At the beginning of
World War II, several electric utilities in Texas agreed to operate together as the Texas Interconnected System (TIS) to support the war effort. During the war, the grid was interconnected to other states and excess power generation was sent to industries on the
Gulf Coast, providing a more reliable supply of electricity for production of metal and other material needed for the war. The
deregulation of the Texas electricity market occurred in two phases: the wholesale generation market in 1995 and the rest of the sector in 1999. The 1999 deregulation was aimed at counteracting a shortage of generation capacity in the state. Since deregulation, retail providers and power generators were unregulated, although regulations on transmitters continued to control the placement of electrical lines. The legislation abolished the former system, in which power was both generated and consumed locally.
2011 winter storm power losses In early
February 2011, a major winter storm impacted Texas; freezing and extreme cold at natural gas pipelines and wells, as well as generating units (such as coal-fired power plants and wind turbines) caused power outages across Texas affecting 3.2 million customers. ERCOT and its regulator, the
Public Utility Commission of Texas, failed to adopt a mandatory standard for preparing electricity infrastructure for such occurrences (winterization), despite recommendations from the
Federal Energy Regulatory Commission and
North American Electric Reliability Corporation (NERC). Texas's failure to prepare left the state vulnerable to winter-storm blackouts, including the major disaster that occurred ten years later in February 2021.
2021 winter storm power losses During a major cold-weather event in mid-February 2021, ERCOT declared a statewide emergency, due to a 34,000 MW shortfall in generation that caused widespread
blackouts. On February 16, electricity shortages caused the price of electricity to spike to over $9,000 per
megawatt-hour (MWh), whereas the week before, the lowest price of power had been less than $30 per MWh. Some retail electricity providers were possibly facing huge losses or bankruptcy, and customers of
Griddy reported receiving absurdly high electric bills. Approximately 4 million customers in Texas were without electricity for various times during the multi-day storm. At first, rotating outages lasting from 10 to 40 minutes were imposed on millions of customers, but those outages lasted many hours for some and over 48 hours for others, while millions more were spared from any hardship. During the power loss, some Texans were forced to survive in record freezing temperatures down to . On February 16, Governor
Greg Abbott declared that ERCOT reform would be an emergency priority for the state legislature, and there would be an investigation of the power outage to determine long-term solutions. A 357-page report had been written after the 2011 power outage in Texas, which seemed to have been ignored, because too many critical generators still lacked appropriate
weatherization in 2021, especially the natural gas system. The first lawsuits against ERCOT grid mismanagement were filed on February 19, 2021. On March 8, 2021, ERCOT began releasing a weekly market notice that includes entities that have paid previously identified short-pay amounts and provides an updated estimate of the aggregate outstanding short-pay amount. On February 16, 2021, it was reported that at least 10 deaths were linked to the 2021 ERCOT grid power outages. By late March, the total number of deaths surpassed 110. A comprehensive review of news reports, death certificates, and lawsuit filings from every county in Texas led a team of journalists in Houston to set the death toll at 194, while a later review of excess deaths by journalists at BuzzFeed estimated the full true, indirect mortalities to be between 426 and 978, four to five times higher than the final toll. An 11-year-old boy, Cristian Pavon, who died of suspected hypothermia was among the deaths caused by ERCOT's grid system. Pavon's family sued Entergy Texas and ERCOT for gross negligence.
Accountability In February 2021, seven ERCOT board members resigned in the face of significant public and political backlash over the power loss and subsequent loss of life and property, and the fact that many board members did not live in Texas: • Sally Talberg, board chair, lived in Michigan. •
Peter Cramton, vice chair, lived in Germany. • Terry Bulger, finance and audit chair, lived in Illinois. • Raymond Hepper, human resources and governance Chair, lived in Maine. • Vanessa Anesetti-Parra, market segment director, lived in Toronto, Canada. • Clifton Karnei, a Texan, was also Executive Vice President of
Brazos Electric Power Cooperative; he resigned shortly after the cooperative received a $2.1 billion bill from ERCOT and subsequently filed for bankruptcy. • Craig Ivey, candidate for an open position, lived in Florida and withdrew his application. Bill Magness, CEO of ERCOT, was fired on March 4, 2021, for his role in the
2021 power loss incident. The board delivered a 60-day termination notice to Magness, who had been president and CEO since 2016. The board said he would serve in those roles for the next two months. In December 2023, the
Texas Supreme Court ruled that ERCOT could not be sued for the 2021 blackouts based on the theory of sovereign immunity.
2023 shift in electricity generation mix In 2023, Texas's energy landscape saw significant growth in solar capacity, notably on the ERCOT grid, with solar installations, including those with storage, increasing by 35% from the previous year, leading to a reduction in midday
natural gas usage.
Solar generation peaked at 5.3 GWh in the summer and 3.8 GWh in the winter, while wind generation remained the largest renewable contributor at 108,000 GWh. ERCOT anticipates a substantial rise in solar capacity, with plans for 24 GW of solar and 13 GW of battery storage additions by 2025, compared to a modest 3 GW increase in both wind and natural gas capacities. ERCOT reported that energy demand on the power grid reached a record 85 gigawatts in 2023 — the hottest year recorded in Texas. In 2024, ERCOT projected that demand could reach 150 gigawatts by 2030. The increase in demand is the result of large users, including data centers and crypto currency mining operations, as well as oil and gas production that is switching from gas- and diesel-generated power to electricity.
Reliability efforts After the 2021 outages, the state pass laws mandating weatherization of power plants against cold, streamlined emergency communications, and provided some aid for backup fuel supplies. ==Governance==