Despite Challenges, Texas' Electric Grid Ranks High

Texas ranks first out of 41 states for modernizing its electric grid, according to a new report — although that doesn’t mean Texans pay significantly less for electricity, or that the grid is safe from strain due to high demand this summer.  

In a new “Grid Modernization Index” compiled by the Washington, D.C-based GridWise Alliance, Texas and California tied for the highest score. The nonprofit group, a coalition of industry and other stakeholders, ranked 41 states and the District of Columbia based on what they’re doing to improve their grids. (Data for the remaining nine states wasn't available, and the report's authors declined to name the lowest scorers.) 

Neither state ranks particularly well on the price of electricity, however. In May, Texas residential customers paid an average of 11.6 cents per kilowatt hour, the 26th-lowest price of all states. Californians paid just over 16 cents, a lower rate than only six other states, according to the federal Energy Information Administration. Current prices in Texas are up significantly compared with last year, too.

“We were surprised” that prices and scores on the index didn’t seem to be related, said Becky Harrison, CEO of GridWise Alliance. Still, she said, “Texas is doing a really good job.”

Harrison said the fact that Texas is a “retail choice” state — meaning customers must be served by competitive suppliers — heavily boosted its score. The federal government has also often pointed to Texas as a leader in retail choice. She added that distribution companies here have been monitoring their grids more closely than those in other states, and are quickly rolling out smart meters, which measure electricity usage more accurately.

According to John Fainter, president of the Association of Electric Companies of Texas, distribution companies have deployed millions of smart meters. American Electric Power, a major electricity provider, has added them for more than half of its users, and all Texas New-Mexico Power Company customers should have them by the end of next year, he said.

Texas’ high score on the grid index doesn’t surprise Fainter. He said it’s a big help that Texas has its own power grid, operated by the Electric Reliability Council of Texas, or ERCOT.

If there were many more grid operators and regulatory agencies, Fainter said, the Legislature's approval of Competitive Renewable Energy Zones transmission lines in 2005 “would have been virtually impossible.” Those lines will transmit wind power across the state.

Fainter also questioned the statewide electricity price averages calculated by the Energy Information Administration, which puts Texas in the middle of the pack compared with other states.

“They can’t tell us how they [calculate] it,” Fainter said. “They overstate the price of electricity. ... They just haven’t figured out how to calculate what people are actually using.” The average 12-month fixed-price offer for electricity in the state in June was 10.8 cents per kilowatt hour, according to his organization, though many have questioned its numbers as well. 

While Texas has invested in modernizing its grid in recent years, and its power infrastructure is relatively new compared with other states', it still faces serious challenges. Earlier this year, the North American Reliability Corporation, a nonprofit that monitors power grids, forecast that the state’s grid would have the lowest percentage of power reserves this summer of any region in the country.

ERCOT officials have said they’re not sure power supply will keep up with increasing demand as the state’s economy and population continue to grow. And with new federal environmental regulations that govern emissions, plants may require more water for cooling in future years, when the supply of water for power plants is already a major problem.

“We’re very concerned,” Fainter said of the water supply issues. But recent rains have been encouraging, he said, and “it looks like from the long-range forecasts that we’re going to be all right this year.”