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
Tax Revenue
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By not trading on the national market, Texas avoids the cost of federal power regulations, as noted in several other answers. Now, the benefits of participating in the national market might seem like an obvious loss for Texas. They could have purchased power from many other states with excess capacity during this time.

However, Texas is enjoying what you might call the "Federal Privatization Tax", which is the situation that arises when a market operator is able to privatize profits while dumping costs on the public. The most obvious example is the 2008 Financial Crisis and the massive bailouts received by the banking sector.

It may not seem obvious that the same is happening in Texas, until you realize that Gov. Abbott declared a state of emergency, then requested Biden to declare a federal emergency for TX to free up FEMA and other assistance. And, because Americans are reluctant to leave their fellow Americans out in the cold, to suffer the consequences of their carefully considered decisions, [Biden agreed](https://www.npr.org/sections/live-updates-winter-storms-2021/2021/02/19/969465887/biden-to-authorize-broader-disaster-relief-for-texas) to the disaster declaration.

Federal Insurance
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It's funny that individual taxpayers are required to purchase liability insurance to enjoy the privilege of driving on public roads, but states are not required to purchase "regulatory insurance" to enjoy the privilege of federal disaster relief. When power plants in MN or ND or ME experience freezing temps, but survive just fine because federal regulations required larger safety margins, the ratepayers in those states pay more for electricity, but receive larger uptime performance. If there were a major disaster in one of those states that precipitated a federal disaster declaration and accompanying relief, taxpayers in other states should not resent the outcome too much, because the affected states have already paid in their "insurance premiums".

Texas, on the other hand, has chosen to forego the "federal insurance" of the national power regulatory framework, but *still receives the protection* of federal disaster relief. And so, Texas taxpayers are transferring my tax dollars to their state under the force of the Federal executive.

I would actually be ok with this, if FEMA dollars were conditioned upon states adhering to or adopting nationwide precautionary measures for whatever situation precipitates the emergency. "You want emergency relief for your short-sighted grid planning? No problem. But by accepting these dollars, you agree to fall under the oversight of the Federal Power Commission. Have a nice day."