North Korea committed to disarmament pact

By Reuters


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North Korea is committed to a disarmament agreement reached in February but wants sanctions against it lifted first, the head of the U.N. nuclear watchdog said upon returning from the reclusive communist state.

It was the International Atomic Energy Agency's first negotiations with North Korea in more than four years, even though IAEA head Mohamed ElBaradei was told the North's top nuclear negotiator was too busy to meet him.

ElBaradei said the visit had been "quite useful" and had opened the way to a normal relationship. He said North Korea was positive about returning to IAEA membership, but wanted sanctions against it lifted.

"I think they were very clear that they are willing to implement the February 13 agreement once the other parties implement their part," he said, referring to an agreement reached at six-party talks grouping the two Koreas, Russia, Japan, the United States and host China.

"The DPRK (North Korea) mentioned that they are waiting for the lifting of sanctions with regard to the Macau bank."

Referring to the closure of the Yongbyon nuclear plant, he said: "They said they are ready, willing and capable of doing that as soon as the financial sanctions are lifted."

ElBaradei's visit was the first by the agency since late 2002, when North Korea expelled its inspectors as an earlier disarmament deal fell apart. It withdrew from the nuclear Non-Proliferation Treaty days later.

Under the terms of the February agreement, the Yongbyon reactor, which makes plutonium that can be used in nuclear weapons, must be shut by mid-April in return for an initial shipment of heavy fuel oil.

South Korean Foreign Minister Song Min-soon said earlier that North Korea had shown no signs of closing the reactor. North Korea tested its first nuclear device last October, drawing widespread condemnation and U.N. sanctions.

"There is no indication of a change in the operational condition of Yongbyon," Song told a news conference in Seoul.

Earlier a U.S. official said North Korea was preparing to shut down the Yongbyon complex, but other U.S. officials have been more guarded.

The IAEA, which is trying to iron out the details of a return of its inspectors to North Korea, will be key to verifying whether the reclusive state makes good on its pledge.

In addition to Hill, South Korean envoy Chun Yung-woo arrived for working-group meetings. Both envoys, along with China's Wu Dawei, will take part in discussions aimed at fleshing out parts of the agreement dealing with disarmament and energy.

Washington said that within 30 days of the February deal it would settle a dispute over North Korean bank accounts frozen in Macau that Washington says had been used to launder illegal earnings for Pyongyang.

"The Macau issue will be resolved as we've promised," Hill told reporters.

As part of the give-and-take to settle the dispute, the U.S. Treasury Department would bar U.S. banks from doing business with the Macau bank, which would allow Macau authorities to decide whether to release some of the frozen accounts, Washington officials told Reuters.

But releasing the funds could take weeks and the U.S. restrictions will continue to hinder the North's access to the international financial system, potentially irritating Pyongyang and complicating denuclearization efforts.

Western diplomats said they expected no immediate progress and warned that the whole process of North Korea establishing relations with the IAEA or bringing back inspectors into North Korea would need time.

"North Korea wants to show that they are in the driving seat. They want to drive home the point that they are on eye level when it comes to these negotiations," one diplomat in Vienna said.

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National Steel Car appealing decision in legal challenge of Ontario electricity fee it calls an unconstitutional tax

Ontario Global Adjustment Appeal spotlights Ontario's electricity fee, regulatory charge vs tax debate, FIT contracts, green energy policy, and constitutional challenge as National Steel Car contests soaring power costs before the Ontario Superior Court.

 

Key Points

Court challenge over Ontario's global adjustment fee, disputing its status as a regulatory charge instead of a tax.

✅ Challenges classification of global adjustment as tax vs regulatory charge.

✅ Focuses on FIT contracts, renewable energy payments, power cost impacts.

✅ Appeals Ontario ruling; implications for ratepayers and policy.

 

A manufacturer of steel rail cars is pursuing an appeal after its lawsuit challenging the constitutionality of a major Ontario electricity fee was struck down earlier this year.

Lawyers for Hamilton, Ont.-based National Steel Car Ltd. filed a notice of appeal in July after Ontario Superior Court Justice Wendy Matheson ruled in June that an electricity fee known as the global adjustment charge was a regulatory charge, and not an unconstitutional tax used to finance policy goals, as National Steel Car alleges.

The company, the decision noted, began its legal crusade last year after seeing its electricity bills had “increased dramatically” since the Ontario government passed green energy legislation nearly a decade ago, and amid concerns that high electricity rates are hurting Ontario manufacturers.

Under that legislation, the judge wrote, “private suppliers of renewable energy were paid to ’feed in’ energy into Ontario’s electricity grid.” The contracts for these so-called “feed-in tariff” contracts, or FIT contracts, were the “primary focus” of the lawsuit.

“The applicant seeks a declaration that part of the amount it has paid for electricity is an unconstitutional tax rather than a valid regulatory charge,” the judge added. “More specifically, it challenges part of the Global Adjustment, which is a component of electricity pricing and incorporates obligations under FIT contracts.”

Chiefly representing the difference between Ontario’s market price for power and the guaranteed price owed to generators, global adjustment now makes up the bulk of the commodity cost of electricity in the province. The fee has risen over the past decade, amid calls to reject steep Nova Scotia rate hikes as well — costing electricity customers $37 billion in global adjustment from 2006 to 2014, according to the province’s auditor general — because of investments in the electricity grid and green-energy contracts, among other reasons.

National Steel Car argued the global adjustment is a tax, and an unconstitutional one at that because it violated a section of the Constitution Act requiring taxes to be authorized by the legislature. The company also said the imposition of the global adjustment broke an Ontario law requiring a referendum to be held for new taxes.

The province, Justice Matheson wrote, had argued “that it is plain and obvious that these applications will fail.” In a decision released in June, the judge granted motions to strike out National Steel Car’s applications.

“The Global Adjustment,” she added, “is not a tax because its purpose, in pith and substance, is not to tax, and it is a regulatory charge and therefore, again, not a tax.”

Now, National Steel Car is arguing that the judge erred in several ways, including in fact, “by finding that the FIT contracts must be paid, when they can be cancelled.”

There has been a change in government at Queen’s Park since National Steel Car first filed its lawsuit last year, and that change has put green energy contracts under fire. The Progressive Conservative government of new Premier Doug Ford has already made a number of decisions on the electricity file, such as moving to cancel and wind down more than 750 renewable energy contracts, as well as repealing the province’s Green Energy Act.

The Tories also struck a commission of inquiry into the province’s finances that warned the global adjustment “may be struck down as unconstitutional,” a warning delivered amid cases where Nova Scotia's regulator approved a 14% rate hike in a high-profile decision.

“There is a risk that a court may find the global adjustment is not a valid regulatory charge if shifting costs over a longer period of time inadvertently results in future ratepayers cross-subsidizing today’s ratepayers,” the commission’s report said.

A spokesperson for Ontario’s Ministry of Energy, Northern Development and Mines said in an email that it would be “inappropriate to comment about the specifics of any case before the courts or currently under arbitration.”

National Steel Car is also prepared to fight its case all the way up to the Supreme Court of Canada, according to its lawyer.

“What is clear from our proceeding with the appeal is National Steel Car has every intention of seeing that lawsuit through to its conclusion if this government isn’t interested or prepared to reasonably settle it,” Jerome Morse said.

 

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California electricity pricing changes pose an existential threat to residential rooftop solar

California Rooftop Solar Rate Reforms propose shifting net metering to fixed access fees, peak-demand charges, and time-of-use pricing, aligning grid costs, distributed generation incentives, and retail rates for efficient, least-cost electricity and fair cost recovery.

 

Key Points

Policies replacing net metering with fixed fees, demand charges, and time-of-use rates to align costs and incentives.

✅ Large fixed access charge funds grid infrastructure

✅ Peak-demand pricing reflects capacity costs at system peak

✅ Time-varying rates align marginal costs and emissions

 

The California Public Service Commission has proposed revamping electricity rates for residential customers who produce electricity through their rooftop solar panels. In a recent New York Times op‐​ed, former Governor Arnold Schwarzenegger argued the changes pose an existential threat to residential rooftop solar. Interest groups favoring rooftop solar portray the current pricing system, often called net metering, in populist terms: “Net metering is the one opportunity for the little guy to get relief, and they want to put the kibosh on it.” And conventional news coverage suggests that because rooftop solar is an obvious good development and nefarious interests, incumbent utilities and their unionized employees, support the reform, well‐​meaning people should oppose it. A more thoughtful analysis would inquire about the characteristics and prices of a system that supplies electricity at least cost.

Currently, under net metering customers are billed for their net electricity use plus a minimum fixed charge each month. When their consumption exceeds their home production, they are billed for their net use from the electricity distribution system (the grid) at retail rates. When their production exceeds their consumption and the excess is supplied to the grid, residential consumers also are reimbursed at retail rates. During a billing period, if a consumer’s production equaled their consumption their electric bill would only be the monthly fixed charge.

Net metering would be fine if all the fixed costs of the electric distribution and transmission systems were included in the fixed monthly charge, but they are not. Between 66 and 77 percent of the expenses of California private utilities do not change when a customer increases or decreases consumption, but those expenses are recovered largely through charges per kWh of use rather than a large monthly fixed charge. Said differently, for every kWh that a PG&E solar household exported into the grid in 2019, it saved more than 26 cents, on average, while the utility’s costs only declined by about 8 cents or less including an estimate of the pollution costs of the system’s fossil fuel generators. The 18‐​cent difference pays for costs that don’t change with variation in a household’s consumptions, like much of the transmission and distribution system, energy efficiency programs, subsidies for low‐​income customers, and other fixed costs. Rooftop solar is so popular in California because its installation under a net metering system avoids the 18 cents, creating a solar cost shift onto non-solar customers. Rooftop solar is not the answer to all our environmental needs. It is simply a form of arbitrage around paying for the grid’s fixed costs.

What should electricity tariffs look like? This article in Regulation argues that efficient charges for electricity would consist of three components: a large fixed charge for the distribution and transmission lines, meter reading, vegetation trimming, etc.; a peak‐​demand charge related to your demand when the system’s peak demand occurs to pay for fixed capacity costs associated with peak use; and a charge for electricity use that reflects the time‐ and location‐​varying cost of additional electricity supply.

Actual utility tariffs do not reflect this ideal because of political concerns about the effects of large fixed monthly charges on low‐​income customers and the optics of explaining to customers that they must pay 50 or 60 dollars a month for access even if their use is zero. Instead, the current pricing system “taxes” electricity use to pay for fixed costs. And solar net metering is simply a way to avoid the tax. The proposed California rate reforms would explicitly impose a fixed monthly charge on rooftop solar systems that are also connected to the grid, a change that could bring major changes to your electric bill statewide, and would thus end the fixed‐​cost avoidance. Any distributional concerns that arise because of the effect of much larger fixed charges on lower‐​income customers could be managed through explicit tax deductions that are proportional to income.

The current rooftop solar subsidies in California also should end because they have perverse incentive effects on fossil fuel generators, even as the state exports its energy policies to neighbors. Solar output has increased so much in California that when it ends with every sunset, natural gas generated electricity has to increase very rapidly. But the natural gas generators whose output can be increased rapidly have more pollution and higher marginal costs than those natural gas plants (so called combined cycle plants) whose output is steadier. The rapid increase in California solar capacity has had the perverse effect of changing the composition of natural gas generators toward more costly and polluting units.

The reforms would not end the role of solar power. They would just shift production from high‐​cost rooftop to lower‐​cost centralized solar production, a transition cited in analyses of why electricity prices are soaring in California, whose average costs are comparable with electricity production in natural gas generators. And they would end the excessive subsidies to solar that have negatively altered the composition of natural gas generators.

Getting prices right does not generate citizen interest as much as the misguided notion that rooftop solar will save the world, and recent efforts to overturn income-based utility charges show how politicized the debate remains. But getting prices right would allow the decentralized choices of consumers and investors to achieve their goals at least cost.

 

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Britons could save on soaring bills as ministers plan to end link between gas and electricity prices

UK Electricity-Gas Price Decoupling aims to reform wholesale electricity pricing under the Energy Security Bill, shielding households from gas price spikes, supporting renewables, and easing the cost-of-living crisis through market redesign and transparent tariffs.

 

Key Points

Policy to decouple power prices from gas via the Energy Security Bill, stabilizing bills and reflecting renewables

✅ Breaks gas-to-power pricing link to cut electricity costs

✅ Reduces volatility; shields households from global gas shocks

✅ Highlights benefits of renewables and market transparency

 

Britons could be handed relief on rocketing household bills under Government plans to sever the link between the prices of gas and electricity, including proposals to restrict energy prices in the market, it has emerged.

Ministers are set to bring forward new laws under the Energy Security Bill to overhaul the UK's energy market in the face of the current cost-of-living crisis.

They have promised to provide greater protection for Britons against global fluctuations in energy prices, through a price cap on bills among other measures.

The current worldwide crisis has been exacerbated by the Ukraine war, which has sent gas prices spiralling higher.

Under the current make-up of Britain's energy market, soaring natural gas prices have had a knock-on effect on electricity costs.

But it has now been reported the new legislation will seek to prevent future shocks in the global gas market having a similar impact on electricity prices.

Yet the overhaul might not come in time to ease high winter energy costs for households ahead of this winter.

According to The Times, Business Secretary Kwasi Kwarteng will outline proposals for reforms in the coming weeks.

These will then form part of the Energy Security Bill to be introduced in the autumn, with officials anticipating a decrease in energy bills by April.

The newspaper said the plans will end the current system under which the wholesale cost of gas effectively determines the price of electricity for households.

Although more than a quarter of Britain's electricity comes from renewable sources, under current market rules it is the most expensive megawatt needed to meet demand that determines the price for all electricity generation.

This means that soaring gas prices have driven up all electricity costs in recent months, even though only around 40% of UK electricity comes from gas power stations.

Energy experts have compared the current market to train passengers having to pay the peak-period price for every journey they make.

One Government source told The Times: 'In the past it didn’t really matter because the price of gas was reasonably stable.

'Now it seems completely crazy that the price of electricity is based on the price of gas when a large amount of our generation is from renewables.'

It was also claimed ministers hope the reforms will make the market more transparent and emphasise to consumers the benefits of decarbonisation, amid an ongoing industry debate over free electricity for consumers.

A Government spokesperson said: 'The high global gas prices and linked high electricity prices that we are currently facing have given added urgency to the need to consider electricity market reform.

 

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Tube Strikes Disrupt London Economy

London Tube Strikes Economic Impact highlights transport disruption reducing foot traffic, commuter flows, and tourism, squeezing small businesses, hospitality revenue, and citywide growth while business leaders urge negotiations, resolution, and policy responses to stabilize operations.

 

Key Points

Reduced transport options cut foot traffic and sales, straining small businesses and slowing London-wide growth.

✅ Hospitality venues report lower revenue and temporary closures

✅ Commuter and tourism declines reduce daily sales and bookings

✅ Business groups urge swift negotiations to restore services

 

London's economy is facing significant challenges due to ongoing tube strikes, challenges that are compounded by scrutiny of UK energy network profits and broader cost pressures across sectors, with businesses across the city experiencing disruptions that are impacting their operations and bottom lines.

Impact on Small Businesses

Small businesses, particularly those in the hospitality sector, are bearing the brunt of the disruptions caused by the strikes. Many establishments rely on the steady flow of commuters and tourists that the tube system facilitates, while also hoping for measures like temporary electricity bill relief that can ease operating costs during downturns. With reduced transportation options, foot traffic has dwindled, leading to decreased sales and, in some cases, temporary closures.

Economic Consequences

The strikes are not only affecting individual businesses but are also having a ripple effect on the broader economy, a dynamic seen when commercial electricity consumption plummeted in B.C. during the pandemic. The reduced activity in key sectors is contributing to a slowdown in economic growth, echoing periods when BC Hydro demand fell 10% and prompting policy responses such as Ontario electricity rate reductions for businesses, with potential long-term consequences if the disruptions continue.

Calls for Resolution

Business leaders and industry groups are urging for a swift resolution to the strikes. They emphasize the need for dialogue between the involved parties to reach an agreement that minimizes further economic damage and restores normalcy to the city's transportation system.

The ongoing tube strikes in London are causing significant disruptions to the city's economy, particularly affecting small businesses that depend on the efficient movement of people. Immediate action is needed to address the issues, drawing on tools like a subsidized hydro plan used elsewhere to spur recovery, to prevent further economic downturn.

 

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Purdue: As Ransomware Attacks Increase, New Algorithm May Help Prevent Power Blackouts

Infrastructure Security Algorithm prioritizes cyber defense for power grids and critical infrastructure, mitigating ransomware, blackout risks, and cascading failures by guiding utilities, regulators, and cyber insurers on optimal security investment allocation.

 

Key Points

An algorithm that optimizes security spending to cut ransomware and blackout risks across critical infrastructure.

✅ Guides utilities on optimal security allocation

✅ Uses incentives to correct human risk biases

✅ Prioritizes assets to prevent cascading outages

 

Millions of people could suddenly lose electricity if a ransomware attack just slightly tweaked energy flow onto the U.S. power grid, as past US utility intrusions have shown.

No single power utility company has enough resources to protect the entire grid, but maybe all 3,000 of the grid's utilities could fill in the most crucial security gaps if there were a map showing where to prioritize their security investments.

Purdue University researchers have developed an algorithm to create that map. Using this tool, regulatory authorities or cyber insurance companies could establish a framework for protecting the U.S. power grid that guides the security investments of power utility companies to parts of the grid at greatest risk of causing a blackout if hacked.

Power grids are a type of critical infrastructure, which is any network - whether physical like water systems or virtual like health care record keeping - considered essential to a country's function and safety. The biggest ransomware attacks in history have happened in the past year, affecting most sectors of critical infrastructure in the U.S. such as grain distribution systems in the food and agriculture sector and the Colonial Pipeline, which carries fuel throughout the East Coast, prompting increased military preparation for grid hacks in the U.S.

With this trend in mind, Purdue researchers evaluated the algorithm in the context of various types of critical infrastructure in addition to the power sector, including electricity-sector IoT devices that interface with grid operations. The goal is that the algorithm would help secure any large and complex infrastructure system against cyberattacks.

"Multiple companies own different parts of infrastructure. When ransomware hits, it affects lots of different pieces of technology owned by different providers, so that's what makes ransomware a problem at the state, national and even global level," said Saurabh Bagchi, a professor in the Elmore Family School of Electrical and Computer Engineering and Center for Education and Research in Information Assurance and Security at Purdue. "When you are investing security money on large-scale infrastructures, bad investment decisions can mean your power grid goes out, or your telecommunications network goes out for a few days."

Protecting infrastructure from hacks by improving security investment decisions

The researchers tested the algorithm in simulations of previously reported hacks to four infrastructure systems: a smart grid, industrial control system, e-commerce platform and web-based telecommunications network. They found that use of this algorithm results in the most optimal allocation of security investments for reducing the impact of a cyberattack.

The team's findings appear in a paper presented at this year's IEEE Symposium on Security and Privacy, the premier conference in the area of computer security. The team comprises Purdue professors Shreyas Sundaram and Timothy Cason and former PhD students Mustafa Abdallah and Daniel Woods.

"No one has an infinite security budget. You must decide how much to invest in each of your assets so that you gain a bump in the security of the overall system," Bagchi said.

The power grid, for example, is so interconnected that the security decisions of one power utility company can greatly impact the operations of other electrical plants. If the computers controlling one area's generators don't have adequate security protection, as seen when Russian hackers accessed control rooms at U.S. utilities, then a hack to those computers would disrupt energy flow to another area's generators, forcing them to shut down.

Since not all of the grid's utilities have the same security budget, it can be hard to ensure that critical points of entry to the grid's controls get the most investment in security protection.

The algorithm that Purdue researchers developed would incentivize each security decision maker to allocate security investments in a way that limits the cumulative damage a ransomware attack could cause. An attack on a single generator, for instance, would have less impact than an attack on the controls for a network of generators, which sophisticated grid-disruption malware can target at scale, rather than for the protection of a single generator.

Building an algorithm that considers the effects of human behavior

Bagchi's research shows how to increase cybersecurity in ways that address the interconnected nature of critical infrastructure but don't require an overhaul of the entire infrastructure system to be implemented.

As director of Purdue's Center for Resilient Infrastructures, Systems, and Processes, Bagchi has worked with the U.S. Department of Defense, Northrop Grumman Corp., Intel Corp., Adobe Inc., Google LLC and IBM Corp. on adopting solutions from his research. Bagchi's work has revealed the advantages of establishing an automatic response to attacks, and analyses like Symantec's Dragonfly report highlight energy-sector risks, leading to key innovations against ransomware threats, such as more effective ways to make decisions about backing up data.

There's a compelling reason why incentivizing good security decisions would work, Bagchi said. He and his team designed the algorithm based on findings from the field of behavioral economics, which studies how people make decisions with money.

"Before our work, not much computer security research had been done on how behaviors and biases affect the best defense mechanisms in a system. That's partly because humans are terrible at evaluating risk and an algorithm doesn't have any human biases," Bagchi said. "But for any system of reasonable complexity, decisions about security investments are almost always made with humans in the loop. For our algorithm, we explicitly consider the fact that different participants in an infrastructure system have different biases."

To develop the algorithm, Bagchi's team started by playing a game. They ran a series of experiments analyzing how groups of students chose to protect fake assets with fake investments. As in past studies in behavioral economics, they found that most study participants guessed poorly which assets were the most valuable and should be protected from security attacks. Most study participants also tended to spread out their investments instead of allocating them to one asset even when they were told which asset is the most vulnerable to an attack.

Using these findings, the researchers designed an algorithm that could work two ways: Either security decision makers pay a tax or fine when they make decisions that are less than optimal for the overall security of the system, or security decision makers receive a payment for investing in the most optimal manner.

"Right now, fines are levied as a reactive measure if there is a security incident. Fines or taxes don't have any relationship to the security investments or data of the different operators in critical infrastructure," Bagchi said.

In the researchers' simulations of real-world infrastructure systems, the algorithm successfully minimized the likelihood of losing assets to an attack that would decrease the overall security of the infrastructure system.

Bagchi's research group is working to make the algorithm more scalable and able to adapt to an attacker who may make multiple attempts to hack into a system. The researchers' work on the algorithm is funded by the National Science Foundation, the Wabash Heartland Innovation Network and the Army Research Lab.

Cybersecurity is an area of focus through Purdue's Next Moves, a set of initiatives that works to address some of the greatest technology challenges facing the U.S. Purdue's cybersecurity experts offer insights and assistance to improve the protection of power plants, electrical grids and other critical infrastructure.

 

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

Texas Electric Cooperatives outperformed during Winter Storm Uri, with higher customer satisfaction, equitable rolling blackouts, and stronger grid reliability compared to deregulated markets, according to ERCOT-area survey data of regulated utilities and commercial providers.

 

Key Points

Member-owned utilities in Texas delivering power, noted for reliability and fair outages during Winter Storm Uri.

✅ Member-owned, regulated utilities serving local communities

✅ Rated higher for blackout management and communication

✅ Operate outside deregulated markets; align incentives with users

 

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, and many faced power and water disruptions 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, mirrored by a rise in electricity complaints statewide, 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 power 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 -2.2%, 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 -2.1%) 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, amid debates over market reforms to avoid 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, aligning with calls to improve electricity reliability across Texas.

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, including rulings that some plants are exempt from providing electricity in emergencies under state law. 

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 and growing awareness of severe heat blackout risks, we may soon get an answer.   

 

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