00:00:06:13 00:00:07:13 So this is the beginning... 00:00:09:02 00:00:10:14 A couple of weeks after the big 00:00:10:15 00:00:12:15 blackout, I found this video 00:00:12:16 00:00:13:17 in my phone. 00:00:13:18 00:00:15:22 Of what might be a historic 00:00:15:23 00:00:16:22 winter storm 00:00:18:02 00:00:19:05 here in Austin. 00:00:19:06 00:00:21:00 It's from the night before the power 00:00:21:01 00:00:22:13 went out. And when I found it, I 00:00:22:14 00:00:24:10 didn't even remember recording. 00:00:24:11 00:00:26:03 It just started down here. 00:00:26:04 00:00:27:24 Or exactly who I was recording 00:00:27:25 00:00:28:21 it for. 00:00:28:22 00:00:30:19 I know I was really excited 00:00:30:20 00:00:31:25 about the snow. 00:00:32:00 00:00:33:23 I love this. 00:00:33:24 00:00:35:17 But when I listen back, it sounds 00:00:35:18 00:00:37:14 corny, but I get 00:00:37:15 00:00:39:15 chills because of this 00:00:39:16 00:00:41:11 last thing I say 00:00:41:12 00:00:42:08 right here. 00:00:42:09 00:00:43:10 Big question for a lot of people 00:00:43:11 00:00:44:14 right now is whether the 00:00:46:09 00:00:47:16 electric grid is going to hold up. 00:00:55:01 00:00:56:23 A lot of people knew a blackout was 00:00:56:24 00:00:59:05 possible, but the really strange 00:00:59:06 00:01:00:19 thing for me, the thing that kind of 00:01:00:20 00:01:02:20 bugs me is how 00:01:02:21 00:01:04:19 casual I was about it. 00:01:04:20 00:01:06:06 I make it sound like the power grid 00:01:06:07 00:01:08:09 falling apart, or at least the risk 00:01:08:10 00:01:10:08 of that is just a part of 00:01:10:09 00:01:12:03 being in Texas. 00:01:12:04 00:01:13:12 And as we'll see — it 00:01:14:15 00:01:15:15 kind of is. 00:01:21:20 00:01:23:17 My name is Mose Buchele. 00:01:23:18 00:01:25:14 I'm a reporter at KUT, the 00:01:25:15 00:01:27:10 public radio station in Austin. 00:01:27:11 00:01:29:18 I've been covering energy in Texas 00:01:29:19 00:01:31:24 for more than a decade and 00:01:32:00 00:01:33:19 around the time I started on this 00:01:33:20 00:01:35:13 beat, there was another blackout. 00:01:35:14 00:01:38:03 In fact, it was almost exactly 00:01:38:04 00:01:39:22 a decade before this year's. 00:01:39:23 00:01:41:22 More than 50 generation units across 00:01:41:23 00:01:44:00 Texas failed in last night's severe 00:01:44:01 00:01:45:00 cold weather. 00:01:45:01 00:01:46:21 So ERCOT, the state's grid 00:01:46:22 00:01:48:16 operator, told utilities to 00:01:48:17 00:01:50:09 start shedding some usage. 00:01:50:10 00:01:52:03 This is from back in 2011. 00:01:52:04 00:01:53:23 And the characters may have changed, 00:01:53:24 00:01:55:20 but the story is the same. 00:01:55:21 00:01:57:13 Governor Rick Perry is urging people 00:01:57:14 00:01:58:21 to conserve energy. 00:01:58:22 00:02:00:07 The outages also got Lt. 00:02:00:08 00:02:02:16 Gov. David Dewhurst talking... 00:02:02:17 00:02:04:12 Back then there was a winter storm. 00:02:04:13 00:02:06:08 Power plants froze up, gas lines 00:02:06:09 00:02:07:08 froze, too. 00:02:07:09 00:02:09:07 Some people's power was turned off. 00:02:09:08 00:02:11:08 But it was for like a couple 00:02:11:09 00:02:11:22 hours. 00:02:11:23 00:02:13:17 Austin Energy general manager Larry 00:02:13:18 00:02:15:22 Weis spoke to the council Thursday. 00:02:15:23 00:02:18:01 This was an emergency situation 00:02:18:02 00:02:20:02 where the planes in a dove 00:02:20:03 00:02:21:16 and we've got to get we've got to 00:02:21:17 00:02:23:17 pull it out real quickly. 00:02:23:18 00:02:25:12 And and that 00:02:25:13 00:02:26:19 — that's what happened. 00:02:26:20 00:02:28:14 At the time. It was seen as this 00:02:28:15 00:02:30:18 huge disaster, a total 00:02:30:19 00:02:31:16 failure. 00:02:31:17 00:02:33:07 There were investigations, finger 00:02:33:08 00:02:35:11 pointing. And the thing is, everyone 00:02:35:12 00:02:37:09 knew exactly how to fix what went 00:02:37:10 00:02:38:03 wrong. 00:02:38:04 00:02:40:00 They could start by winterizing 00:02:40:01 00:02:40:16 the grid. 00:02:40:17 00:02:43:05 We've got to figure out a way to 00:02:43:06 00:02:45:15 somehow incentivize 00:02:45:16 00:02:47:19 the generators to 00:02:47:20 00:02:49:12 to to be prepared. 00:02:49:13 00:02:51:09 You know, 82 outages, 00:02:51:10 00:02:52:19 I think is unacceptable. 00:02:52:20 00:02:54:04 They knew what to do. 00:02:54:05 00:02:56:02 They just didn't do it. 00:02:59:24 00:03:01:20 So when this year's winter storm 00:03:01:21 00:03:03:20 rolled around, almost the same thing 00:03:03:21 00:03:06:09 happened again and it was much, 00:03:06:10 00:03:07:18 much worse. 00:03:07:19 00:03:09:05 See all these headlights? 00:03:09:06 00:03:10:06 You see all these people? 00:03:11:08 00:03:13:02 These are people that have had no 00:03:13:03 00:03:15:16 electricity for 13 hours 00:03:15:17 00:03:16:17 and they don't have anywhere else to 00:03:16:18 00:03:17:17 go. 00:03:18:01 00:03:19:09 They don't have friends. 00:03:19:10 00:03:21:07 The hotels and motels are sold 00:03:21:08 00:03:23:15 out. Look at this. 00:03:23:16 00:03:25:12 This isn't some third world 00:03:25:13 00:03:27:11 country, this is the USA, 00:03:27:12 00:03:29:09 this is Texas. 00:03:29:10 00:03:30:09 Look at this s***. 00:03:31:17 00:03:34:04 This is ridiculous, 00:03:34:05 00:03:35:24 I'm so f***ing heated, y'all. 00:03:35:25 00:03:37:19 Greg Abbott, what the f*** are you 00:03:37:20 00:03:39:14 going to do about this power grid? 00:03:39:15 00:03:40:25 Really? 2021? 00:03:40:26 00:03:41:25 No f***ing power? 00:03:42:23 00:03:43:23 Day five. 00:03:45:18 00:03:47:16 In the bathroom I have 00:03:47:17 00:03:49:20 lights — well, candles 00:03:49:21 00:03:50:20 and 00:03:52:05 00:03:53:13 [flips light switch] nothing. 00:03:53:14 00:03:55:13 Millions lost power for 00:03:55:14 00:03:56:08 days. 00:03:56:09 00:03:58:06 According to at least one estimate, 00:03:58:07 00:04:00:03 more than 700 people 00:04:00:04 00:04:01:03 may have died. 00:04:11:15 00:04:13:06 But I'm not sure people really 00:04:13:07 00:04:15:04 understand what happened or 00:04:15:05 00:04:16:03 why. 00:04:16:04 00:04:17:19 I started talking about this project 00:04:17:20 00:04:19:04 with my colleagues at the public 00:04:19:05 00:04:21:01 radio station in Austin a couple of 00:04:21:02 00:04:23:10 days after the end of the blackouts. 00:04:23:11 00:04:24:23 And I heard all these questions 00:04:24:24 00:04:26:21 about how our power grid works and 00:04:26:22 00:04:28:17 how something so catastrophic 00:04:28:18 00:04:30:01 could happen in a state that's 00:04:30:02 00:04:31:16 literally known for its energy 00:04:31:17 00:04:33:13 industry, like it's baked into 00:04:33:14 00:04:35:24 the whole persona of the state. 00:04:36:00 00:04:38:11 This is the stuff about which 00:04:38:12 00:04:40:04 thousands of stories have been 00:04:40:05 00:04:41:04 written 00:04:42:02 00:04:44:00 in which almost invariably, at 00:04:44:01 00:04:46:04 least once, the author refers 00:04:46:05 00:04:48:01 to it as black gold. 00:04:48:02 00:04:49:16 Over half the oil that has been 00:04:49:17 00:04:51:16 produced in the whole world was 00:04:51:17 00:04:53:13 produced in the United States, 00:04:53:14 00:04:55:03 mainly in the state of Texas. 00:04:55:04 00:04:56:25 In recent years, Texas has 00:04:57:00 00:04:58:24 come to be accepted practically 00:04:59:00 00:05:00:13 as the universal gauge of the 00:05:00:14 00:05:03:02 ultimate of everything oil — 00:05:03:03 00:05:05:03 production and reserves to stagger 00:05:05:04 00:05:06:10 the imagination. 00:05:06:11 00:05:08:14 But even with all that oil and gas 00:05:08:15 00:05:10:15 and coal, nuclear, wind, 00:05:10:16 00:05:12:21 solar and hydro power, 00:05:12:22 00:05:14:21 the electricity grid in Texas 00:05:14:22 00:05:17:08 lives on this knife's edge. 00:05:17:09 00:05:19:06 I mean, just since the February 00:05:19:07 00:05:21:04 blackouts, there's been two more 00:05:21:05 00:05:22:04 close calls — two! 00:05:23:03 00:05:24:22 and it seems like people have lost 00:05:24:23 00:05:26:23 faith in this story of Texas 00:05:26:24 00:05:28:20 as this beacon of energy. 00:05:28:21 00:05:31:03 The power grid here has become 00:05:31:04 00:05:32:08 a national joke. 00:05:32:09 00:05:34:08 So Texas had a decade to prepare 00:05:34:09 00:05:35:18 and it just didn't. 00:05:35:19 00:05:37:05 And you can get a lot done in 10 00:05:37:06 00:05:38:09 years. Look at the Beyonce. 00:05:38:10 00:05:39:19 In the last decade, she announced 00:05:39:20 00:05:41:02 she was pregnant in the coolest way 00:05:41:03 00:05:42:17 possible, performed at two Super 00:05:42:18 00:05:43:15 Bowl halftime. 00:05:43:16 00:05:44:25 Watched Solange kick the s*** out of 00:05:45:00 00:05:46:04 her husband and then made a whole 00:05:46:05 00:05:47:24 album about it, invented the color 00:05:48:00 00:05:49:12 yellow and founded the Coachella 00:05:49:13 00:05:51:18 Music Festival and was in a film 00:05:51:19 00:05:54:01 with the world's greatest actor. 00:05:54:02 00:05:55:11 She got a lot done. 00:05:55:12 00:05:56:17 She probably could have winterized 00:05:56:18 00:05:58:03 Texas' power plants as well. 00:05:58:04 00:05:59:19 If anyone had just thought to ask 00:05:59:20 00:06:00:04 her. 00:06:00:05 00:06:02:05 I mean, has anyone asked Beyonce? 00:06:04:12 00:06:06:02 For the past few months, a team of 00:06:06:03 00:06:08:01 reporters at KUT and I have 00:06:08:02 00:06:09:23 been looking into some of the big 00:06:09:24 00:06:11:18 questions about the power grid in 00:06:11:19 00:06:12:16 Texas. 00:06:12:17 00:06:14:11 We wanted to know how we got the 00:06:14:12 00:06:16:02 grid we have and why it keeps 00:06:16:03 00:06:17:20 failing the way it does. 00:06:17:21 00:06:19:03 And there's a word that keeps coming 00:06:19:04 00:06:20:18 up when you talk about this. 00:06:20:19 00:06:23:02 It's deregulation. 00:06:23:03 00:06:23:03 Deregulation. 00:06:23:04 00:06:24:01 Deregulation. 00:06:24:02 00:06:24:21 What they call deregulation. 00:06:24:22 00:06:25:21 Deregulated. 00:06:26:07 00:06:26:11 Deregulation. 00:06:26:12 00:06:26:12 Deregulation. 00:06:26:13 00:06:27:12 The 00:06:28:10 00:06:30:03 deregulated electric market in 00:06:30:04 00:06:30:19 Texas. 00:06:30:20 00:06:33:06 But the answer isn't that simple. 00:06:33:07 00:06:34:11 Like the grid itself, it's 00:06:34:12 00:06:35:11 complicated. 00:06:35:12 00:06:37:13 And in this podcast, we're going 00:06:37:14 00:06:39:11 to try to make it 00:06:39:12 00:06:41:00 make sense. 00:06:41:01 00:06:42:04 We're going to take you from the very 00:06:42:05 00:06:44:08 early days of the Texas grid 00:06:44:09 00:06:46:04 to the big push to deregulate in the 00:06:46:05 00:06:47:25 1990s, right up 00:06:48:00 00:06:49:23 to now, when maybe 00:06:49:24 00:06:51:10 the lights come on, but 00:06:51:11 00:06:53:08 sometimes...maybe they don't. 00:06:54:21 00:06:57:05 I'm Mose Buchele, and this is 00:06:57:06 00:06:59:09 The Disconnect: Power, 00:06:59:10 00:07:01:06 Politics and the Texas 00:07:01:07 00:07:02:06 Blackout. 00:07:06:17 00:07:08:05 Episode One. 00:07:08:06 00:07:09:08 The Energy Island. 00:07:10:10 00:07:12:06 In February, after the initial 00:07:12:07 00:07:14:09 shock of being without power started 00:07:14:10 00:07:16:08 to sink in, I think one 00:07:16:09 00:07:18:01 of the things that really surprised 00:07:18:02 00:07:20:16 people was the realization that we 00:07:20:17 00:07:22:12 in Texas were 00:07:22:13 00:07:24:02 all alone. 00:07:24:03 00:07:25:21 Our state energy system fell apart 00:07:25:22 00:07:27:10 in this big winter storm. 00:07:27:11 00:07:29:07 We did not have the power to keep 00:07:29:08 00:07:30:15 ourselves warm. 00:07:30:16 00:07:32:16 But more than that: The cavalry 00:07:32:17 00:07:34:18 was not coming. Even if there was 00:07:34:19 00:07:36:06 power in other parts of the country 00:07:36:07 00:07:38:02 to send our way to save us 00:07:38:03 00:07:39:21 from this day's long, deadly 00:07:39:22 00:07:41:17 catastrophe that was coming. 00:07:41:18 00:07:43:18 There was and is simply 00:07:43:19 00:07:45:16 no way to get that power to 00:07:45:17 00:07:46:21 us. 00:07:46:22 00:07:48:18 That's because Texas, unlike any 00:07:48:19 00:07:50:20 other state in the country, operates 00:07:50:21 00:07:52:21 its own independent electric 00:07:52:22 00:07:54:17 grid. Now, I've got to say, there 00:07:54:18 00:07:56:02 are parts of the state that aren't 00:07:56:03 00:07:56:23 on that grid. 00:07:56:24 00:07:58:01 And it's worth noting that those 00:07:58:02 00:07:59:16 places were much better off in 00:07:59:17 00:08:01:12 February, but about 90 00:08:01:13 00:08:03:09 percent of Texans are cut 00:08:03:10 00:08:05:09 off. It's an island that can't 00:08:05:10 00:08:07:13 bring in or send out very 00:08:07:14 00:08:09:10 much power, even if it needs 00:08:09:11 00:08:10:15 to. 00:08:10:16 00:08:12:23 A lot of people learned that 00:08:12:24 00:08:14:23 only after 00:08:14:24 00:08:16:11 the power went out. 00:08:16:12 00:08:18:07 KUT's Claire McInerny was one of 00:08:18:08 00:08:18:17 them. 00:08:18:18 00:08:20:02 I sure was. 00:08:20:03 00:08:21:13 I wanted to ask you about this. 00:08:21:14 00:08:22:09 What did you find out? 00:08:22:10 00:08:24:03 That Texas had its own grid. 00:08:24:04 00:08:25:14 Like halfway through the storm, 00:08:25:15 00:08:27:10 sitting on my couch and two hoodies 00:08:27:11 00:08:28:18 and a blanket. 00:08:28:19 00:08:29:06 Oh, man. 00:08:29:07 00:08:31:04 And at that time, my mom, who 00:08:31:05 00:08:32:12 was texting me, I'm so confused. 00:08:32:13 00:08:33:14 What, you guys are still in a 00:08:33:15 00:08:34:18 blackout. Why are you just getting 00:08:34:19 00:08:36:13 energy from other states? 00:08:36:14 00:08:38:05 And I was like, well, I just learned 00:08:38:06 00:08:40:00 five minutes ago because we can't. 00:08:40:01 00:08:41:11 Right? Yeah, yeah, yeah. 00:08:41:12 00:08:42:24 So that's why I wanted to dig into 00:08:43:00 00:08:43:06 this. 00:08:43:07 00:08:44:06 And so that's what this first 00:08:44:07 00:08:45:21 chapter is about. 00:08:45:22 00:08:46:21 So where did you start? 00:08:46:22 00:08:48:04 Yeah. So since I didn't know too 00:08:48:05 00:08:49:07 much about this, I went and found an 00:08:49:08 00:08:51:05 expert and the person 00:08:51:06 00:08:52:21 I talked to was Julie Cohn. 00:08:52:22 00:08:54:19 My focus has been on 00:08:54:20 00:08:56:24 energy history and specifically 00:08:57:00 00:08:58:21 electrification in the United 00:08:58:22 00:09:00:17 States and North America more 00:09:00:18 00:09:01:11 generally. 00:09:01:12 00:09:02:08 Sounds like you found the right 00:09:02:09 00:09:02:21 person. 00:09:02:22 00:09:04:14 Yeah. If you need an electricity 00:09:04:15 00:09:06:01 historian, Julie's your girl. 00:09:06:02 00:09:07:06 Yeah. Let's start at the very start. 00:09:07:07 00:09:08:14 Let's start with, like, the 00:09:08:15 00:09:09:21 beginning of electricity. 00:09:09:22 00:09:10:21 Menlo Park! 00:09:10:22 00:09:12:25 Yeah, you've got Thomas Edison, 00:09:12:26 00:09:14:21 Ladies and gentlemen, those 00:09:14:22 00:09:17:06 of us who began our labors 00:09:17:07 00:09:19:08 at the operators key 50 years 00:09:19:09 00:09:20:08 ago, have been permitted to see 00:09:22:13 00:09:24:06 and assist in the whole modern 00:09:24:07 00:09:25:22 industrial development of 00:09:25:23 00:09:26:22 electricity. 00:09:30:20 00:09:31:18 You know, one thing that they were 00:09:31:19 00:09:33:03 using electricity for pretty early 00:09:33:04 00:09:33:23 on in Texas? 00:09:33:24 00:09:34:12 What? 00:09:34:13 00:09:35:08 Icemaking. 00:09:35:09 00:09:36:13 Oh, because that's how we cooled 00:09:36:14 00:09:36:25 off. 00:09:36:26 00:09:38:08 Yeah. You know, making just making 00:09:38:09 00:09:39:15 big chunks of ice. 00:09:39:16 00:09:40:24 And it's all kind of a novelty. 00:09:40:25 00:09:42:23 For a long time, we start 00:09:42:24 00:09:44:20 to use electricity to 00:09:44:21 00:09:46:01 power different things. 00:09:46:02 00:09:46:24 People start to use it in their 00:09:46:25 00:09:48:08 homes, 00:09:48:09 00:09:49:05 Utilities, I guess, starting up. 00:09:49:06 00:09:50:25 And these are mostly in cities. 00:09:51:00 00:09:51:01 Yeah. 00:09:51:02 00:09:53:00 It was hydro power or 00:09:53:01 00:09:54:20 a city or an early electric company 00:09:54:21 00:09:56:15 could kind of buy a kit — like a 00:09:56:16 00:09:58:13 build your own utility kit. 00:09:58:14 00:10:00:09 You get a small steam generator 00:10:00:10 00:10:03:06 to power streetlights, 00:10:03:07 00:10:04:23 industry, maybe streetcars. 00:10:04:24 00:10:06:01 So you had public utilities and a 00:10:06:02 00:10:08:02 lot of little private power 00:10:08:03 00:10:09:16 companies all competing for 00:10:09:17 00:10:10:04 customers. 00:10:10:05 00:10:11:07 Right. And we should say that public 00:10:11:08 00:10:13:06 utilities are maybe 00:10:13:07 00:10:15:04 city owned. They're publicly run the 00:10:15:05 00:10:16:24 same way that the city might run 00:10:16:25 00:10:18:19 your water supply system or 00:10:18:20 00:10:19:19 something else. 00:10:19:20 00:10:22:06 The city would control and own 00:10:22:07 00:10:23:08 the electric utility. 00:10:23:09 00:10:24:19 And then on the other hand, like you 00:10:24:20 00:10:26:12 say, you had all these kind of tiny 00:10:26:13 00:10:28:08 little independent utility 00:10:28:09 00:10:30:04 outfits. You buy a generator and 00:10:30:05 00:10:31:24 you start making power and and you 00:10:32:00 00:10:33:18 try to compete for customers. 00:10:33:19 00:10:35:17 But for a while, it's 00:10:35:18 00:10:37:18 kind of just this hodgepodge 00:10:37:19 00:10:39:01 thing that's existing in the United 00:10:39:02 00:10:39:13 States. 00:10:39:14 00:10:41:23 Starting in 1907, states 00:10:41:24 00:10:43:23 began to regulate power 00:10:43:24 00:10:44:21 companies. 00:10:44:22 00:10:46:12 They said, you know, this is 00:10:46:13 00:10:48:02 becoming an essential service. 00:10:48:03 00:10:49:08 We want to make sure that it's 00:10:49:09 00:10:51:10 provided on a fair basis to 00:10:51:11 00:10:53:02 the citizens of our state. 00:10:53:03 00:10:55:01 So we will say who can 00:10:55:02 00:10:56:20 operate where and how much you can 00:10:56:21 00:10:58:23 charge your customers for 00:10:58:24 00:11:00:10 your electric service. 00:11:00:11 00:11:02:13 And this is happening because 00:11:02:14 00:11:04:11 after a while, electricity starts 00:11:04:12 00:11:05:23 to become a necessity. 00:11:05:24 00:11:07:19 And I kind of was looking 00:11:07:20 00:11:09:10 at it is how we view Wi-Fi. 00:11:09:11 00:11:10:15 You know, for a long time it was 00:11:10:16 00:11:12:07 neat to have in your house and have 00:11:12:08 00:11:13:09 access to the Internet. 00:11:13:10 00:11:15:07 But now school and business 00:11:15:08 00:11:17:13 and, you know, interacting 00:11:17:14 00:11:19:02 with your local government has to be 00:11:19:03 00:11:19:17 done online. 00:11:19:18 00:11:21:01 So this is becoming more than a 00:11:21:02 00:11:21:24 novelty. 00:11:22:00 00:11:23:12 And in the first few decades of the 00:11:23:13 00:11:25:12 20th century, state regulation comes 00:11:25:13 00:11:25:18 in. 00:11:25:19 00:11:27:24 So almost every state 00:11:28:00 00:11:29:14 is regulating their local power 00:11:29:15 00:11:32:05 companies to some extent. 00:11:32:06 00:11:33:06 Guess who wasn't. 00:11:34:20 00:11:35:21 I'm going to guess Texas. 00:11:35:22 00:11:36:25 Yes, exactly. 00:11:37:00 00:11:37:17 OK. 00:11:37:18 00:11:39:07 So as electricity becomes more 00:11:39:08 00:11:41:06 popular and more of a necessity 00:11:41:07 00:11:43:04 and people need it every day, 00:11:43:05 00:11:45:04 power companies start to 00:11:45:05 00:11:45:23 consolidate. 00:11:45:24 00:11:47:18 Bigger ones are buying smaller ones. 00:11:47:19 00:11:49:22 Also, we see them starting 00:11:49:23 00:11:51:24 to connect and share 00:11:52:00 00:11:53:12 power for the first time. 00:11:53:13 00:11:54:17 So what you're describing here is 00:11:54:18 00:11:56:15 really the beginning of an electric 00:11:56:16 00:11:57:11 grid, right? 00:11:57:12 00:11:59:14 You have all these different 00:11:59:15 00:12:01:08 electric utilities — companies in 00:12:01:09 00:12:03:08 urban centers — and those 00:12:03:09 00:12:05:24 utilities start consolidating, 00:12:05:25 00:12:08:09 growing to sell more electricity 00:12:08:10 00:12:09:20 to more people. And so the grid is 00:12:09:21 00:12:10:19 spreading out. 00:12:10:20 00:12:12:00 Yeah, that's the whole point is like 00:12:12:01 00:12:13:09 if the power companies are linked 00:12:13:10 00:12:14:12 up, they don't have to create it 00:12:14:13 00:12:15:17 locally. And that's why people 00:12:15:18 00:12:16:23 wanted to do this. 00:12:16:24 00:12:18:23 I almost picture like a plant 00:12:18:24 00:12:20:24 growing — starting in population 00:12:21:00 00:12:22:06 centers and spreading throughout the 00:12:22:07 00:12:24:04 state, linking up to 00:12:24:05 00:12:25:19 form what becomes a grid. 00:12:25:20 00:12:27:12 And it's based on monopolies. 00:12:27:13 00:12:28:24 After a while, there's only one 00:12:29:00 00:12:31:11 company serving any one place, 00:12:31:12 00:12:33:10 and most of the oversight, if there 00:12:33:11 00:12:35:14 is any, comes from the state. 00:12:35:15 00:12:36:17 So this is growing. 00:12:36:18 00:12:38:12 It's growing at the state level and 00:12:38:13 00:12:39:21 then these companies are crossing 00:12:39:22 00:12:41:02 state lines. 00:12:41:03 00:12:43:07 So what's happening nationally? 00:12:43:08 00:12:45:03 Well, a lot of things 00:12:45:04 00:12:46:17 changed when this guy became 00:12:46:18 00:12:47:03 president. 00:12:47:04 00:12:49:02 Let me assert my firm 00:12:49:03 00:12:51:00 belief that the 00:12:51:01 00:12:52:24 only thing we have to 00:12:53:00 00:12:55:05 fear is 00:12:55:06 00:12:56:11 fear itself. 00:12:57:13 00:12:57:21 Ahh, FDR. 00:12:57:22 00:13:00:11 Nameless, unreasoning, unjustified 00:13:00:12 00:13:03:06 terror, which paralyzes 00:13:03:07 00:13:05:13 needed efforts to convert 00:13:05:14 00:13:07:17 retreat into advance. 00:13:10:12 00:13:12:08 So this is a New Deal era, people 00:13:12:09 00:13:14:07 are desperate, FDR has 00:13:14:08 00:13:16:00 come in saying he's going to help 00:13:16:01 00:13:17:22 and the reason for 00:13:17:23 00:13:20:10 the Depression were the excesses 00:13:20:11 00:13:22:01 of banking. 00:13:22:02 00:13:24:06 Right. Monopoly powers. 00:13:24:07 00:13:26:02 And I didn't realize this until we 00:13:26:03 00:13:27:18 started researching this, but these 00:13:27:19 00:13:29:14 big electric companies were a lot 00:13:29:15 00:13:31:02 of what they were talking about with 00:13:31:03 00:13:33:03 the New Deal. Like eventually these 00:13:33:04 00:13:35:01 monopoly utilities became taken 00:13:35:02 00:13:35:23 over by banks. 00:13:35:24 00:13:37:04 And I don't want to get too much 00:13:37:05 00:13:38:13 into the weeds here, but these 00:13:38:14 00:13:39:13 things were called holding 00:13:39:14 00:13:40:12 companies. 00:13:40:13 00:13:41:25 They operated, like you said, across 00:13:41:26 00:13:43:08 state lines. You know, they could 00:13:43:09 00:13:45:07 control the market charge what they 00:13:45:08 00:13:46:02 wanted. 00:13:46:03 00:13:47:07 This was just the kind of thing that 00:13:47:08 00:13:48:15 FDR railed against. 00:13:48:16 00:13:50:13 It was very unfair to the consumer, 00:13:50:14 00:13:52:12 which is why they passed 00:13:52:13 00:13:54:15 the Federal Utility Holding 00:13:54:16 00:13:56:14 Company Act in 1935, 00:13:56:15 00:13:57:20 was to hold those people accountable 00:13:57:21 00:13:58:16 so they couldn't do that. 00:13:58:17 00:14:00:15 OK, so that was a rule 00:14:00:16 00:14:02:03 that said that if you cross state 00:14:02:04 00:14:04:08 lines, you 00:14:04:09 00:14:06:13 were going to be under 00:14:06:14 00:14:07:25 the regulation of the feds. 00:14:08:00 00:14:09:12 It's the first time that the federal 00:14:09:13 00:14:12:03 government said electricity 00:14:12:04 00:14:14:01 is a big driving 00:14:14:02 00:14:15:22 force in this country and we 00:14:15:23 00:14:17:19 want to make it fair to 00:14:17:20 00:14:19:16 consumers to get 00:14:19:17 00:14:21:11 it and use it, because before that 00:14:21:12 00:14:23:17 wasn't a goal of many people. 00:14:23:18 00:14:24:24 And so what they do is they kind of 00:14:25:00 00:14:26:10 break up a lot of these monopolies 00:14:26:11 00:14:28:05 that are operating across state 00:14:28:06 00:14:29:02 lines. 00:14:29:03 00:14:30:04 Basically, they limit their market 00:14:30:05 00:14:32:01 power, right. They limit the amount 00:14:32:02 00:14:33:18 of power they have over consumers, 00:14:33:19 00:14:34:22 but the power companies could get 00:14:34:23 00:14:36:21 around it if they didn't cross 00:14:36:22 00:14:37:22 state lines. 00:14:37:23 00:14:38:10 Exactly. 00:14:38:11 00:14:40:02 You know, you can imagine why it was 00:14:40:03 00:14:41:24 very attractive to these Texas 00:14:42:00 00:14:44:04 power companies to say, "OK, forget 00:14:44:05 00:14:46:05 it, we're not going to sell power to 00:14:46:06 00:14:48:06 anybody in Louisiana or Oklahoma 00:14:48:07 00:14:49:03 or whatever. 00:14:49:04 00:14:50:16 We're just going to form 00:14:50:17 00:14:52:17 interconnected systems inside 00:14:52:18 00:14:54:14 Texas and operate 00:14:54:15 00:14:55:12 as we wish." 00:14:55:13 00:14:56:18 And they weren't the only ones, 00:14:56:19 00:14:57:18 though. So that's important to 00:14:57:19 00:14:58:24 remember. 00:14:59:00 00:15:00:20 Texas didn't become an outlier in 00:15:00:21 00:15:02:18 the 1930s when this federal law was 00:15:02:19 00:15:03:24 passed. 00:15:03:25 00:15:05:07 A lot of states were doing the same 00:15:05:08 00:15:07:02 thing. So Maine 00:15:07:03 00:15:09:05 power companies were creating power 00:15:09:06 00:15:10:09 and keeping it within their state 00:15:10:10 00:15:12:03 lines. Wisconsin did the same thing 00:15:12:04 00:15:12:24 as well. 00:15:13:00 00:15:14:25 So Texas wasn't unique 00:15:14:26 00:15:15:10 there. 00:15:15:11 00:15:16:13 It wasn't just that we were like a 00:15:16:14 00:15:17:24 bunch of cowboys out here. 00:15:18:00 00:15:19:23 Texas is exceptional, but not 00:15:19:24 00:15:21:06 in this case. 00:15:21:07 00:15:23:02 But eventually we 00:15:23:03 00:15:24:01 were the only ones that could 00:15:24:02 00:15:25:17 continue to do that. 00:15:25:18 00:15:27:15 Texas, as everyone who lives in 00:15:27:16 00:15:29:11 Texas knows, is a really big 00:15:29:12 00:15:30:23 state. 00:15:30:24 00:15:32:19 And not only are we big, but we're 00:15:32:20 00:15:35:06 wide. We have two time zones. 00:15:35:07 00:15:37:08 So the sun rises an hour 00:15:37:09 00:15:39:03 later in West Texas than it does in 00:15:39:04 00:15:40:14 East Texas. 00:15:40:15 00:15:43:00 And we also have 00:15:43:01 00:15:44:21 virtually every type 00:15:44:22 00:15:46:19 of energy resources that's used 00:15:46:20 00:15:48:19 nowadays to generate electricity. 00:15:48:20 00:15:50:20 We have oil, we have gas, we coal, 00:15:50:21 00:15:51:22 we have uranium. 00:15:51:23 00:15:53:06 We have sunshine. 00:15:53:07 00:15:54:09 We have wind. 00:15:54:10 00:15:56:01 You know, literally, we have an 00:15:56:02 00:15:57:21 abundance of all types of 00:15:57:22 00:15:59:10 energy resources. 00:15:59:11 00:16:01:10 So for the power companies, this 00:16:01:11 00:16:02:16 worked out really well. 00:16:02:17 00:16:04:12 So it's not just that we're big, 00:16:04:13 00:16:05:09 It's that we're wide. 00:16:05:10 00:16:06:07 It's that we're wide. 00:16:06:08 00:16:07:08 Right. 00:16:08:16 00:16:10:14 California is a big state, but it's 00:16:10:15 00:16:11:09 skinny. 00:16:11:10 00:16:12:07 Exactly. Not as wide. 00:16:12:08 00:16:14:10 As we learned during the storm. 00:16:14:11 00:16:16:15 A grid is kind of a fickle creature 00:16:16:16 00:16:18:00 and you don't want it to come out of 00:16:18:01 00:16:19:14 balance. And when everybody needs 00:16:19:15 00:16:21:06 energy at the same time, you throw 00:16:21:07 00:16:22:08 it off balance. 00:16:22:09 00:16:24:09 So what makes us unique in Texas is 00:16:24:10 00:16:26:17 everybody isn't using electricity at 00:16:26:18 00:16:27:15 the same time. 00:16:27:16 00:16:29:16 East Texas neighborhoods, at 00:16:29:17 00:16:30:15 a certain point in the morning, 00:16:30:16 00:16:32:10 their streetlights turn off, people 00:16:32:11 00:16:34:13 wake up, turn on their coffee, 00:16:34:14 00:16:36:05 all of that movement. 00:16:36:06 00:16:37:06 Yeah, it gets going. 00:16:37:07 00:16:37:17 Yeah. 00:16:37:18 00:16:39:16 And then that moves slowly 00:16:39:17 00:16:41:11 across the state and an hour later 00:16:41:12 00:16:43:11 in West Texas, 00:16:43:12 00:16:44:08 that starts happening. 00:16:44:09 00:16:47:01 So we never typically 00:16:47:02 00:16:47:22 overload the grid. 00:16:47:23 00:16:48:24 And as she was saying, we have all 00:16:49:00 00:16:50:19 these different sources that feed 00:16:50:20 00:16:52:17 into it. And most states have to 00:16:52:18 00:16:54:13 depend on each other to 00:16:54:14 00:16:57:03 bring in more wind or more 00:16:57:04 00:16:58:05 hydro or things like that. 00:16:58:06 00:17:00:06 So we just we're kind of set 00:17:00:07 00:17:02:02 up in a perfect way that we never 00:17:02:03 00:17:03:23 had to connect where 00:17:03:24 00:17:05:08 other states eventually felt like 00:17:05:09 00:17:06:19 they had to connect to these bigger 00:17:06:20 00:17:07:04 grids. 00:17:07:05 00:17:08:09 Yeah, because staying within state 00:17:08:10 00:17:09:22 lines helped the power companies. 00:17:09:23 00:17:11:04 Right. They got to avoid federal 00:17:11:05 00:17:12:02 oversight. 00:17:12:03 00:17:13:11 But now a lot of people are saying, 00:17:13:12 00:17:15:12 hey, this is maybe not worth it. 00:17:15:13 00:17:17:03 Which is why when we started talking 00:17:17:04 00:17:18:15 about this project, I said I wanted 00:17:18:16 00:17:20:13 to work on this part because 00:17:20:14 00:17:22:04 is the question I wanted to answer 00:17:22:05 00:17:24:01 personally, you know, why are 00:17:24:02 00:17:24:22 we on our own grid? 00:17:24:23 00:17:26:18 It didn't make sense to me that week 00:17:26:19 00:17:28:14 when I was in hoodies, wrapped in 00:17:28:15 00:17:30:22 blankets, running out of food. 00:17:30:23 00:17:32:18 I looked around the country and not 00:17:32:19 00:17:34:14 every other state was dealing with 00:17:34:15 00:17:36:16 a storm as bad as we did. 00:17:36:17 00:17:38:03 We could have gotten electricity 00:17:38:04 00:17:40:02 from places more north from us 00:17:40:03 00:17:41:19 where the storm didn't hit as hard. 00:17:41:20 00:17:43:01 And if we could have just turned on 00:17:43:02 00:17:44:20 the lights and turned on the heat, 00:17:44:21 00:17:46:17 so much of the bad stuff 00:17:46:18 00:17:47:19 that happened that week could have 00:17:47:20 00:17:48:20 been avoided. 00:17:54:08 00:17:55:07 Claire, thank you so much. 00:17:55:08 00:17:56:08 You're welcome, Mose. 00:18:10:02 00:18:11:24 So Claire just told us how 00:18:12:00 00:18:13:24 smaller electric systems linked 00:18:14:00 00:18:15:21 together in the first half of 00:18:15:22 00:18:17:19 the 20th century, the idea 00:18:17:20 00:18:19:20 was to make electric service more 00:18:19:21 00:18:21:20 reliable. At some point, its 00:18:21:21 00:18:23:17 smaller energy grid decided it 00:18:23:18 00:18:25:25 needed to join up to ensure 00:18:25:26 00:18:27:11 a steady supply of power to its 00:18:27:12 00:18:28:16 customers. 00:18:28:17 00:18:30:14 Texas is the one state 00:18:30:15 00:18:32:07 that did not. 00:18:32:08 00:18:34:07 But in 1965, 00:18:34:08 00:18:36:04 something happened that did force 00:18:36:05 00:18:37:14 the state to focus more on 00:18:37:15 00:18:38:19 reliability. 00:18:38:20 00:18:40:12 It was a huge blackout. 00:18:40:13 00:18:42:10 But it didn't happen 00:18:42:11 00:18:44:09 in Texas. It happened in 00:18:44:10 00:18:45:21 the Northeast. 00:18:45:22 00:18:47:24 Now I'm going to play you 00:18:47:25 00:18:49:09 the sound of that blackout. 00:18:53:04 00:18:54:15 This is Everyone's Gone to the Moon 00:18:54:16 00:18:55:16 by Jonathan King. 00:18:55:17 00:18:58:12 It was a big hit in 1965. 00:18:58:13 00:19:00:18 Streets full of people 00:19:02:17 00:19:05:05 all alone. 00:19:05:06 00:19:07:02 On November 9th of that year, 00:19:07:03 00:19:08:24 it was playing on the radio station 00:19:08:25 00:19:11:17 WABC in New York City 00:19:11:18 00:19:12:17 when this blackout. 00:19:16:24 00:19:19:19 Here's the tape of that broadcast. 00:19:19:20 00:19:20:20 Everyone's gone to the moon. 00:19:30:17 00:19:32:14 This tape is going to teach us 00:19:32:15 00:19:34:15 about blackouts, because 00:19:34:16 00:19:36:08 a lot of people don't know this, but 00:19:36:09 00:19:38:10 the electric grid has 00:19:38:11 00:19:39:10 a beat. 00:19:39:11 00:19:41:17 It's 60 hertz or 60 00:19:41:18 00:19:43:12 cycles per second. 00:19:43:13 00:19:45:09 It's the frequency that 00:19:45:10 00:19:47:11 electricity runs over transmission 00:19:47:12 00:19:49:16 lines. Almost everything 00:19:49:17 00:19:51:12 electrical in your house is built to 00:19:51:13 00:19:54:01 run on 60 hertz, your toaster, 00:19:54:02 00:19:55:03 your TV. 00:19:55:04 00:19:57:02 And at this radio station in 00:19:57:03 00:19:59:01 New York, the turntables 00:19:59:02 00:20:01:07 were synched to that frequency. 00:20:01:08 00:20:03:07 So when the beat starts 00:20:03:08 00:20:05:03 to slow on the grid, 00:20:05:04 00:20:06:17 the deejay starts to notice in the 00:20:06:18 00:20:07:17 music. 00:20:08:18 00:20:09:18 Hold it! Hold it! You're going too 00:20:09:24 00:20:11:00 slow fella. 00:20:11:01 00:20:12:00 Pick up a speed. 00:20:14:15 00:20:16:00 He doesn't know this yet, but 00:20:16:01 00:20:18:04 something has gone very wrong 00:20:18:05 00:20:19:21 on the power grid around Niagara 00:20:19:22 00:20:20:17 Falls. 00:20:20:18 00:20:22:17 That's caused a chain reaction 00:20:22:18 00:20:24:13 that resulted in not enough power 00:20:24:14 00:20:25:22 getting to New York City. 00:20:25:23 00:20:27:13 The beat is dropping. 00:20:27:14 00:20:29:13 You can actually use this tape 00:20:29:14 00:20:31:09 to figure out when electricity 00:20:31:10 00:20:32:25 is falling off the system. 00:20:33:00 00:20:34:02 Everyone's gone to the moon. 00:20:34:03 00:20:35:02 Does that sound particularly slow to you? 00:20:40:09 00:20:41:09 Everyone's gone... 00:20:43:24 00:20:44:06 Gonna become a bass. 00:20:44:07 00:20:45:06 ...to the moon. 00:20:47:12 00:20:48:25 Around 30 million people on the East 00:20:48:26 00:20:50:01 Coast lost power. 00:20:50:02 00:20:52:03 This was the worst blackout in U.S. 00:20:52:04 00:20:53:16 history up to that point. 00:20:53:17 00:20:54:22 Everything sounds like it's running 00:20:54:23 00:20:56:02 in slow motion here, I don't know 00:20:56:03 00:20:57:03 what's going on. 00:20:58:14 00:20:59:14 It is too. 00:20:59:24 00:21:01:10 The lights are dimming in the studio. 00:21:01:11 00:21:02:20 You wouldn't believe what's going on 00:21:02:21 00:21:03:20 in the studio, folks. The 00:21:04:21 00:21:05:21 lights are getting dim. 00:21:06:20 00:21:08:12 The electricity is slowing down. 00:21:08:13 00:21:09:13 I didn't know that could happen. 00:21:13:09 00:21:14:22 When the grid gets out of balance 00:21:14:23 00:21:16:21 like that, it can fry 00:21:16:22 00:21:18:16 the entire system, like literally 00:21:18:17 00:21:20:08 break the grid. 00:21:20:09 00:21:22:21 So to save the system, 00:21:22:22 00:21:25:07 grid operators cut power. 00:21:25:08 00:21:27:06 The idea is it's better to 00:21:27:07 00:21:29:06 intentionally go dark 00:21:29:07 00:21:31:14 than to let the system crash. 00:21:34:15 00:21:36:22 On the East Coast in 1965, 00:21:36:23 00:21:38:24 the power was back up the next day 00:21:39:00 00:21:41:08 and soon big utility companies 00:21:41:09 00:21:43:09 started creating what they called 00:21:43:10 00:21:45:14 "reliability councils" across 00:21:45:15 00:21:47:17 the United States to protect 00:21:47:18 00:21:50:05 against grid failures like this. 00:21:50:06 00:21:52:09 Texas, still an island — 00:21:52:10 00:21:53:25 electrically disconnected from the 00:21:54:00 00:21:55:21 rest of the states — got its 00:21:55:22 00:21:56:18 own. 00:21:56:19 00:21:58:21 In 1970, the Electric 00:21:58:22 00:22:00:21 Reliability Council of Texas, 00:22:00:22 00:22:02:20 ERCOT, for short, was 00:22:02:21 00:22:03:16 born. 00:22:03:17 00:22:05:22 And simply put, its job 00:22:05:23 00:22:07:20 was to keep that balance 00:22:07:21 00:22:09:16 of electricity stable, to keep that 00:22:09:17 00:22:12:02 beat, that 60 hertz 00:22:12:03 00:22:13:02 constant. 00:22:20:00 00:22:21:25 At first ERCOT was just composed 00:22:21:26 00:22:23:23 of two people — volunteers at 00:22:23:24 00:22:25:18 that — but over time 00:22:25:19 00:22:27:15 it grew, becoming what some would 00:22:27:16 00:22:29:14 call the traffic cop of 00:22:29:15 00:22:31:06 the power grid in Texas. 00:22:31:07 00:22:33:08 And by 1975, 00:22:33:09 00:22:35:05 the state had also established 00:22:35:06 00:22:36:16 the Public Utility Commission of 00:22:36:17 00:22:39:12 Texas to set electric rates. 00:22:39:13 00:22:41:11 I'm telling you all this because 00:22:41:12 00:22:43:03 we just heard about how Texas had 00:22:43:04 00:22:44:23 not enacted state rules for its 00:22:44:24 00:22:46:00 energy system. 00:22:46:01 00:22:47:23 But by the 70s, that 00:22:47:24 00:22:48:19 was different. 00:22:48:20 00:22:50:14 The creation of these two groups 00:22:50:15 00:22:53:03 really ushered in an era 00:22:53:04 00:22:55:02 when Texas was a lot 00:22:55:03 00:22:56:23 like other parts of the country. 00:22:56:24 00:22:59:09 That's to say it had a regulated 00:22:59:10 00:23:01:02 electricity system. 00:23:01:03 00:23:02:23 So what does that mean 00:23:02:24 00:23:04:19 and what did it look like in Texas? 00:23:04:20 00:23:06:07 What can it tell us about what we 00:23:06:08 00:23:07:15 have now? 00:23:07:16 00:23:08:24 Joining me to help answer those 00:23:09:00 00:23:11:02 questions is a man who actually grew 00:23:11:03 00:23:13:00 up in that environment, 00:23:13:01 00:23:14:01 KUT's Jimmy Maas. 00:23:14:05 00:23:16:07 Yes, it was a strange time. 00:23:16:08 00:23:18:04 Luckily, I was pretty 00:23:18:05 00:23:19:19 much ignorant to a lot of it as a 00:23:19:20 00:23:20:20 child. But —. 00:23:20:21 00:23:21:19 So you weren't paying the bills? 00:23:21:20 00:23:23:10 I was not paying the bills then. 00:23:23:11 00:23:25:07 But, you know, I think by 00:23:25:08 00:23:27:04 and large, most people saw their 00:23:27:05 00:23:29:03 electric company as these, 00:23:29:04 00:23:31:04 you know, whomever 00:23:31:05 00:23:32:16 they were paying the check to, 00:23:32:17 00:23:35:05 whether it was a municipal utility, 00:23:35:06 00:23:37:05 co-op or an 00:23:37:06 00:23:38:24 actual company, they saw them as 00:23:39:00 00:23:41:09 sort of benevolent entities 00:23:41:10 00:23:43:08 that provided this great technology 00:23:43:09 00:23:45:04 that just shortly before all of our 00:23:45:05 00:23:47:09 lives was not available to everyone. 00:23:47:10 00:23:49:13 And this is sort of a golden 00:23:49:14 00:23:51:00 era for the electric company. 00:23:51:01 00:23:52:14 They can almost do no wrong. 00:23:52:15 00:23:55:06 They always produce these glowing 00:23:55:07 00:23:57:04 jingles that they would play 00:23:57:05 00:23:58:09 — no matter where you lived, there's 00:23:58:10 00:23:59:25 probably something that you heard 00:24:00:00 00:24:01:09 that sounded similar to this. 00:24:01:10 00:24:03:21 When you flip that switch at 00:24:03:22 00:24:05:14 any hour, what comes on is 00:24:07:08 00:24:08:16 people power. 00:24:08:17 00:24:10:19 People working for you just 00:24:10:20 00:24:12:03 to see that you live better, 00:24:13:17 00:24:15:05 electrically... 00:24:15:06 00:24:17:06 You know, and who doesn't 00:24:17:07 00:24:19:07 feel good about the electric company 00:24:19:08 00:24:21:07 when they're doing this? 00:24:21:08 00:24:22:24 I mean, this is great stuff. 00:24:22:25 00:24:24:01 You know? 00:24:24:02 00:24:26:02 I feel that kind of postwar 00:24:26:03 00:24:27:13 American optimism. 00:24:27:14 00:24:29:08 We're a country that's come out of 00:24:29:09 00:24:31:10 World War Two with great wealth 00:24:31:11 00:24:33:04 and a sense, as you said, that 00:24:33:05 00:24:34:13 there's a kind of benevolence 00:24:34:14 00:24:36:14 perhaps, and in government and even 00:24:36:15 00:24:38:18 in industry, in these companies 00:24:38:19 00:24:39:25 that are bringing us the service 00:24:39:26 00:24:41:09 that, you know, our parents maybe 00:24:41:10 00:24:42:15 didn't have access to. 00:24:42:16 00:24:45:09 It's working every minute, 00:24:45:10 00:24:46:17 every hour. 00:24:46:18 00:24:48:22 Any time, all the time. 00:24:48:23 00:24:50:10 People power is the power with 00:24:50:11 00:24:51:10 personality. 00:24:51:14 00:24:52:14 That helps you 00:24:53:09 00:24:54:09 live better 00:24:55:10 00:24:56:17 electrically. 00:24:56:18 00:24:57:21 You live better, Texas, electrically. 00:24:59:18 00:25:01:15 Let's talk a little bit 00:25:01:16 00:25:03:21 about how this actually looked 00:25:03:22 00:25:06:01 on the ground, like in Texas. 00:25:06:02 00:25:07:12 I almost hesitate to use these 00:25:07:13 00:25:08:07 terms. And, you know, I've 00:25:08:08 00:25:09:11 interviewed enough people that tell 00:25:09:12 00:25:10:18 me that the terms are meaningless, 00:25:10:19 00:25:12:06 that that's something that we might 00:25:12:07 00:25:13:09 have to get into a little bit more. 00:25:13:10 00:25:15:08 But we're talking about 00:25:15:09 00:25:17:05 a regulated system, 00:25:17:06 00:25:19:06 a regulated utility system. 00:25:19:07 00:25:21:02 You mentioned publicly-owned 00:25:21:03 00:25:22:21 utilities and privately-owned 00:25:22:22 00:25:23:18 utilities. 00:25:23:19 00:25:25:15 But what both of those had in 00:25:25:16 00:25:26:23 common is that they were essentially 00:25:26:24 00:25:28:01 a monopoly, right? 00:25:28:02 00:25:29:20 Right. These are big companies that 00:25:29:21 00:25:31:06 own the power plants. 00:25:31:07 00:25:32:20 They own the transmission, in many 00:25:32:21 00:25:35:00 cases, and they sell the electricity 00:25:35:01 00:25:35:23 to consumers. 00:25:35:24 00:25:37:22 All of that was taken care of by one 00:25:37:23 00:25:40:06 sort of entity that you knew of 00:25:40:07 00:25:42:05 as the power company or 00:25:42:06 00:25:44:09 electric and light or power 00:25:44:10 00:25:46:12 and light, you know, whatever. 00:25:46:13 00:25:47:13 By Houston Lighting and Power. 00:25:48:16 00:25:50:02 The light company. 00:25:50:03 00:25:52:03 They have a monopoly over 00:25:52:04 00:25:53:01 the region. Right. 00:25:53:02 00:25:54:10 You know, you can't you can't go to 00:25:54:11 00:25:55:12 a different electric company. 00:25:55:13 00:25:56:07 We're going to get to this. 00:25:56:08 00:25:57:11 But in Texas, it's still like this 00:25:57:12 00:25:58:12 in a lot of places, too. 00:25:58:13 00:26:00:09 And you paid what they asked 00:26:00:10 00:26:01:04 you to pay. 00:26:01:05 00:26:02:15 That was it. This is your only 00:26:02:16 00:26:03:06 option. 00:26:03:07 00:26:04:19 This is the regulated part, or at 00:26:04:20 00:26:06:19 least a big part of the regulated 00:26:06:20 00:26:08:16 part. You paid what they asked you 00:26:08:17 00:26:10:14 to pay, but they had to go 00:26:10:15 00:26:11:25 to the government to get approval 00:26:12:00 00:26:13:00 for that. 00:26:14:23 00:26:16:12 Essentially, it was a deal that was 00:26:16:13 00:26:18:08 made between regulators 00:26:18:09 00:26:20:05 at the state level and and these 00:26:20:06 00:26:22:04 companies, you have access to this 00:26:22:05 00:26:23:13 pool of customers that are going to 00:26:23:14 00:26:24:09 be yours. 00:26:24:10 00:26:26:06 But the government, the public 00:26:26:07 00:26:27:22 is going to give oversight to make 00:26:27:23 00:26:29:08 sure essentially that the people 00:26:29:09 00:26:30:13 aren't getting too much of a raw 00:26:30:14 00:26:31:06 deal. 00:26:31:07 00:26:33:04 And in exchange, they had 00:26:33:05 00:26:35:08 a steady stream of customers. 00:26:35:09 00:26:36:13 They could just call themselves the 00:26:36:14 00:26:38:14 power company and then that be it. 00:26:43:14 00:26:46:01 In an age of such distrust, 00:26:46:02 00:26:48:11 where where we're at now in history, 00:26:48:12 00:26:50:12 it's hard to think about 00:26:50:13 00:26:52:11 a time when arrangements like 00:26:52:12 00:26:54:08 this could be taken for granted 00:26:54:09 00:26:56:06 and generally viewed as this 00:26:56:07 00:26:57:12 just kind of a positive. 00:26:57:13 00:26:59:00 Yeah, it is. 00:26:59:01 00:27:00:23 It's very strange now, especially 00:27:00:24 00:27:02:21 when we have choices for a lot of 00:27:02:22 00:27:04:20 options, whether, you know, 00:27:04:21 00:27:05:24 no matter what our utility is, 00:27:05:25 00:27:07:21 whether it's phone or or 00:27:07:22 00:27:09:14 Wi-Fi or whatever. 00:27:09:15 00:27:11:14 The idea that just we just, without 00:27:11:15 00:27:13:10 question, accepted 00:27:13:11 00:27:15:08 a bill or accepted a hook 00:27:15:09 00:27:17:13 up really to our home and 00:27:17:14 00:27:19:10 expected it, and then we didn't 00:27:19:11 00:27:21:02 question it in any way. 00:27:21:03 00:27:22:03 OK, so what happened? 00:27:23:05 00:27:25:14 Well, things changed culturally 00:27:25:15 00:27:27:13 in America in the 60s 00:27:27:14 00:27:29:17 and 70s. We had some major 00:27:29:18 00:27:30:02 shifts. 00:27:30:03 00:27:31:10 From Dallas, Texas. 00:27:31:11 00:27:33:17 The Flash apparently official. 00:27:33:18 00:27:35:18 President Kennedy died 00:27:35:19 00:27:37:07 at 1:00 p.m. 00:27:37:08 00:27:39:00 Central Standard Time. 00:27:39:01 00:27:40:13 For it seems now more certain than 00:27:40:14 00:27:42:16 ever that the bloody experience 00:27:42:17 00:27:44:12 of Vietnam is to end in 00:27:44:13 00:27:45:13 a stalemate. 00:27:45:14 00:27:46:13 Therefore, 00:27:47:14 00:27:49:05 I shall resign the presidency 00:27:49:06 00:27:50:14 effective at noon tomorrow. 00:27:51:17 00:27:53:17 People began to lose faith 00:27:53:18 00:27:54:17 in government. 00:27:56:12 00:27:58:08 On the energy side, we had two 00:27:58:09 00:28:00:06 major events that sort of had 00:28:00:07 00:28:02:03 us all question 00:28:02:04 00:28:04:00 this utility that for so long 00:28:04:01 00:28:06:02 we just we were singing songs to, 00:28:06:03 00:28:06:21 you know, 00:28:06:22 00:28:08:09 Here is NBC News Washington 00:28:08:10 00:28:09:23 correspondent Robert Abernathy. 00:28:11:03 00:28:12:08 Good evening. 00:28:12:09 00:28:13:21 The northeastern United States 00:28:13:22 00:28:15:15 tonight suffered its worst electric 00:28:15:16 00:28:17:04 power failure in history. 00:28:17:05 00:28:18:08 We had this blackout on the East 00:28:18:09 00:28:20:08 Coast in 1965, 00:28:20:09 00:28:22:11 which you talked about earlier. 00:28:22:12 00:28:24:06 And then we had the oil crisis 00:28:24:07 00:28:25:11 in the early 70s. 00:28:25:12 00:28:27:04 And when several circuits break at 00:28:27:05 00:28:29:04 the same time, we have 00:28:29:05 00:28:30:09 an energy crisis. 00:28:32:09 00:28:34:10 I spoke with historian 00:28:34:11 00:28:36:05 Sarah Stanford-Mclntyre, she's an 00:28:36:06 00:28:37:02 assistant professor at the 00:28:37:03 00:28:39:05 University of Colorado, Boulder. 00:28:39:06 00:28:40:12 She got her undergrad at University 00:28:40:13 00:28:41:21 of Texas, by the way, 00:28:41:22 00:28:44:02 The Arab members of OPEC embargo 00:28:44:03 00:28:45:13 oil to the United States. 00:28:45:14 00:28:47:09 And by this point, 00:28:47:10 00:28:49:05 oil production has shifted 00:28:49:06 00:28:50:09 out of the United States into the 00:28:50:10 00:28:51:04 Middle East. 00:28:51:05 00:28:53:02 And so these nations 00:28:53:03 00:28:54:23 know that they have a political 00:28:54:24 00:28:57:04 weapon here, which is oil supply. 00:28:57:05 00:28:59:10 This had sort of a huge public 00:28:59:11 00:29:00:25 impact, not only in policy, but then 00:29:01:00 00:29:03:11 also sort of political consciousness 00:29:03:12 00:29:05:19 and sort of public understanding 00:29:05:20 00:29:06:21 of sort of America's place in the 00:29:06:22 00:29:07:07 world. 00:29:07:08 00:29:09:11 And see what happens after this 00:29:09:12 00:29:11:21 is the people of Texas 00:29:11:22 00:29:13:17 in the oil industry, they sit up in 00:29:13:18 00:29:15:09 their seats and they they start 00:29:15:10 00:29:17:06 seeing themselves as part of the 00:29:17:07 00:29:19:05 solution in this whole 00:29:19:06 00:29:21:08 puzzle that is energizing 00:29:21:09 00:29:23:07 America, whether it's in our cars 00:29:23:08 00:29:25:17 or in electric transmission. 00:29:25:18 00:29:26:17 Yeah, because she's talking about 00:29:26:18 00:29:28:18 oil. But but this really went beyond 00:29:28:19 00:29:30:14 that. This was a question 00:29:30:15 00:29:32:00 of energy writ large. 00:29:32:01 00:29:34:06 And in the 70s, you had 00:29:34:07 00:29:35:03 you know, you have you have a 00:29:35:04 00:29:36:13 President Jimmy Carter, coming out 00:29:36:14 00:29:38:10 and literally asking people to 00:29:38:11 00:29:40:13 conserve. You know, if if 00:29:40:14 00:29:41:11 you're cold in your house, put on 00:29:41:12 00:29:42:14 your sweater. Don't don't turn your 00:29:42:15 00:29:43:19 thermostat up. 00:29:43:20 00:29:45:14 Many of these proposals will be 00:29:45:15 00:29:47:08 unpopular. 00:29:47:09 00:29:48:25 Some will cause you to put up with 00:29:49:00 00:29:50:03 inconveniences and to make 00:29:50:04 00:29:51:16 sacrifices. 00:29:51:17 00:29:52:25 The most important thing about these 00:29:52:26 00:29:55:18 proposals is that the alternative 00:29:55:19 00:29:58:10 may be a national catastrophe. 00:29:58:11 00:29:59:14 And you know what? 00:29:59:15 00:30:00:18 He was right. 00:30:00:19 00:30:02:24 Those proposals were very 00:30:02:25 00:30:03:23 unpopular. 00:30:03:24 00:30:06:02 And a lot of people began to wonder 00:30:06:03 00:30:08:00 whether we had it quite as good as 00:30:08:01 00:30:08:21 we thought we had. 00:30:08:22 00:30:10:25 Our decision about energy will test 00:30:10:26 00:30:13:05 the character of the American people 00:30:13:06 00:30:14:19 and the ability of the president and 00:30:14:20 00:30:17:03 the Congress to govern this nation. 00:30:17:04 00:30:18:16 So in the late 70s, the Carter 00:30:18:17 00:30:20:18 administration is facing 00:30:20:19 00:30:22:09 sort of the fallout of all of these 00:30:22:10 00:30:23:09 crises. 00:30:23:10 00:30:25:07 And it's on his administration to 00:30:25:08 00:30:27:04 come up with a solution. 00:30:27:05 00:30:29:05 And among those solutions that they 00:30:29:06 00:30:30:24 managed to find was the Public 00:30:31:00 00:30:33:02 Utility Regulatory Policy Act, 00:30:33:03 00:30:35:13 known in the biz as the PURPA. 00:30:35:14 00:30:37:23 And what this did was start 00:30:37:24 00:30:39:09 to ratchet up the tone for 00:30:39:10 00:30:42:03 deregulation in the energy industry. 00:30:42:04 00:30:43:25 Some of it opened up the energy 00:30:43:26 00:30:45:15 industry and to other sources of 00:30:45:16 00:30:46:10 energy. 00:30:46:11 00:30:47:18 It stands to reason that we would 00:30:47:19 00:30:49:18 not have developed solar, wind and 00:30:49:19 00:30:51:08 other renewable sources of energy 00:30:51:09 00:30:53:06 within Texas without the 00:30:53:07 00:30:55:08 act being passed in the late 70s. 00:30:55:09 00:30:57:10 So the deregulatory push 00:30:57:11 00:31:00:03 went hand in hand with 00:31:00:04 00:31:02:06 a push for energy alternatives, 00:31:02:07 00:31:03:04 essentially renewables. 00:31:03:05 00:31:05:05 Over time, it laid the foundation 00:31:05:06 00:31:07:23 for what Texas is now 00:31:07:24 00:31:09:23 the biggest producer of wind energy 00:31:09:24 00:31:10:23 in the United States. 00:31:16:21 00:31:18:21 So then with PURPA, you 00:31:18:22 00:31:20:11 have this sort of, 'hey, 00:31:20:12 00:31:22:12 deregulation is a good idea.' 00:31:22:13 00:31:24:09 It sort of sets this tone where 00:31:24:10 00:31:26:08 both parties are just eager to find 00:31:26:09 00:31:27:22 things that they can deregulate. 00:31:27:23 00:31:29:11 Yeah, and we're talking about like 00:31:29:12 00:31:30:13 telecom. 00:31:30:14 00:31:32:06 We're talking about airlines? 00:31:32:07 00:31:33:23 Airlines got deregulated. 00:31:33:24 00:31:35:17 Many industry experts say that 00:31:35:18 00:31:38:00 actually saved the airline industry 00:31:38:01 00:31:39:22 before they were regulated on 00:31:39:23 00:31:41:22 what cities they had to fly 00:31:41:23 00:31:43:04 to. 00:31:43:05 00:31:44:20 What came out of deregulation of the 00:31:44:21 00:31:46:16 airline industry is 00:31:46:17 00:31:48:13 what you commonly see today, the 00:31:48:14 00:31:50:21 hub and spoke system which allowed 00:31:50:22 00:31:52:18 airlines to more efficiently use 00:31:52:19 00:31:53:19 aircraft. 00:31:54:21 00:31:56:03 So you have a list? 00:31:56:04 00:31:57:03 Yeah, there's uh — 00:31:58:19 00:31:59:20 transport... 00:31:59:21 00:32:00:22 These are all things that have been 00:32:00:23 00:32:02:03 that have been deregulated. 00:32:02:04 00:32:05:00 That were deregulated since Nixon. 00:32:05:01 00:32:07:19 Transportation, agriculture, 00:32:07:20 00:32:08:20 finance... 00:32:08:21 00:32:10:04 Awesome, yeah, that helped that a 00:32:10:05 00:32:11:04 lot, 00:32:11:20 00:32:13:03 Really did a bang up job on that one 00:32:13:04 00:32:14:08 — that worked out. And 00:32:15:09 00:32:17:10 telecommunications, natural 00:32:17:11 00:32:18:23 gas, oil. 00:32:18:24 00:32:20:20 I mean, there are literally one, 00:32:20:21 00:32:23:02 two, three, four, five, 00:32:23:03 00:32:24:23 six, seven, eight, nine, 00:32:24:24 00:32:27:02 10, 11, 12, 13, 00:32:27:03 00:32:29:14 14 regulatory 00:32:29:15 00:32:30:15 acts from 1976 to 00:32:32:11 00:32:34:17 1999, all trying to 00:32:34:18 00:32:36:15 undo something that has 00:32:36:16 00:32:37:24 been in place for decades. 00:32:42:07 00:32:43:17 And again, I just want to make it 00:32:43:18 00:32:45:10 clear, we're not saying that there's 00:32:45:11 00:32:47:06 no regulation involved in 00:32:47:07 00:32:48:23 any of this stuff anymore, but what 00:32:48:24 00:32:50:18 we're talking about is a specific 00:32:50:19 00:32:52:14 market arrangement 00:32:52:15 00:32:54:17 where the government decides it's 00:32:54:18 00:32:56:18 going to step back and that 00:32:56:19 00:32:58:16 free market competition is going 00:32:58:17 00:33:00:11 to begin to fill the void 00:33:00:12 00:33:02:11 left by 00:33:02:12 00:33:03:17 the government's absence. 00:33:03:18 00:33:05:16 Essentially, the attitude was 00:33:05:17 00:33:07:15 and the philosophy was 00:33:07:16 00:33:10:01 and many economists were saying, 00:33:10:02 00:33:11:11 let's let the market decide. 00:33:15:20 00:33:17:18 Through a new top 00:33:17:19 00:33:18:19 level review process, we 00:33:20:09 00:33:22:19 will do a better job of reducing 00:33:22:20 00:33:24:15 government regulation that 00:33:24:16 00:33:26:15 drives up costs and drives 00:33:26:16 00:33:27:11 up prices. 00:33:27:12 00:33:28:21 That was President Jimmy Carter 00:33:28:22 00:33:30:17 again. And that deregulatory 00:33:30:18 00:33:32:20 attitude continued under 00:33:32:21 00:33:34:13 the Ronald Reagan administration. 00:33:34:14 00:33:36:13 That brings me back to regulation, 00:33:36:14 00:33:38:14 in this case, regulation of natural 00:33:38:15 00:33:39:14 gas. 00:33:39:15 00:33:41:08 I'm convinced and I believe that the 00:33:41:09 00:33:43:04 evidence backs me up, that 00:33:43:05 00:33:45:04 just as deregulation of oil has 00:33:45:05 00:33:46:07 led to a better deal for the 00:33:46:08 00:33:48:08 American consumer, a freer 00:33:48:09 00:33:50:02 market and natural gas will have the 00:33:50:03 00:33:51:17 same beneficial effect for you. 00:33:51:18 00:33:53:01 And then that continues all the way 00:33:53:02 00:33:55:07 up into the Clinton years 00:33:55:08 00:33:57:09 when Sarah describes 00:33:57:10 00:33:59:06 a key change to a law 00:33:59:07 00:34:00:02 in the Clinton era. 00:34:00:03 00:34:01:13 There is this kind of new piece of 00:34:01:14 00:34:02:12 legislation out of the Clinton 00:34:02:13 00:34:04:09 administration which 00:34:04:10 00:34:06:07 revised what this organization 00:34:06:08 00:34:07:21 called the Federal Energy Regulatory 00:34:07:22 00:34:10:10 Commission, how they're supposed to 00:34:10:11 00:34:11:11 regulate industry. 00:34:11:12 00:34:13:05 And these are sort of famously the 00:34:13:06 00:34:15:01 laws that in these 00:34:15:02 00:34:16:21 regional monopolies ending the 00:34:16:22 00:34:18:09 vertical and horizontal integration 00:34:18:10 00:34:20:08 that sort of dictated the 00:34:20:09 00:34:21:20 sort of old system. 00:34:21:21 00:34:23:01 So there's one thing that I'm still 00:34:23:02 00:34:23:24 confused about. 00:34:24:00 00:34:26:01 We've established the kind of broad 00:34:26:02 00:34:27:09 historical sweep of this whole 00:34:27:10 00:34:29:17 thing. And we know, you know, 00:34:29:18 00:34:31:10 in the 70s, there was there was a 00:34:31:11 00:34:33:17 shift in people's mentality 00:34:33:18 00:34:35:02 about government, their attitude 00:34:35:03 00:34:36:10 towards government. Perhaps, you 00:34:36:11 00:34:37:16 know, there's a big recession. 00:34:37:17 00:34:39:18 And people started thinking that 00:34:39:19 00:34:41:14 perhaps the future was not going 00:34:41:15 00:34:43:12 to be as bright as the past. 00:34:43:13 00:34:45:08 And that was harnessed in 00:34:45:09 00:34:47:00 part by a political push to 00:34:47:01 00:34:48:07 deregulate. 00:34:48:08 00:34:50:06 But who really was 00:34:50:07 00:34:51:14 asking for that? 00:34:51:15 00:34:53:05 I mean, were people coming up and 00:34:53:06 00:34:55:05 clamoring and saying, hey, we got to 00:34:55:06 00:34:56:06 deregulate telecom? 00:34:56:07 00:34:58:22 We you know, I'm sick of regulated 00:34:58:23 00:35:00:08 airlines. 00:35:00:09 00:35:02:23 I believe in the end, no customers 00:35:02:24 00:35:04:19 were asked whether or not they 00:35:04:20 00:35:06:23 wanted any of this to occur. 00:35:06:24 00:35:09:03 I think in the end 00:35:09:04 00:35:10:16 there was one motivator: 00:35:10:17 00:35:12:21 I think there was a lot of profit 00:35:12:22 00:35:14:23 potential there for for energy 00:35:14:24 00:35:16:23 companies and for folks who wanted 00:35:16:24 00:35:18:16 to invest in energy companies. 00:35:18:17 00:35:20:09 And it wasn't so much concern 00:35:20:10 00:35:22:24 necessarily for consumers, 00:35:23:00 00:35:24:21 but it had a lot to do with 00:35:24:22 00:35:26:18 this realization 00:35:26:19 00:35:28:01 that if, you know, if there isn't 00:35:28:02 00:35:29:15 sort of a government backed monopoly 00:35:29:16 00:35:31:16 and there's there's all kinds of 00:35:31:17 00:35:33:07 of potential for investment. 00:35:33:08 00:35:34:04 So we're talking about the whole 00:35:34:05 00:35:36:02 country. And in a certain 00:35:36:03 00:35:37:23 way, Texas is in the same boat. 00:35:37:24 00:35:39:02 Right. We're still dealing with 00:35:39:03 00:35:40:22 these big power 00:35:40:23 00:35:41:25 company monopolies. 00:35:41:26 00:35:43:04 Yeah, some of them are publicly 00:35:43:05 00:35:45:03 owned, like, for example, in Austin, 00:35:45:04 00:35:46:05 in San Antonio. 00:35:46:06 00:35:48:17 Some of them are privately held or 00:35:48:18 00:35:49:13 they're investor-owned. 00:35:49:14 00:35:51:04 Right. What they have in common is 00:35:51:05 00:35:53:02 that there are these big companies. 00:35:53:03 00:35:55:02 They own power plants, mostly coal 00:35:55:03 00:35:57:05 power plants, and they sell 00:35:57:06 00:35:58:10 the electricity they make in those 00:35:58:11 00:36:00:17 power plants to the customers 00:36:00:18 00:36:02:05 who have no choice but to buy from 00:36:02:06 00:36:02:12 them. 00:36:02:13 00:36:04:02 That power comes over the lines that 00:36:04:03 00:36:06:02 they own and they set 00:36:06:03 00:36:07:10 the market rate. 00:36:07:11 00:36:09:04 Under the regulation of the state. 00:36:09:05 00:36:11:09 Right. Until the 90s, when finally 00:36:11:10 00:36:13:10 this deregulation wave 00:36:13:11 00:36:15:12 comes to the Texas energy 00:36:15:13 00:36:16:07 market. 00:36:16:08 00:36:18:05 A market that — let's remember 00:36:18:06 00:36:20:02 — is an island within 00:36:20:03 00:36:21:25 the country, the one state that 00:36:22:00 00:36:24:12 still has its very own grid, 00:36:24:13 00:36:26:08 where the process 00:36:26:09 00:36:28:04 of deregulation, the great 00:36:28:05 00:36:30:01 experiment of deregulation, 00:36:30:02 00:36:32:00 can happen to a level 00:36:32:01 00:36:34:03 unheard of anywhere else 00:36:34:04 00:36:35:04 in the United States. 00:36:36:13 00:36:37:18 Thanks, Jimmy. 00:36:37:19 00:36:38:18 Always a pleasure, Mose. 00:36:53:03 00:36:54:20 Now, the start of this segment, we 00:36:54:21 00:36:56:21 talked about the creation of 00:36:56:22 00:36:58:25 the Electric Reliability Council 00:36:58:26 00:37:00:16 of Texas — ERCOT. 00:37:00:17 00:37:02:22 How it became the traffic cop 00:37:02:23 00:37:04:19 of the Texas grid, balancing 00:37:04:20 00:37:06:23 the flow of electricity 00:37:06:24 00:37:08:04 through the state. 00:37:08:05 00:37:09:25 Now, this year, because of that 00:37:10:00 00:37:12:00 role, it was the first group 00:37:12:01 00:37:13:21 to be blamed when the blackout 00:37:13:22 00:37:15:20 hit. But amid all 00:37:15:21 00:37:18:06 that anger and frustration, 00:37:18:07 00:37:19:09 there seemed to be a lot of 00:37:19:10 00:37:21:11 confusion about what ERCOT's 00:37:21:12 00:37:23:12 real job is 00:37:23:13 00:37:25:20 and how it does that job. 00:37:25:21 00:37:27:23 Because the fact is, ERCOT's 00:37:27:24 00:37:29:25 main job is not 00:37:29:26 00:37:32:10 to keep your power running at home. 00:37:32:11 00:37:34:10 Like we said before, its main 00:37:34:11 00:37:36:12 job is just to keep the grid 00:37:36:13 00:37:38:02 balanced, to keep it all from 00:37:38:03 00:37:39:12 breaking down. 00:37:39:13 00:37:41:11 Sometimes that means disconnecting 00:37:41:12 00:37:42:20 the power at your home. 00:37:42:21 00:37:44:16 And what's more, ERCOT 00:37:44:17 00:37:46:15 doesn't own any 00:37:46:16 00:37:48:10 of the stuff that makes up the grid. 00:37:48:11 00:37:50:09 It owns no power plants, 00:37:50:10 00:37:52:08 no transmission lines, nothing 00:37:52:09 00:37:53:09 like that. 00:37:53:10 00:37:55:06 So how does it operate this 00:37:55:07 00:37:57:09 big, complicated system 00:37:57:10 00:37:59:12 without any of those tools? 00:37:59:13 00:38:01:14 Well, to explain how, I'd 00:38:01:15 00:38:03:13 like to take you there, because 00:38:03:14 00:38:04:24 ERCOT is a place. 00:38:05:00 00:38:06:15 The headquarters are in Taylor, 00:38:06:16 00:38:08:13 Texas, about a half hour drive 00:38:08:14 00:38:09:15 from Austin. 00:38:09:16 00:38:11:16 And up until this year, 00:38:11:17 00:38:13:14 they used to invite reporters there 00:38:13:15 00:38:15:10 every spring, basically 00:38:15:11 00:38:17:10 to answer the question, does 00:38:17:11 00:38:19:07 Texas have enough juice to get 00:38:19:08 00:38:20:07 through the year? 00:38:22:02 00:38:23:06 I went a few times. 00:38:23:07 00:38:25:02 There were presentations you'd 00:38:25:03 00:38:27:06 meet executives, but the highlight 00:38:27:07 00:38:29:04 of these trips was always the 00:38:29:05 00:38:31:04 visit to the control room. 00:38:31:05 00:38:32:16 It's very quiet. 00:38:32:17 00:38:34:17 This is me inside that room. 00:38:34:18 00:38:36:06 A lot of people here at desks just 00:38:36:07 00:38:37:21 surrounded by computer screens and 00:38:37:22 00:38:40:04 then up on the wall or facing a huge 00:38:40:05 00:38:41:09 screen. 00:38:41:10 00:38:42:07 It's impressive. 00:38:42:08 00:38:44:04 It looks like mission control at 00:38:44:05 00:38:45:00 NASA. 00:38:45:01 00:38:47:02 It's staffed 24 hours a day 00:38:47:03 00:38:49:05 by the people who manage all 00:38:49:06 00:38:51:06 of the electricity going on 00:38:51:07 00:38:52:06 and off the grid. 00:38:52:07 00:38:54:04 Now, remember, they need to keep 00:38:54:05 00:38:56:01 that completely balanced 00:38:56:02 00:38:58:00 or the whole thing breaks down. 00:38:58:01 00:38:58:24 You see maps of the weather 00:38:59:00 00:39:01:05 conditions where there's a generator 00:39:01:06 00:39:02:03 operating. 00:39:02:04 00:39:04:02 But managing that flow 00:39:04:03 00:39:06:09 is not nearly as simple 00:39:06:10 00:39:08:18 as directing traffic, especially 00:39:08:19 00:39:10:14 after deregulation happened. 00:39:10:15 00:39:12:18 There are maps of Texas 00:39:12:19 00:39:14:13 showing transmission lines, 00:39:14:14 00:39:16:23 different counties with the pricing 00:39:16:24 00:39:18:15 of energy in each place. 00:39:18:16 00:39:20:16 See, the truth is, ERCOT 00:39:20:17 00:39:22:24 is not a traffic cop. 00:39:23:00 00:39:25:20 It's really a big marketplace. 00:39:25:21 00:39:27:16 The way the people here manage 00:39:27:17 00:39:29:15 the flow of electricity is 00:39:29:16 00:39:31:14 by overseeing who's buying 00:39:31:15 00:39:33:04 and who's selling that electricity. 00:39:33:05 00:39:35:11 Kind of like an auctioneer 00:39:35:12 00:39:37:13 at a very quiet auction. 00:39:39:23 00:39:41:21 So say there's a private company 00:39:41:22 00:39:43:18 that owns a power plant and 00:39:43:19 00:39:45:07 wants to sell the electricity it's 00:39:45:08 00:39:47:06 making. Under Texas rules, 00:39:47:07 00:39:49:05 it cannot sell that electricity 00:39:49:06 00:39:51:01 directly to consumers. 00:39:51:02 00:39:53:00 So it's got to sell its power 00:39:53:01 00:39:54:16 to another company. 00:39:54:17 00:39:56:17 And that company doesn't own power 00:39:56:18 00:39:59:02 plants so it can sell 00:39:59:03 00:40:01:02 to people in their homes. 00:40:01:03 00:40:02:02 You with me? 00:40:02:22 00:40:05:05 ERCOT takes bids and handles 00:40:05:06 00:40:07:00 those transactions between 00:40:07:01 00:40:09:12 power generators and middlemen 00:40:09:13 00:40:11:14 that then sell to people like 00:40:11:15 00:40:13:06 you and me. 00:40:13:07 00:40:15:13 ERCOT literally holds the debt 00:40:15:14 00:40:16:22 on the transactions between 00:40:16:23 00:40:18:14 different players in the market. 00:40:18:15 00:40:20:14 And that's how it controls 00:40:20:15 00:40:22:08 the flow of electricity by 00:40:22:09 00:40:24:09 overseeing those sales. 00:40:24:10 00:40:26:05 The state doesn't set the price of 00:40:26:06 00:40:28:06 power. There is a cap on 00:40:28:07 00:40:30:07 how much generators can charge, but 00:40:30:08 00:40:32:01 most of the time the price is just 00:40:32:02 00:40:33:22 determined by how much power is 00:40:33:23 00:40:35:18 available and how many people are 00:40:35:19 00:40:36:14 buying. 00:40:36:15 00:40:38:12 Classic supply and 00:40:38:13 00:40:39:12 demand. 00:40:41:19 00:40:43:24 And in Texas, the market 00:40:44:00 00:40:45:23 also decides other things. 00:40:45:24 00:40:47:20 Things like how much you pay 00:40:47:21 00:40:49:20 for electricity at your house, 00:40:49:21 00:40:51:21 like when it's profitable for 00:40:51:22 00:40:54:13 a company to run a power plant. 00:40:54:14 00:40:56:11 How many get built and 00:40:56:12 00:40:58:10 whether to insulate them 00:40:58:11 00:40:59:10 against the cold. 00:41:02:01 00:41:04:01 It all rests on a series 00:41:04:02 00:41:06:03 of complex transactions 00:41:06:04 00:41:08:12 between electricity generators, 00:41:08:13 00:41:10:19 power traders, retail 00:41:10:20 00:41:12:17 electric providers and 00:41:12:18 00:41:14:01 consumers. 00:41:14:02 00:41:16:04 One thing triggers, another thing 00:41:16:05 00:41:18:12 triggers another thing, and it all 00:41:18:13 00:41:20:20 needs to work very smoothly 00:41:20:21 00:41:22:10 to keep the lights on. 00:41:22:11 00:41:24:08 And most of the time it does work 00:41:24:09 00:41:26:17 smoothly, except 00:41:26:18 00:41:28:01 when it doesn't. 00:41:35:00 00:41:36:09 Next time, we're going to tell the 00:41:36:10 00:41:38:05 story of this transformation, 00:41:38:06 00:41:40:09 how ERCOT went from traffic cop 00:41:40:10 00:41:42:06 to auctioneer, and how 00:41:42:07 00:41:44:17 the grid became the most competitive 00:41:44:18 00:41:47:04 market for electrons in the country. 00:41:47:05 00:41:48:12 We'll hear from the people who 00:41:48:13 00:41:50:07 hatched the plan to remake the 00:41:50:08 00:41:51:09 Texas energy grid. 00:42:06:01 00:42:07:23 The Disconnect is a production of 00:42:07:24 00:42:09:23 KUT and KUTX Studios 00:42:09:24 00:42:10:18 in Austin. 00:42:10:19 00:42:12:12 It is produced by me, Claire 00:42:12:13 00:42:14:10 McInerny, Jimmy Maas, Andrew 00:42:14:11 00:42:16:14 Weber, Nadia Hamden and Audrey 00:42:16:15 00:42:18:13 McGlinchy. Matt Largey is our 00:42:18:14 00:42:20:15 editor. Thanks to Todd Callahan 00:42:20:16 00:42:22:11 for technical support, engineering 00:42:22:12 00:42:23:22 help from Jake Perlman. 00:42:23:23 00:42:25:20 Stephanie Federico is our 00:42:25:21 00:42:26:22 digital editor. 00:42:26:23 00:42:27:23 I'm Mose Buchele.