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Harvard Kennedy School Professor William Hogan Outlines Causes and

Consequences of the "Texas Energy Crisis" in New Episode of "Environmental


Podcast is a production of the Harvard Environmental Economics Program.

Cambridge, MA, March 05, 2021 --(PR.com)-- William Hogan, the Raymond Plank Research Professor
of Global Energy Policy at Harvard Kennedy School and director of the Harvard Electricity Policy
Group, outlined the causes and consequences of the recent Texas energy crisis in the latest episode of
“Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics
Program,” a podcast produced by the Harvard Environmental Economics Program.

Listen to the interview here.

Hosted by Robert N. Stavins, A.J. Meyer Professor of Energy and Economic Development at Harvard
Kennedy School and director of the Harvard Environmental Economics Program and the Harvard Project
on Climate Agreements, Environmental Insights is intended to promote public discourse on important
issues at the intersection of economics and environmental policy.

The Texas energy crisis unfolded in mid-February when a convergence of winter storms produced
record-cold temperatures across much of the central part of the United States, reaching as far south as the
Lone Star State. The sustained cold and ice caused significant damage to the energy infrastructure in
Texas, knocking down transmission lines, freezing gas pipelines and pumps, severely pinching supplies,
and creating blackouts throughout much of the state. At the same time, the exceptionally cold weather
resulted in spiking demand, as electric heating was cranked up by consumers. Hogan described the scale,
scope, and duration of the crisis as “unprecedented,” akin to a one-in-one-hundred-year event.

“It's a very tragic situation. Terrible. And when you're dealing with systems like this, you can plan for
some things. And then, when you get outside the envelope, you're in trouble,” he said.

The situation resulted in a severe energy supply/demand imbalance during which hundreds of thousands
of homes and businesses were left without power for days, and some of those who remained on the grid
were at risk of receiving extremely high electricity bills because they had previously opted for contracts
which passed on wholesale costs plus a relatively small monthly charge.

Some observers have pointed fingers at Texas’ relatively less regulated energy market as the culprit for
the crisis that unfolded last month, but Hogan largely disagrees.

“One of the claims that has been very popular in certain press articles is that Texas has a free market in
electricity. And you can't have a free market in electricity because of problems like this. And that's a
mischaracterization of what has happened in Texas,” he said. “There are differences in the level of
choice. But there are also reliability conditions, operating reserves that are imposed, transmission
constraints that you have to respect. So, it's a complicated mix of engineering and economics. And you

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have more choice, perhaps, in Texas than you have elsewhere. But I think it's a mistake to characterize it
as just having no regulation."

Hogan agreed that the Texas energy grid is not equipped to withstand such pronounced and sustained cold
snaps as the one in February, but he argued that the state’s electricity market design, which is highly
responsive to typical changing supply and demand conditions under normal circumstances, is one that is
being replicated in other parts of the country.

“You see evidence in the Western energy imbalance market that's expanding rapidly because of the
pressure coming from renewables. And you see the Southeast electricity and energy market proposed a
couple of weeks ago, which is trying to accelerate the amount of trading and the amount of market
operations. All of these things are moving in the direction of the Texas energy market,” he said. “So,
they're going that way because of the intermittency problems and challenges that come from renewables.”

In general, Hogan concluded, the Texas electricity market design isn’t “as broken as people have

Hogan’s interview is the 21st episode in the Environmental Insights series, with future episodes
scheduled to drop each month.

“Environmental Insights is intended to inform and educate listeners about important issues relating to an
economic perspective on developments in environmental policy, including the design and implementation
of market-based approaches to environmental protection,” said Stavins. “We speak with accomplished
Harvard colleagues, other academics, and practitioners who are working on solving some of the most
challenging public problems we face.”

Environmental Insights is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify
and Stitcher.

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Contact Information:
Harvard Environmental Economics Program
Doug Gavel
Contact via Email

Online Version of Press Release:

You can read the online version of this press release at: https://www.pr.com/press-release/832218

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