In February 2021, a winter storm swept across the U.S. and numbed Texas with record-breaking low temperatures. Just as heating demand skyrocketed, many natural gas plants and a handful of wind turbines failed due to the freezing conditions, causing a devastating blackout across the state — 4.8 million homes lost power, and 246 people died. Energy prices jumped 360-fold, with some customers facing electricity bills of more than $5,000 for the five days of the storm.
The Texas power crisis caused such widespread damage partly because of the uniquely isolated nature of the state’s electricity grid. In the rest of the U.S., utilities have more options for buying electricity, enabling them to top up when supply dips or demand surges. Groups of power generators and utilities that trade this way are called energy markets. Various regional energy markets cover California, the Northwest, the Midwest and other…
