Electricity is neither a Giffen good nor a Veblen good but it still violates the law of demand. This was reinforced last summer in Texas, the hottest on record, when wholesale electricity prices reached nearly 30 times the normal price with no appreciable dent in demand. The Electric Reliability Council of Texas, the wholesale market operator, scrambled to procure the necessary capacity to keep Texans’ air-conditioners humming and barely avoided having to impose rolling blackouts. It could do so because “reserve margins” (electric sector jargon for excess capacity) in Texas at the time were adequate to avoid any shortfall in supply. Signs now point to reserve margins being in decline. If current trends continue, by 2016 the region’s reserve margin will be less than half its current reliability target of 13.8 percent (of total peak demand). What can Texas do to reverse this trend?