Texas Businesses Have an Incentive to Save Power—and Aid the State’s Electricity Grid

In February 2021, an extreme winter storm hit the Texas power grid hard, triggering widespread blackouts. This summer’s waves of extreme heat are again putting the electricity network to the test. But this time the system has kept running, thanks in large part to a regulatory quirk that has little to do with environmental sensitivity or civic responsibility and everything to do with cold hard cash.

The state provides a big financial carrot for businesses that reduce their power demand the most on certain peak days, coupled with the smack of a painful stick for those who aren’t as successful doing so. The result: Big companies are slashing electricity use at critical moments to minimize their share of expenses to maintain the grid, saving them millions of dollars in the process.