Old and inefficient power plants are being fired back up to meet demand peaks, which is an inefficient use of inefficient technology and is unreliable. The transmission system is outdated. Financial obstacles like the bankruptcy of Energy Future Holdings (and all the associated fallout) - which controls the largest retail utility and the largest power generation fleet in the state – overhang any possible solution. All these challenges combined with growing electricity demand amount to a potentially serious problem.
Obviously for anyone living in or doing business in Texas, the potential for a breakdown in electric reliability is a very serious concern. Systemic disruptions in the energy sector are dangerous and can also cause serious and lasting economic damage. Simply the threat of unreliable supply and potential power failures reduce incentives to invest in Texas industries.
Much Bigger than Texas
Texas’s power problems are about much more than Texas. The obvious concern is that the direct economic implications could be much wider than just Texas. The state represents a huge portion of U.S. economic activity, and is a vital part of our national energy strategy. Perhaps more important than the direct economic considerations is that the fight over EPA regulations may be defined by the battles in Texas. Similarly, how the lack of long-term power price certainty is resolved (allowing adequate financing to support necessary new generation projects) will cause ripples throughout US power markets.