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State lawmakers in Austin spent all of Thursday grilling the people responsible for keeping the power on in Texas. They want to know where and how the system broke down last week. But it really isn’t all that hard to figure out. Two former CEOs in Dallas saw this coming years ago, which is why they sold their companies. They’d separately come to the same conclusion: if something like last week occurred, it would put them out of business. One of those CEOs believed a disaster was likely, if not imminent.

Stream Energy and Ambit Energy are electricity retailers. Both companies have, by all accounts, achieved great success. After Stream began registering users, in March of 2005, it took only 10 months to become the fifth-largest retail electricity provider in Texas. This was three years after the Legislature deregulated the state’s electricity market, turning what the rest of the country considered a closely regulated utility into a free-market spree.

For the first time, Texans could choose their energy provider. Upstart retailers didn’t generate their own power but would instead buy wholesale from major generators. They would market that energy to consumers, usually undercutting the retail arms of the larger producers. (The Legislature froze established rates to trigger market competition.) The retail market ushered in creative delivery plans like free usage during nights and weekends. Some credit the proliferation of Smart Meters directly to this free market approach.

The idea of deregulation was to let the market drive energy production instead of any government agency, but that didn’t translate into sufficient reserve power or infrastructure improvements that may have helped keep the plants online in single-digit temperatures.

The Electric Reliability Council of Texas, known as ERCOT, manages the grid. It can order utility providers like Dallas’ Oncor to cut power to preserve the grid during periods of extreme demand, which is what happened last week. But ERCOT is supposed to be overseen by the Legislature and the Public Utility Commission of Texas, known as the PUCT. Neither did nearly enough to motivate generators to winterize their facilities or create enough additional power to fall back on in an emergency. The federal government even warned the electricity grid manager to do this in 2011.

ERCOT can make its utility partners like Oncor put customers in the dark, but it can’t order the private generators to pay for infrastructure improvements to prepare its generating units for a freak storm: insulated power lines, de-icing equipment on wind turbines, removable structures for natural gas plants, all of which is less expensive if you’re not retrofitting existing generators.

That’s not to say the state government didn’t dangle carrots. Deregulation introduced scarcity pricing. Generally, a megawatt of energy costs anywhere from $40 to $150 to produce, depending on the source of that energy—coal, natural gas, renewables—and the conditions under which that energy was being generated. But renewables were becoming so subsidized that it was actually priced negatively, spurring the PUCT to come up with a way to motivate more natural gas generation. (A megawatt can power about 200 Texas homes during peak demand, according to ERCOT.)

So when demand soared, the state allowed energy generators to sell electricity for an inflated price. It was capped at $1,000 per megawatt, then $3,000, then $4,500, then $9,000. The idea was to use this inflated pricing to motivate generators to produce more when prices were higher. The Public Utility Commission of Texas’ hope was that this would prompt these private generators to build more natural gas facilities; the more power you generate, the more money you make during moments of scarcity.

But for years, Texas generators rarely charged the inflated cap, especially not for consecutive hours. That wasn’t the case last week, when unprecedented temperatures froze natural gas in the pipelines, shuttered some coal production, held wind turbines in place, and knocked off a nuclear plant. Natural gas, coal, and nuclear account for 70 percent of the state’s production. It’s rough to lose renewables like wind, but when those traditional sources fail, we have a problem. And the traditional sources of energy lost about 41 percent of their generating capacity in a flash.

Texas had no backstop. And, ironically, some generators couldn’t benefit from the scarcity pricing because the cold had stifled the gas production.

Nevertheless, Stream almost certainly would have had to purchase wildly inflated electricity for its customers at the height of last week’s storm. The difference between that inflated cost and the lower income from its customers might have sunk the company. Its general partner and founder, Rob Snyder, sold the operation and its customers to NRG in May of 2019 for $300 million.

The company was doing well at the time of the sale. In May of 2019, days after the deal closed, Snyder quipped in an email to a Dallas Morning News editor that Stream was “such an efficient cash flow machine that I have almost become numb to the size of the federal income bills that I have been paying over the past seven years.” 

So why sell? Stream and Ambit sold energy like Mary Kay sells cosmetics, through thousands of direct-to-consumer salespeople.

Snyder says he saw last week coming and got out. He predicted the circumstance, if not the timing. He figured the grid would fail, or come close to failing, during the summer. That’s when demand has historically been at its highest, when rolling outages were sometimes necessary to conserve energy. Besides, Texas just doesn’t dip into single-digit temperatures, especially not across the entire state. But then it did.

A quarterly NRG earnings report in 2019 caught Snyder’s eye. Generally, ERCOT wants a reserve margin of 13.75 percent that can be deployed if generators can’t produce for whatever reason, including extreme weather. But there is no legal requirement for such safety nets. By 2021, Houston-based NRG was predicting reserves so low that the state wouldn’t be able to sustain even a day without blackouts if generation failed. The market had not motivated enough new generation to keep up with all the new Texans and their power usage should a catastrophe occur that resulted in generators not being able to operate.

“If we have a recurrence of the summer of 2011 (when we had 40+ consecutive days of 100+ degree weather), there is virtually no chance for the survival of independent retailers that do not have vertical integration with significant generation capabilities,” Snyder wrote in his email to the editor at the News. He was saying that companies needed to be in the generation game if they wanted to stay in the retail business. He sold to one of those generators.

Snyder said he saw retailers like Stream to be “shock absorbers” for when there was volatility in the market. Generators like NRG benefit because they can sell the electricity they produce at an inflated margin when energy is scarce. Customers who were locked into fixed-rate plans would be protected from market swings. The retailers—known as REPs, Retail Electricity Providers—would be the ones left holding the bag. (Customers with variable-rate plans would feel the pain, too. That is what happened with the much-publicized California-based Griddy. Powering your home at wholesale rates is great when demand and prices are low, but when scarcity pricing kicks in, five-figure electric bills follow. During Thursday’s hearings, the head of the PUCT said about 40,000 to 45,000 Texans out of 7 million total customers were enrolled in such a plan.)

Senate, House Take Aim at Who to Blame for Outages. Over the course of 14 hours yesterday, the Texas House and Senate grilled the Electric Reliability Council of Texas, which manages the state’s electricity grid. They ducked blame. The legislature grilled the Public Utilities Commission of Texas, which is supposed to oversee ERCOT. They also ducked blame, pointing the finger at the agency below them. One thing ERCOT CEO Bill Magness—whose annual salary is a cool $803,000—did note is that the Legislature could change the agency’s governance power. It could give them teeth to mandate generators winterize and further protect their equipment during extreme weather events, which will surely become more common as we live through the effects of climate change. Meanwhile, Curt Morgan, the CEO of Dallas’ Vistra Energy, said the natural gas companies couldn’t get gas to the power companies with the required pressures. Morgan told legislators that his faith in the deregulated energy market has been shaken. NRG’s CEO, Mauricio Gutierrez, basically said the same.

COVID Numbers Ticking Back Up after the Storm. Dallas County reported 614 new coronavirus infections on Thursday and 24 new deaths. The infection count has been artificially low because of how the storm affected testing and our ability to move about the city. County Judge Clay Jenkins anticipates those numbers to begin their ascent soon, but he believes deaths will begin to decrease.

It Really Hailed Last Night. I’m exhausted with this weather. Last night, two rounds of hail battered mostly parts of the northern corners of Dallas-Fort Worth. That’s where we got more reports of golfball and quarter-sized hail. The rest of the weekend brings a mild, springlike cold front on Saturday and widespread storms on Sunday. Saturday looks dry but cloudy, yet there is a chance we’ll get some precipitation.

Mavs Fall to Sixers. Luka had trouble against Ben Simmons, posting 19 points on 6-13 shooting with only four assists and seven turnovers. The Mavericks, who were without Kristaps Porzingis again, fell 99 to 111. Doncic posted a miserable +/- of -20 while Josh Richardson was even worse against his former team, with -24. The Mavs fall to 15-16 and snap a two game win streak.

Remember That Guy, Jamie Faith, Who Was Tragically Shot and Killed in Oak Cliff Back in October While Walking His Dog, Maggie, With His Wife? And afterwards, his wife, Jennifer Faith, said the masked shooter approached them from behind just as they were leaving their home on South Waverly Drive, fired at Jamie’s head several times, then tried to bind Jennifer’s hands and steal her jewelry? Well, Jennifer was arrested yesterday on a federal charge of obstruction of justice. Police say that text messages show that Jennifer was having a “full-blown emotional affair” with the actual shooter, Darrin Rubin Lopez, a former high school and college boyfriend from Tennessee. Police arrested Lopez for the shooting in January, alleging that he shot Jamie and then fled to Tennessee. Former Dallas County prosecutor Toby Shook is representing Jennifer.

Seriously? Hail? The temperature swing from 2 to 81 apparently means that showers and thunderstorms, which are expected to start later this afternoon, may bring quarter-size hail along with heavy rains. On the bright side, at least it’s not falling airplane debris, which just missed my sister’s house in Broomfield, Colorado earlier this week.

Hooters With No Servers and a Food Truck on Steroids? I really just have so many questions today. Hoots Wings apparently plans to serve the chain’s beloved wings without the side of sexism across North Texas, taking on Dallas-based Wingstop. Meanwhile, former Fast N’ Loud TV host Richard Rawlings is designing a 42-foot-long, $500,000 food truck with t-shirt cannons, which will be parked in the “Monkey Yard” behind his restaurant, Gas Monkey Garage, on Merrill Road. I’m guessing he will also have wings, like Flying Monkey Wings or somesuch. Maybe they, too, can be shot from cannons.

Dallas Rapper Yella Beezy Faces Misdemeanor Weapons Charge for Having Five Firearms in His Vehicle. An arrest warrant shows that the 29-year-old musical artist, née Markies Deandre Conway, was stopped on February 13 after officers, who were surveilling a strip mall in east Oak Cliff, pulled over his black Yukon for minor traffic violations (pulling out of the parking lot without yielding to traffic and not fully stopping at an intersection). Officers asked Beezy to roll down his windows, but he said he couldn’t because they were bulletproof. He cooperated with a request to get out of the vehicle, but when an ID check indicated a gang affiliation, and officers say they spotted a gun visible on the floorboard, they searched the vehicle and found four additional firearms. Beezy was shot three times in Lewisville in October 2018, a month after opening for Beyoncé and Jay-Z.

Dallas County Reports 789 New COVID-19 Cases and 25 Deaths. County Judge Clay Jenkins says that the Fair Park vaccination site will continue to prioritize second doses as they attempt to catch up with delays caused by last week’s storms. Military and FEMA personnel pitched in yesterday for the first time as part of a new nationwide effort launched by the Biden administration. Dallas is one of three locations in Texas to receive a FEMA vaccination site; the other two are in Arlington and Houston. Locally, the goal is to help vaccinate 21,000 people per week from Dallas’ 17 most vulnerable zip codes. But the post-thaw rush for second doses led to a bit of a bottleneck on Wednesday, with cars snaking around Fair Park earlier in the day. Officials are requesting that only people who were supposed to receive their second shot on or before February 17 should report to Fair Park for vaccinations today.

Storm May Be Responsible for 17 Dallas County Deaths. The Dallas County medical examiner’s office said it will investigate 17 deaths that occurred during the past week to determine if they can be attributed to the winter storm. They include three men who died of carbon monoxide poisoning. It may take months to determine the cause of the deaths.

More Winter Storm Fallout. Five members of the ERCOT board who do not live in Texas have resigned. The Hall of State in Fair Park, which recently received a multi-million renovation, suffered “millions in damage” after pipes burst during the storm. Crop and livestock losses are being tallied and are expected to be huge. The IRS has extended the tax filing deadline for Texans. Plumbers are being run into ground as they scramble to fix thousands of broken pipes. And Gov. Greg Abbott will address the state tonight in a televised address and is expected to speak about the outages and ongoing recovery efforts.

Dallas County Reports 18 New COVID-19 Deaths. They include a woman in her 30s who had no underlying conditions. The county also reported 412 new cases.  So far, 257,725 people in Dallas County have received at least one dose of a coronavirus vaccine, and 116,941 Dallas County residents are fully vaccinated. As the U.S. passes 500,000 COVID deaths, WFAA looks at some of the North Texas families whose lives have been devastated by the disease.

Late Luka Heroics Push Mavs Past Celts. Here’s something to feel good about. Also, Cuban continues to dispel Porzingis trade rumors.

On Sunday, BET premiered the first of six 40-minute episodes for Soledad O’Brien’s new miniseries, which is titled “Disrupt and Dismantle.” The reporter and editor found stories across the country that showcase the impact and longstanding trauma created by racist policies that disproportionately affect communities of color. O’Brien starts in Dallas, next to Marsha Jackson’s home, where a pile of shingles that weighed somewhere between 50 and 100 tons has stood for years.

In a preview for the series, which began last Sunday, O’Brien says she and her production team wanted to “highlight things that were unfolding in time right now, to connect the dots to a history that is a discriminatory history, then explain what could be done to change those things.”

And so they launched their project in southern Dallas.

I doubt there is a monument as visual as Shingle Mountain that can better highlight what can happen to a community when industrial zoning is allowed to coexist with residences, further flamed by lax oversight on the part of local and state governments. Blue Star Recycling, whose CEO was a former roofer who lives in Collin County named Chris Ganter, is accused of using the city’s loose zoning enforcement to create a monstrous, illegal dump next door to Marsha Jackson. She says it ruined her quality of life. (Ganter has denied any wrongdoing.)

Jackson’s voice cracks on the phone in interviews. Her doctor suspects the fiberglass that blows in the wind from the shingles next door has caused rashes on her hands and arms. She doesn’t allow her 12-year-old granddaughter to venture outside, lest the particulate matter from the shingle pile aggravate her asthma. She lived next to this mountain since its arrival in January 2018; the city began removing it last December, after reaching a $1 million settlement with the land owner.

The activists, attorneys, and community leaders who have worked for years to raise awareness of this incredibly visible monstrosity have long maintained that the city’s zoning is the root of the dysfunction. After all, without the plot of land being zoned for an industrial use, Ganter and his Blue Star Recycling company doesn’t show up and start buying used shingles from contractors who didn’t want to wait in line across the street at the city dump. Even though deed restrictions should have prevented such a thing from happening, City Hall and the Texas Commission on Environmental Quality only noticed it after the shingles stopped up a nearby creek.

“If you have the land primed for a toxic use, you will continue to attract that same toxic use and the only way to undo it is to actually get rid of that industrial zoning,” Evy Mayo, the environmental activist and paralegal who has helped research the pollution that plagues southern Dallas, tells O’Brien.

Last night, after the Mavs defeated the Grizzlies in their first game in a week, a post went up on Bleacher Report saying that the team was “quietly gauging Kristpas Porzingis’ trade value.” It was interesting timing since Porzingis sat out the game with tightness in his back and the Mavs didn’t seem to miss him. That was especially true on defense, where by every metric the 7-foot-3 Latvian has been, and this is a technical term, absolute garbage this season. He can’t move laterally, can’t elevate around the rim, and lacks the lower body strength to hold his position on post ups and blockouts. (Offensively, he’s been a bit better of late, but still pretty regularly needs to shoot himself into a game which is not ideal.)

The Athletic’s Tim Cato followed the Bleacher Report story this morning, getting Mark Cuban to refute it. I agree with Tim’s main point: the Mavs more than likely will not trade KP this year or this summer. He’s not playing at his best right now, so there is probably a depressed market for his services, and when he starts playing better, it makes more sense to keep him. The bubble version of Porzingis is the ideal complement to Luka Doncic. I don’t doubt that they have brought his name up, because that’s what good front offices do. Also what some front offices do: leak that a team is doing that, to try to create dissension. That’s the game. The most alarming detail in the Bleacher Report story, to me, is that the Mavs are looking to try to get Andre Drummond from Cleveland. Unless it costs the team nothing in terms of players or draft picks (i.e. he gets waived and then signs here), put me down as a giant NO THANKS.

My main takeaway from all this: everyone needs to be patient. It was just sort of assumed that the Mavs would get a top-4 seed this season and Luka would either win the MVP or come extremely close. Both those might happen—so much is still in flux. But it might not happen until next year. Progress is not always a straight line pointing up. Setbacks happen, and the really great teams are forged in those fires.

In 2003, the Mavericks, led by the Big Three of Dirk Nowitzki, Steve Nash, and Michael Finley, made the Western Conference finals against the Spurs. They fell in six games, and almost took it to seven, even though Dirk missed the last three games after hurting his knee. Man, if we had him we would have made the Finals. Maybe we would have won the championship. Just imagine what next year will be like.

The Mavs lost in the first round to the Sacramento Kings in five games.

COVID Update. Yesterday Dallas County reported 348 new cases and 18 deaths. The new cases are artificially low, owing to last week’s storm. The state added 184 new cases in Collin County, with no deaths. Tarrant reported 415 new cases and 22 deaths. Yesterday, the Fair Park vaccination center ran out of vaccine; it will be closed today. You know what I’m going to say next, but I’m going to say it nonetheless. Wash your hands, wear a mask, and keep your distance.

Many Folks Struggle Without Water. The DMN brings us a striking story about residents of Vickery Meadow waiting in line for three hours to get water from a fire hydrant. “This is like Mexico,” a woman said. People all over the area lack running water because of burst mains. DISD says it had 130 pipes burst at its campuses. Meanwhile grocers say North Texas shelves will be stocked and back to normal by this weekend.

Officer Mitchell Penton Celebrated at Funeral. You should read this story about Penton’s funeral yesterday. He was the Dallas cop who was killed by a suspected drunken driver on Central Expressway. He sounded like a great guy. Just heartbreaking.

Sports! The Mavs and the Stars both returned to action last night; it wasn’t a happy night for both teams. From the Miami Herald: “Somehow, someway, the Florida Panthers were going to get the puck past Dallas Stars goaltender Anton Khudobin. It took an all-out onslaught in the second period to make that happen. The Panthers put 29 shots on goal in the middle frame — a franchise record for a single period — and finally got a pair past Khudobin before holding on for a 3-1 win over the Stars …” From the Commercial Appeal: “Any missed shot at American Airlines Center echoes loud in the arena due to microphones behind the rims. For the Memphis Grizzlies, the echoes and clangs made for some ugly music. The Dallas Mavericks, however, had a sweeter tune of fastbreak layups and 3-pointers. The Grizzlies’ fifth game in seven days ended in a 102-92 road loss that felt much larger.”

Last month, as the storms were closing in, we published a guide to helping Dallasites without shelter survive the freezing temperatures. Once the freezing temperatures arrived and snow started falling, dozens of nonprofits in North Texas began working around the clock to provide food, shelter, and warmth to these vulnerable individuals.

It didn’t take long for some of these organizations to exhaust their resources, and several have reached–and surpassed–a state of crisis. Domestic violence shelters are rebuilding their facilities after suffering from flooding, burst pipes, and irreparable damage. Nonprofits that house abused and neglected children depleted their food supplies and are just starting to restock. Many organizations need help to pay for the hundreds of hotel and motel rooms they booked to house unsheltered Dallasites. This guide will point you to immediate actions you can take to help.

Do you know of an organization in dire need of assistance to get through the next few weeks? Email [email protected] to add them to this guide. We will update regularly.

Last week, photographer George Utkov captured something very few of us, if any of us, have ever seen before: a frozen White Rock Lake. With temperatures in the single digits, the lake iced over. The shots from above show sailboats docked in ice while others appear moored in the middle of the lake. There are some stranger ones, of ice separating as if a sample under a microscope. Take a look—the lake may never appear this way again.

George shot his images using a DJI Mavic Air 2 drone. I asked him to write some words about what he saw.

Gov. Abbott Announces Moratorium On Power Disconnects for Non-Payment. People are facing insanely high bills, and the governor said addressing those out-of-line costs and the failure of the state’s power grid will be priorities for the Lege this session. I should hope so. The weather now is like last week never happened, but people are still struggling.

Prince Harry and Meghan Markle Donate to Genesis Women’s Shelter. The Duke and Duchess of Essex sent money via their Archewell Foundation nonprofit, which will be used to replace the roof and help meet Genesis’ immediate needs.

DISD Schools Still Closed. At least for today and tomorrow.

Mavericks Donate $1.25 Million to Winter Storm Relief. Owner Mark Cuban, CEO Cynt Marshall, Luka Doncic, Tim Hardaway Jr., Dwight Powell, and Maxi Kleber all pitched in. The team is finally back in action tonight, for the first time in a week. One positive: their starting five were able to practice together more than they have all season, including training camp.

COVID. Dallas County cases (273) are low, or at least lower, but deaths (22) are high. Cases are probably lower than they would be, owing to weather-delayed reporting, but they’re probably trending down anyway. Now that we can get back out, remember: mask up, keep your distance, and get the shot when you can.

On Tuesday, when temperatures peaked at 14 degrees, Cibo Divino owner Daniele Puleo stood by the oven in his Sylvan Thirty shop and restaurant, overseeing the brisk shuffling in and out of pizzas charred by the inferno. The power was out, but the oven blazed, making food for people who were walking in from a frozen world. They continued until the dough supply gave out midday yesterday.

The restaurant community, which has been slammed this year by hit after hit, rose yet again as the meteorological conditions were compounded by a canceled Valentine’s Day, lengthy closures, and an unsteady return to normalcy.

In the Dallas Farmers Market area—the enclosed Shed and adjacent shops and apartments—power failed as well. Ka-Tip owner and Farmers Market resident George Kaiho trekked down with his wife and a cousin to stir up the stove. They lit the gas appliances in the dark and turned out a simple menu of bacon, eggs, and pancakes and comforting shrimp and chicken congees. They sold hot tea and coffee and let people bring containers to fill with hot water, knowing others were in dire straits at home.

Tuesday and Wednesday, as power danced on and off, Kaiho was able to add some of their regular menu items. When the restaurant darkened naturally, around 4 p.m., the tiny team stopped. “We couldn’t see anymore, so we closed,” Kaiho says.