The Texas Power Grid Failure: What Business Owners Need to Know

As winter storms swept across the nation, Texas experienced frigid temperatures at record lows not seen for decades. As a result, the Texas power grid failed, leaving over four million people without heat, hot water, and electricity throughout the state, leading to several fatalities.

Why did the Texas Power Grid Fail?

Texas draws energy from several sources: natural gas, coal, and wind. While Texas rarely sees such cold temperatures, many power companies did not take measures to winterize the equipment used to generate power, according to an article in The Texas Tribune.

According to Scientific American, the freeze caused wind generation to fall by 32%, coal to decrease by 13%, and natural gas generation to drop by 25% between 9 p.m. on Feb. 14, 2021 and 3 a.m. on Feb. 15, 2021. By 7 a.m. on Feb. 15, the primary power grid surged to approximately 71 gigawatts, while they are only generally able to generate 51 gigawatts of electricity.

The Electric Reliability Council of Texas (ERCOT) stated in a news release, “Extreme weather conditions caused many generating units – across fuel types – to trip offline and become unavailable.”

Texas Governor Greg Abbott called on ERCOT reform, declaring it an emergency item in the current legislative session. He has asked the legislature to mandate winterization of the power system and ensure funding.

How Are Businesses Affected by the Texas Power Grid Failure?

Not only have the conditions been devastating for millions of residents, but business owners have been significantly affected as well. The impact on the dairy, poultry, citrus, beef, and other agricultural industries has been substantial, causing farmers and ranchers to suffer damages in the millions.

Consequently, every aspect of the supply chain has been affected — stores and restaurants are without power and being forced to toss spoiled food, resulting in loss of profit. As a result of being unable to obtain the products from the manufacturers, grocery store shelves are left empty.

The full extent of the agricultural losses may not yet be known. However, according to an article published by the Texas Farm Bureau, about 50% of the citrus harvest in the Rio Grande Valley may have been lost. Additionally, the Texas power grid failure has caused some dairy farmers to lose $8 million in milk each day since their plants do not have the power to keep operations running.

According to Reuters, the Arctic temperatures have also caused ranchers to struggle to keep their cattle alive, and baby chicks are dying as a result of hatcheries being unheated. Grain mills are also unable to operate and produce animal feed, and the water sources for livestock have frozen.

Countless commercial businesses are impacted by the Texas power grid failure, also. Not only are they losing profits, but many have suffered significant property damage. Millions across Texas have incurred repair costs for burst pipes, flooding, and water damage.

What Can You Do If Your Business Was Affected by the Texas Power Grid Failure?

If you own a business that was impacted by the Texas power grid failure, you may be entitled to compensation from your insurance provider — or in a lawsuit to hold the power company accountable. Lawyers are currently investigating the issue and individual business owners’ potential claims.