May 11, 2021

Electric Cooperatives, The Lone Shining Utility Star Of The Texas 2021 Winter Storm

Electric Cooperatives, The Lone Shining Utility Star Of The Texas 2021 Winter Storm



Renée Cross, Mark P. Jones, Pablo Pinto, Kirk P. Watson


Winter Storm Uri began to hit parts of Texas on February 13, 2021 and its onslaught left close to 4.5 million Texas homes and businesses without power at its peak. By some accounts, the preliminary number of deaths attributed to the storm is nearly 200, and the economic toll for the Lone Star State is estimated to be as high as $295 billion. 

The more than two-thirds of Texans who lost power during this devastating storm were notably more negative than positive in their evaluation of the performance of their local electric utility, with one exception. That exception are the members of the more than 60 electric cooperatives operating within the Texas Interconnection electrical grid, which, in sharp contrast to the customers of the commercial utilities that provide power to the majority of Texans, gave their local utility a positive evaluation related to its performance during the storm.

In order to study Winter Storm Uri’s impact on Texas, the Hobby School of Public Affairs at the University of Houston conducted an online survey during the first half of March of residents 18 and older who live in the 213 counties (91.5% of the state population) served by the Texas Electrical Grid, which is managed by the Electric Reliability Council of Texas (ERCOT). 

Three-quarters of the survey population (75%) live in areas with a deregulated utility market, where a specified transmission and delivery utility by region is responsible for delivering the electricity (purchased from one of a myriad of private companies by the consumer) to homes and businesses. The four main utility providers are Oncor, CenterPoint

CNP
, American Electric Power (AEP) North, and American Electric Power (AEP) Central. 

The other 25% of the survey population live in areas with regulated markets, where a single company is responsible for both delivering the electricity to homes and businesses and serves as the only source from which electricity is purchased. Municipal-owned and operated utilities (e.g., Austin Energy, Bryan Texas Utilities, Burnet Electric Department, Denton Municipal Electric, New Braunfels Utilities, San Antonio’s CPS Energy

CMS
) serve 73% of the regulated market. Electric cooperatives (e.g., Bluebonnet Electric Cooperative, Central Texas Electric Cooperative, Guadalupe Valley Cooperative, Lamb County Electric Cooperative, Pedernales Electricity Cooperative, Wood County Electric Cooperative) serve one-fifth of this market (21%), with private companies accounting for 6% of the regulated market.

The overall distribution of the survey population by electric utility providers is: Oncor (38%), CenterPoint (21%), municipal-owned utilities (18%), AEP Central & AEP North combined (12%), electric cooperatives (6%), other providers in the deregulated market (4%) and other providers in the regulated market (1%). 

There were no noteworthy differences among the 31% of Texans who did not lose power during the winter storm in regard to their evaluations of their local electricity provider or their belief that the power cuts in their locale were carried out in an equitable manner.  

However, among the 69% of Texans who lost power, those served by electric cooperatives in the regulated market and those served by private electric utilities in the deregulated market differed notably regarding their evaluation of the performance of their local electric utility, both in regard to their management of the rolling blackouts and to their overall performance during the winter storm. Those Texans who lost power and are served by electric cooperatives in a regulated market had a significantly more positive evaluation of the performance of their local electric utility than did those Texans who lost power and are served by a private company in a deregulated electricity market. 

For example, only 24% of Texans served by electric cooperatives had a negative evaluation of their local electric utility’s overall performance during the winter storm, compared to 55%, 56% and 61% of those served by AEP, Oncor and CenterPoint respectively. A slightly smaller proportion of Texans served by electric cooperatives (22%) had a negative evaluation of their local electric utility’s performance managing the rolling blackouts during the winter storm, compared to 58%, 61% and 71% of Texans served by Oncor, AEP and CenterPoint, respectively.

Texans served by electric cooperatives in regulated markets were more likely to agree that the power cuts in their local area were carried out in an equitable manner compared to Texans served by commercial electricity utilities in deregulated markets. More than half (52%) of those served by an electric cooperative agreed that power cuts during the winter storm in their area were carried out in an equitable manner, compared to only 26%, 23% and 23% of those served by Oncor, AEP and CenterPoint respectively

The survey data did not allow us to provide a conclusive explanation as to why the performance during the winter storm by electric cooperatives (and to a much lesser extent municipal utilities) in the regulated markets was viewed more favorably by their customers than was the performance of the private companies in the deregulated markets viewed by their customers. Yet here are three, far from exhaustive, possible explanations.

First, electric cooperatives might have performed better (based on objective empirical metrics) during the winter storm, perhaps because they are more committed to their customers, who are effectively their bosses. .  

Second, members of electric cooperatives may believe their electric utility prioritizes their interests more than do customers of commercial electric utilities and therefore, even if equal empirical performance were the case, are more likely to rate their electric utility in a positive manner than are customers of commercial utilities.  

Third, regulated electric utilities where a single entity is responsible for the commercialization, transmission and distribution of electricity might be better able to respond to the type of challenges presented by the February 2021 winter storm than are deregulated electric utilities where one entity is responsible for commercialization and another is responsible for transmission and distribution.

Other explanations for these findings may exist, which in addition to the three posited above, await future empirical verification via new and more comprehensive studies designed specifically to study electric cooperatives, large commercial utilities, and the incentives that these entities face under the regulatory system governing production, commercialization and distribution of electricity. 

Still, opinion about electricity providers during Winter Storm Uri is clear: Texans served by regulated electricity markets, especially by electric cooperatives, were much more satisfied with their providers’ performance than were those in deregulated markets. Throughout its history, Texas has staunchly supported the free market. Could Winter Storm Uri change this propensity, or will attempts to regulate electricity lessen as the memories of the storm’s havoc fades? With a hotter summer predicted to be on the horizon in 2021, we may soon get an answer.   


Renée D. Cross is the Senior Director of the Hobby School of Public Affairs at the University of Houston. Renée worked as the district director in the office of a state representative for two years before joining the staff of the University of Houston Center for Public Policy as a researcher. Now with the Hobby School of Public Affairs for 21 years (the Center for Public Policy is one of several entities housed within the Hobby School since 2016), Renée serves as the School’s senior director. Her academic interests include Houston and Texas government, politics, and history; urban politics; and civic engagement and voting. In addition to serving as the course instructor for the School’s internship programs, Renée teaches upper level political science courses such as Texas Politics, Urban Politics, State and Local Government & Politics, Campaign Politics, and Participation & Democracy in American Politics at the University of Houston and the University of Houston-Downtown.

Mark P. Jones, Ph.D., is the fellow in political science at the Baker Institute, the Joseph D. Jamail Chair in Latin American Studies and a professor in the Department of Political Science at Rice University.

Pablo M. Pinto is an Associate Professor and Director of the Center for Public Policy at the University of Houston’s Hobby School of Public Affairs, and the co-editor of the journal Economics & Politics. Pinto is a UH Energy Faculty Fellow, a non-resident Scholar in the Latin America Initiative of the Baker Institute at Rice University, and adjunct research scholar for the Saltzman Institute of War and Peace Studies at Columbia University. Pinto’s areas of expertise are international and comparative political economy, comparative politics, and quantitative methods. Pinto holds an M.A. from Aoyama Gakuin University in Japan, and a Ph.D. in Political Science and International Affairs from the University of California, San Diego. He received a Law Degree from Universidad Nacional de La Plata, Argentina. Prior to joining the University of Houston in 2014, Pinto was a member of the faculty of Columbia University. He taught at the Escuela Nacional de Gobierno in his native Argentina, and the Universidad Nacional de La Plata, where he founded and directed the Department for Asia-Pacific Studies. He also worked as Chief Counsel for Toyota Argentina.

Kirk P. Watson is the Founding Dean of the University of Houston Hobby School of Public Affairs and began his position on May 1, 2020. Watson’s policy experience spans local and state government. As Senator, he championed education, health care, transportation and government transparency. During his tenure in the Senate, he served as a member and vice chair of multiple standing and special committees. Most recently he was Vice-Chair of the Senate Committee on Nominations and also served on the committees overseeing State Finance, Education, Higher Education and the Sunset Advisory Commission. His peers elected him President Pro Tempore of the Senate in 2019.Senator Watson graduated from Baylor University and graduated first in his law school class at Baylor Law School. He has been named an outstanding young alumnus of Baylor, Young Baylor Lawyer of the Year, and the Outstanding Young Lawyer of Texas. He was most recently of counsel at the law firm Husch Blackwell LLP.UH Energy is the University of Houston’s hub for energy education, research and technology incubation, working to shape the energy future and forge new business approaches in the energy industry.



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