Question: A recent article by the [Texas Tribune](https://www.texastribune.org/2011/02/08/texplainer-why-does-texas-have-its-own-power-grid/) explains why Texas has its own electrical grid:

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> The Texas Interconnected System — which for a long time was actually operated by two discrete entities, one for northern Texas and one for southern Texas — had another priority: staying out of the reach of federal regulators. In 1935, President Franklin D. Roosevelt signed the Federal Power Act, which charged the Federal Power Commission with overseeing interstate electricity sales. By not crossing state lines, Texas utilities avoided being subjected to federal rules. "Freedom from federal regulation was a cherished goal — more so because Texas had no regulation until the 1970s," writes Richard D. Cudahy in a 1995 article, "The Second Battle of the Alamo: The Midnight Connection."
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But what exactly does it gain from staying independent? Is it purely a political statement or is there a rational reason behind having a completely separate grid?

Answer: 
As a general rule, regulation transfers costs from consumers to producers, while deregulation transfers costs from producers to consumers. In this specific case, that works out like so:

* With regulation, energy producers would be required to take precautionary steps to ensure the security and viability of the power grid, and could be held accountable for failures to do so. In other words, the energy producers would have to pay up-front to upgrade their equipment, and if they didn't do so they could be subject to penalties and lawsuits for any harm that came from inaction. This would have a significant impact on their profit margins.
* Without regulation, energy producers are not obliged to pay up-front for upgrades, and have better legal protections against fines or lawsuits for not doing so. The costs incurred from a disaster of this sort will be absorbed by the state or federal governments through emergency management procedures, and will ultimately be paid by the taxpayer. Corporate profits are increased by cutting corners, with little or no financial risk to the corporations themselves.

This is essentially the same thing that happened during the California energy crisis back in the late 1990s, the Flint Michigan water crisis, and other less severe cases caused by reckless deregulation under GOP administrations
It’s actually a purely economic reason. Regulations invariably increase cost, as regulation increases work above and beyond the cost of achieving a regulatory goal ie documentation of regulatory compliance.

Think of it this way, suppose they had to comply with the regulatory rules for every country in the world (ignoring jurisdiction). Suppose further that there were no conflicts, just that some were more strict than others. That would be a huge burden on a company just in the paperwork alone, but it would also be a problem in deciding which regulation to follow. If there’s a minimum distance between components, they would have to be aware of all of them, in order to be sure they complied.

Now, this of course isn’t that extreme, and for quite a while they didn’t have any regulatory rules to follow, but it still applies. No regulatory paperwork is going to be cheaper than one, and when the states added their own, one is cheaper than two.

NOTE: Just as you can exceed regulatory standards when they apply, you can exceed them even when they don’t. The desire to escape regulatory oversight is not limited to those that want to produce low quality crap. The main reason a company would want regulatory oversight is because they think it gives them an economic advantage. Not because they feel they need it in order to produce good work.