Texas has an accountability problem. The technology and capacity for solutions exist, so why is the infrastructure inadequate?

Larry Sharpe, the 2018 Libertarian Party candidate for Governor and host of The Sharpe Way, discussed the Texas winter storm crisis on a recent show. He proposed innovative solutions that have been tested and proved reliable in prior disasters.

More than 4 million residents are without power and many have no way to heat their homes. Dozens are dead and there is no end in sight to the crisis. Mr. Sharpe points out that decentralized markets with independent fiduciary accountability are the most powerful solution available, and this system has the flexibility to adjust to unprecedented conditions.

Unprecedented events occur every day. Yet somehow, actuaries are consistently able to mitigate the financial risks for their clients.  Over the last year, many states have had massive outages. The largest power failure in US history occurred in 2003. Despite this and many other disasters and warnings, Texas, California, and other states are unprepared for disaster. Why can’t these states benefit from actuarial acumen?

Many critics are calling for additional government oversight. This solution did nothing to help the residents of New Orleans after Hurricane Katrina, and FEMA is unable to respond effectively to large-scale problems.

The problem with FEMA is the same with ERCOT. Inadequate accountability and transparency leads to missing or insufficient contingency plans. Funding is also a serious issue. If we hold organizations financially responsible for these events, industry will find ways to mitigate risk and prepare for catastrophic incidents, without a need for additional oversight or taxpayer investment.

“The key is not oversight, but accountability!”

Larry Sharpe

Massive power outages hit the US with alarming frequency, due mainly to inadequate infrastructure. The aftermath of the 2003 blackout did not include preparing for the future. One side blames Green Energy Initiatives, pointing at frozen wind turbines. Others are calling for greater regulation. These are not the problems, despite popular interest. The problems are much more detailed and require a system change to be addressed. Energy Policy Consultant, Russ Clark, explains in this article.

Fiduciary accountability is the key. Right now all anyone can do is point the finger. Everyday, industries like tech and finance manage disasters with speed and flexibility, keeping human impacts to a minimum.

In a mature marketplace, responsibility falls on corporate associations and insurance providers. If fiduciaries fail, the individuals involved go to jail and lose their money. This responsibility keeps the powerful accountable.  This combination of accountability and oversight is missing in current electricity providers.

Insurance and an open marketplace provide robust solutions when the government is powerless.

People are frustrated and angry, and vulnerable populations are hurting. Green energy and Natural gas equipment was not prepared for more than a 2-day freeze.

ERCOT, the Electric Reliability Council of Texas, regulates the generation and distribution of electricity in Texas. Accountability is spread out and distributed to the point where no one individual has the power to respond. This lack of accountability means no one prepares for disasters, and no one is held responsible, not even when people die. The result has been rolling blackouts with only short windows of electricity for millions of homes.

“Texas needs to continue with a decentralized system to defend against a full state collapse. But, it must also have a brokered insurance system to be able to fairly provide energy in crisis and well as an improved substation infrastructure to be able to import energy effectively when required.”

Larry Sharpe

The State wasn’t prepared for the increase in usage from a boom in population. There is anger and disbelief at the chaos in Texas, and at the lack of effective action.

The local distribution of natural gas helped. It allowed for some Texans to get energy instead of the entire state going down. But when disasters hit and there is an inadequate supply or resources, price gouging is the result.

Larry Sharpe believes there is much more we can do. With an industry tested risk mitigation system, decentralized grids and new technologies, we can and should prepare for the future with the best chances for success.

The post Texas Power Outage Disaster: It Was Not the Markets or Green Energy. It Was a Lack of Accountability—Larry Sharpe appeared first on Larry Sharpe, Libertarian.

by Dan Smith

If energy policy makes your eyes roll back into your head, I get it. And if all the regulations, bans, subsidies, taxes combined with all the different forms of energy leave you confused, I get that, too.

It’s likely by design.

That’s because the players probably wouldn’t like you taking too close of a look at the big bucks at stake ($40 billion per year in New York) and how it’s all tightly controlled by state and federal officials—giving way to lots of favors and taxpayer handouts, as we’ll see.

One should probably start with New York’s 2015 Clean Energy Standard. By 2030, 50% of electricity generated in New York will be from renewable energy sources: wind, solar, hydro, nuclear, biomass, et. al., up from 24% in 2016. That’s a big gap to close, so it’s phased in starting in 2017 and grows each year until 2030. Companies which produce non-renewable energy—oil, coal and natural gas, face a significant and growing tax (called “alternative compliance payments”).

The Clean Energy Standard is a big reward for energy companies to immediately start increasing investment in wind and solar, among others. Renewable energy technologies are being given special privilege over coal, oil and natural gas, who are quickly facing a big, new cost for failure to switch. Such an advantage is a call for investment money to start rolling in from banks and other private investors to fund the expansion into renewable energy in New York.

Unfortunately, there’s one big investor who is funding a lot of this: New York taxpayers, via Governor Andrew Cuomo.  

Governor Cuomo has promised $5 billion of New Yorkers’ tax dollars to the Clean Energy Fund—subsidies which are being given to renewable energy firms.

Setting aside whether or not you like the rule requiring more renewable energy, this situation begs the question:

Why do we need both . . . the Clean Energy Standard and also taxpayer funded subsidies?

Put another way, the Clean Energy Act was put in place to reward those who invest in Governor Cuomo’s vision of moving toward renewable energy, so why must taxpayers also payoff renewable energy companies now, before the fact, as well?

I believe there is no good reason. It’s just another excuse for Governor Cuomo to hand out more taxpayer money to cronies and for him to gather more power.

But there’s got to be a stated reason. New York renewable energy advisor, Phoenix Energy cites a common storyline, “generators of renewable sources . . . warned they would sell their generated energy to other states, and wind farms even went so far as to threaten authorities with a complete shutdown if subsidies were not granted . . . and New York Governor Andrew Cuomo announced that 11 large renewable energy projects would be getting a total of $360 million in subsidies.”

Did you get that?

The companies who know they’re needed under Cuomo’s law, who were given the huge business advantage in 2015, had the audacity to come along in 2016 and threaten New Yorkers’ access to electricity if they didn’t get taxpayer money to subsidize them, as well.

They held New Yorkers hostage. Andrew Cuomo capitulated.

Let’s examine the threat. There are a great many problems in believing it. It’s easy to imagine this was all designed to get Cuomo’s cronies a $5 billion taxpayer payday.

But taking the claims at face value, the first problem is that wind and solar already have been receiving generous federal subsidies which should have seen them through their industries’ formative years. Why should New Yorkers pay more on top of that?

Further, individuals and businesses themselves can receive New York tax incentives for installing things like on-grid solar energy facilities, smaller, off-grid residential and commercial solar installations and small wind turbines, thereby getting some taxpayers to fund expensive panels and installation  for others.

But what’s most curious is that it makes no sense for them to move away from New York at the moment they were being handed a big regulatory advantage—one that would allow them to undercut competitors and/or raise prices when their non-renewable competitors had to pass their compliance tax onto customers.

Wind and solar weren’t alone in the “take New York hostage” game. Separately in 2016, several upstate nuclear power plants threatened to shut down if they didn’t get their own subsidies. Always generous with New Yorkers’ money, Governor Cuomo rewarded them with $500 million per year going forward. Reports are that the nuclear plants’ excuse for requiring the subsidies is that they can’t compete with another renewable energy source, biomass.  

This is becoming insane. Why should New Yorkers subsidize one renewable energy source and punish another? Isn’t the goal getting renewable energy . . . does it matter which one?  

And don’t lose sight of the irony here—nuclear is a less efficient and more costly than biomass and Andrew Cuomo has forced New Yorkers to back the less efficient technology. This isn’t isolated. It’s happening across the board, as New York’s energy efficiency has fallen from third in the nation in 2013 to seventh in 2017, and is expected to continue falling under these policies.  And inefficiency means higher energy prices, on top of the big tax bills Governor Cuomo is leaving us with.

One would be quite reasonable to start questing these policies and believe that taxpayer money could be better spent elsewhere. Perhaps someone should consider investigating how this all came about.

But is this the way one earns goodies from Andrew Cuomo—threaten to do something deeply illogical and hope New Yorkers don’t recognize the silliness of your empty threat?  Do we have to hand out taxpayer money and also see higher electricity costs as the “benefit”?

Sadly, it appears this is the way business is done in New York.

The subsidies themselves make no sense to anyone with a basic understanding of economics.

Governor Cuomo has piled billions in New York taxpayer funded subsidies on top of favorable mandates and rules which are on top of a many years of other federal and New York state subsidies which themselves run into the tens of billions of dollars.

And basic economics also instructs us that energy prices are very likely to go up as the non-renewable tax is passed on to consumers and wind and solar are free to raise their prices in response. When combined with our falling efficiency, that spells trouble for New Yorkers’ electric bills.

So New Yorkers can expect to get hit now and later, just as Californians have with the nation’s most-aggressive renewables programs and, not coincidentally, the nation’s highest electricity costs—paying 41% more than the national average.

These policies make sense only in the world of corruption and wasteful spending of Albany under the direction of our governor, Andrew Cuomo.

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