the war effort. The state’s electricity planners—anxious to keep the assembly lines running and concerned about the reliability of the power supply—felt that a Texas-only system would be more dependable than one that harnessed electricity from distant states. Texas’ isolated arrangement worked largely because of the state’s abundance of homegrown natural resources, particularly coal (Texas currently ranks fifth in annual production) and gas (first, with 24 percent of the nation’s proven reserves).

There has been relatively little agitation to integrate ERCOT into the national systems, primarily because Texas doesn’t really need the help. The state uses more electricity than any other, 44 percent more than runner-up California. Much of this is used by industrial customers such as petrochemical plants and oil refineries. Despite Texas’ massive thirst for electricity, ERCOT has been able to provide cheap power with few service hiccups. In fact, Texas electricity is cheaper, per kilowatt hour, than the national average.

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Explainer thanks Michelle Michot Foss of the Institute for Energy, Law and Enterprise at the University of Houston Law Center, and Jim Rossi at the FloridaStateUniversityCollege of Law.

Correction, Aug. 22, 2003: This article originally stated that America’s electricity system consists of three regions. In fact, only the lower 48 states derive power from the three interconnections mentioned. Hawaii and Alaska are on separate grids. ( Return to the corrected sentence.)