Survey Shows Texans Don’t Like Warren Buffett’s $8 Billion Texas Power Plan

Renée Cross, Mark P. Jones, Pablo M. Pinto, Kirk P. Watson

Winter Storm Uri began to hit parts of Texas on Feb. 13, 2021 and - at its peak- left close to 4.5 million homes and businesses without power. The preliminary number of deaths attributed to the storm totals 111 and the storm’s economic toll is estimated to be as high as $295 billion. Over the course of the week of Feb. 14-20, more than two-thirds of Texans lost electrical power, for an average of 42 hours, and primarily due to the power outages, half lost running water for an average of 52 hours, with even more Texans with water lacking access to potable water for almost two days on average.

A little over a month later, on March 25, Warren Buffett’s Berkshire Hathaway BRK.B announced a proposal being pitched to Texas lawmakers under which it would build $8 billion worth of power plants to substantially boost the state’s electrical generation reserve capacity and, in doing so, help prevent the type of preventable disaster that afflicted the Lone Star State the week of Feb. 14. A mandatory monthly fee paid by Texas consumers as part of their electricity bill would be the principal method of funding the Berkshire Hathaway project.

The Texas Electrical grid is located entirely within the boundaries of Texas; hence, it is not subject to the regulation of the Federal Electric Regulatory Commission. Two Texas counties are part of the Western Interconnection electrical grid while 29 are part of the Eastern Interconnection grid. The lack of federal oversight allowed Texas policymakers to design an electrical system based on market-based incentives that would promote innovation, competition, and lower prices for consumers. The system seems to have delivered positive outcomes along these dimensions, yet recurring extreme weather events, such as Winter Storm Uri, have exposed a flaw: the system is not resilient to sudden spikes in demand and drops in supply of electric power effected by the fall in temperature, resulting in massive blackouts, and human and material losses.

The central problem facing Texas is identifying solutions that would make the system more resilient. Yet building a resilient electrical system has the typical properties of a public good, which is likely to be undersupplied by the market. A proposal such as Berkshire Hathaway’s with its reliance on building excess reserve capacity requires government action. The catch for Texas policymakers is that despite the broad acknowledgement of the costs of the blackouts and the demand for policy remedies to mitigate the impact of severe weather events, a majority of Texans do not seem to be willing to pay an additional fee to the generators for the required investment in a more resilient electrical infrastructure. Perhaps these Texans do not believe they are the ones, after being left shivering in their homes, to pay an additional price for an investment that generators can make to assure a more resilient electrical infrastructure.

Between March 9-19, the Hobby School of Public Affairs at the University of Houston conducted a survey of 1,500 adults living in the 213 Texas counties (containing 92% of the state’s 29 million population) served by the Texas Electrical grid, which is managed by the Electrical Reliability Council of Texas (ERCOT).

The survey respondents were asked about the extent to which they would support a proposal to allow electricity generators to charge consumers an additional fee to support the maintenance of a more substantial minimum electricity reserve in order to protect the state of Texas from the effects of severe weather affecting its energy supply and delivery. More than half (54%) of those surveyed oppose allowing generators to charge this fee, with 36% strongly opposed and 18% somewhat opposed. Conversely, fewer than one in four (24%) support this fee proposal, 8% strongly and 16% somewhat. The remaining 22% neither support nor oppose the fee proposal to bolster the state’s reserve generation capacity.

This opposition is very bipartisan, with 57% of Republicans, 50% of Democrats, and 58% of Independents all opposing the proposal to allow a company like Berkshire Hathaway charge consumers a fee to support the creation of a larger reserve electrical generation capacity in Texas.

These same Texans were also asked how much more they would be willing to pay on their monthly electricity bill to protect the Texas electrical grid from the effects of severe winter weather by increasing reserve generation capacity and insuring power plants were fully winterized. Half (51%) indicated that they would not be willing to pay any more at all on their monthly bill to achieve these goals. The next most common option selected was $5 more which one quarter (25%) of Texans said they would be willing to pay each month, followed by 14% who indicated they would be willing to pay $10 more monthly, with the remaining 10% spread among those who would be willing to pay $20 more (6%), $30 more (3%), $40 more (0%), and $50 more (1%).

Obviously, far more goes into the decision calculus of state lawmakers when considering a proposal of this magnitude.  other than public opinion. And lawmakers also face public demands to resolve problems with the electrical grid that Winter Storm Uri made apparent. That said, the Texas public surveyed in this poll indicated quite clearly that it opposes policies that would require consumers to largely shoulder the burden for boosting reserve electrical generation capacity with the goal of preventing another winter power outage of the magnitude experienced by Texans during Valentine’s Day week of 2021.

Renée D. Cross is the Senior Director of the Hobby School of Public Affairs at the University of Houston. Renée worked as the district director in the office of a state representative for two years before joining the staff of the University of Houston Center for Public Policy as a researcher. Now with the Hobby School of Public Affairs for 21 years (the Center for Public Policy is one of several entities housed within the Hobby School since 2016), Renée serves as the School’s senior director. Her academic interests include Houston and Texas government, politics, and history; urban politics; and civic engagement and voting. In addition to serving as the course instructor for the School’s internship programs, Renée teaches upper level political science courses such as Texas Politics, Urban Politics, State and Local Government & Politics, Campaign Politics, and Participation & Democracy in American Politics at the University of Houston and the University of Houston-Downtown.

Mark P. Jones, Ph.D., is the fellow in political science at the Baker Institute, the Joseph D. Jamail Chair in Latin American Studies and a professor in the Department of Political Science at Rice University.

Pablo M. Pinto is an Associate Professor and Director of the Center for Public Policy at the University of Houston’s Hobby School of Public Affairs, and the co-editor of the journal Economics & Politics. Pinto is a UH Energy Faculty Fellow, a non-resident Scholar in the Latin America Initiative of the Baker Institute at Rice University, and adjunct research scholar for the Saltzman Institute of War and Peace Studies at Columbia University. Pinto’s areas of expertise are international and comparative political economy, comparative politics, and quantitative methods. Pinto holds an M.A. from Aoyama Gakuin University in Japan, and a Ph.D. in Political Science and International Affairs from the University of California, San Diego. He received a Law Degree from Universidad Nacional de La Plata, Argentina. Prior to joining the University of Houston in 2014, Pinto was a member of the faculty of Columbia University. He taught at the Escuela Nacional de Gobierno in his native Argentina, and the Universidad Nacional de La Plata, where he founded and directed the Department for Asia-Pacific Studies. He also worked as Chief Counsel for Toyota Argentina.

Kirk P. Watson is the Founding Dean of the University of Houston Hobby School of Public Affairs and began his position on May 1, 2020. Watson’s policy experience spans local and state government. As Senator, he championed education, health care, transportation and government transparency. During his tenure in the Senate, he served as a member and vice chair of multiple standing and special committees. Most recently he was Vice-Chair of the Senate Committee on Nominations and also served on the committees overseeing State Finance, Education, Higher Education and the Sunset Advisory Commission. His peers elected him President Pro Tempore of the Senate in 2019.

Senator Watson graduated from Baylor University and graduated first in his law school class at Baylor Law School. He has been named an outstanding young alumnus of Baylor, Young Baylor Lawyer of the Year, and the Outstanding Young Lawyer of Texas. He was most recently of counsel at the law firm Husch Blackwell LLP.

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