Texas (But Not Only Texas): Regulatory Capture

Regulatory capture is a simple concept: it applies when regulatory agencies become dominated by the industries or interests they are by law required to regulate. These agencies begin to act to benefit particular incumbent firms or people in the industry they are supposed to be overseeing. The concept is also sometimes called agency capture or state capture. (There are distinctions between these terms, but they all describe the same corruption of a public institution’s defined role under law.)

There have been many tragedies from the failures of Texas’s energy market, and more than one reason for those failures (e.g., deregulation, a grid confined only to Texas, inferior leaders at the Electric Reliability Council of Texas). These failures caused illness, loss of life, and property damage across Texas.

There was, however, another cause, as Colby Galliher, Kelsey Landau, and Julia Bourkland explain in Why Texas Has Catastrophic Blackouts:

Texas policymakers with longstanding financial and lobbying relationships to the industry scapegoated renewable energy during and after last month’s storm. In the first days of the crisis, Abbott went on Fox News and blamed the blackouts on wind energy while making broad attacks on the Green New Deal. Cruz was quick to blame wind energy as well (after he returned from his aborted Cancún vacation). In reality, wind power makes up just 23% of Texas’ annual electricity generation. At the time of last month’s storm, wind generated just 7% of the state’s total electricity, with the power outages almost entirely the result of natural gas-related failures. And the Green New Deal is an unrealized legislative proposal with little relevance to last month’s storm or Texas’ existing power sector.

Keeping in mind the longstanding influence of the oil and gas industry over these officials and their rhetoric, their deflections are easy to understand. Even after ERCOT publicly stated that the brunt of the state’s electricity woes were due to the failure of unwinterized natural gas plants, Texas figures (except for Abbott) who had erroneously blamed the state’s burgeoning renewables industry declined to correct their remarks. Beyond encapsulating their oil and gas industry benefactors’ affinity for deregulation, this refusal to place blame where it is due—and legislate accordingly—parallels the climate denialism propagated by its beneficiaries in the Republican Party.

The extent to which the oil and gas industry shapes Texas’ electricity market borders on regulatory and state capture. This dynamic was clear enough in the wake of the 2011 “once-in-a-lifetime” storm that caused major power outages; ten years later, another once-in-a-lifetime storm hit the state. In both instances, state lawmakers have seemingly refused to meaningfully address the fossil fuel industry’s grip on policy and regulation, choosing to proceed with deregulation despite the higher electricity prices and vulnerability to extreme weather. As the climate crisis worsens, such weather phenomena will likely become increasingly more common. If Texas policymakers fail to disentangle their interests and those of the Texas electrical grid from the fossil fuel industry—and if citizens are not fully empowered to hold them accountable for doing so—2021 will not be the last time that Texans are left in the cold and the dark.

So, why would a blogger in Whitewater, Wisconsin write about regulatory capture in Texas?

Because regulatory capture exits in many places, and far closer than Texas.

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