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Clearing price for supplying power to Texas grid –$31.65

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Re: Clearing price for supplying power to Texas grid –$31.65

#71

Post by WalterBright »

Dylan16807 wrote: post #69
WalterBright wrote: post #61

Earlier quoted context omitted.

In the 1970s, the feds decided they could set prices and allocate gas far more efficiently than the market. The result was many years of gas shortages and long lines. Reagan's first act in 1980 was an Executive Order to repeal all of that. The gas lines disappeared literally overnight, and have not returned in 40 years. I don't buy that anything is fundamentally different about electricity. > case of shortage you don…

> I'd change my behavior if rates doubled. Wouldn't you, too? But most customers want fixed-rate electricity. So in a free market, that's what they buy. The spot market largely only exists for suppliers, and if you run out of suppliers the problems with electricity are vastly harsher than you could ever get with gas. The combination of market + contracts + consumer preference ends up causing shortages. I'm not sugges…

> But most customers want fixed-rate electricity.

And what they got was no electricity when they needed it most.

> So in a free market, that's what they buy.

Some did buy the variable plan. They had electricity (although at a high price).

Re: Clearing price for supplying power to Texas grid –$31.65

#72

Post by throw0101a »

mrDmrTmrJ wrote: post #18
spacemanmatt wrote: post #8

Earlier quoted context omitted.

I believe that is an accurate description of disincentivizing oversupply. I hate ERCOT.

Why do you hate ERCOT? I ask because I broadly understand ERCOT to have delivered the lowest prices and the highest reliability over the last decade. A far better outcome than PJM or CALISO. Last weeks failure was because the natural gas pipeline infrastructure isn't winterized - a separate issue from the structure of the electricity market. What leads you to a different opinion?

> I ask because I broadly understand ERCOT to have delivered the lowest prices and the highest reliability over the last decade.

Until they didn't. Until any money savings you may have gotten over the last decade was eaten up by what will be the cost of the burst pipes and flooding of your house.

How are ERCOT's prices compared to El Paso's?

> El Paso Electric said they always try to prepare for the future and after a winter storm in 2011, the utility company worked towards replacing and upgrading their equipment. Many generators now have antifreeze protection.

> "We went from plus-10 degrees which was what the original equipment was designed for to a minus-10, so currently everything we install or upgrade is done to a minus-10 degree sustained temperature," said Louie Guarderrama, director of operations for the utility company.

* https://kvia.com/news/el-paso/2021/02/15/el-pasos-not-seeing...

Re: Clearing price for supplying power to Texas grid –$31.65

#73

Post by godmode2019 »

mrDmrTmrJ wrote: post #43
godmode2019 wrote: post #33

Earlier quoted context omitted.

I'm sorry but how does a trace element affect the polar vortex/ jetstream bending. It doesn't. Its not a good argument if all weather situations can be explained by "climate change". It's too hot - climate change It's too cold - climate change What you are describing is called weather.

Godmode2019, I suspect we're strongly agreeing. My point is that Texas didn't assume the 'weather' would ever be bad. So when it got cold they ran out of natural gas to run their electricity system. The reason I bring up methane is that's the raw fuel they need to power their generators. And my proposed solution is to require the energy infrastructure (here the natural gas infrastructure, which is required to power t…

I didn't mean to be negative.

I just get bothered when see co2 makes things cold, its almost absurdist joke ie the one thing to nullify a hypothesis is now incorporated into the hypothesis to strength the argument.

I don't know anything about Texans, I don't even live in America but American politics trickle down

Re: Clearing price for supplying power to Texas grid –$31.65

#74

Post by godmode2019 »

Sparkle-san wrote: post #42
godmode2019 wrote: post #33

Earlier quoted context omitted.

I'm sorry but how does a trace element affect the polar vortex/ jetstream bending. It doesn't. Its not a good argument if all weather situations can be explained by "climate change". It's too hot - climate change It's too cold - climate change What you are describing is called weather.

Climate change leading to temperature extremes in both directions is an open question within climate science. There are some theories suggesting this is the case and there are skeptics of that theory, but if you've proven otherwise then you should probably submit your research to them.

I agree,

I feel the burden of proof is in the new theory, rather than - here is a hypothesis, prove its wrong.

It's pretty clear in the small scale studies co2 concentration affects temperature in the direction or warming in the long term and the short term affect of cooling because less energy makes it to the surface. (Similar to clouds or smog/ smoke blocking light)

But a causing extreme cold weather events..

Re: Clearing price for supplying power to Texas grid –$31.65

#75

Post by Dylan16807 »

WalterBright wrote: post #71
Dylan16807 wrote: post #69

Earlier quoted context omitted.

> I'd change my behavior if rates doubled. Wouldn't you, too? But most customers want fixed-rate electricity. So in a free market, that's what they buy. The spot market largely only exists for suppliers, and if you run out of suppliers the problems with electricity are vastly harsher than you could ever get with gas. The combination of market + contracts + consumer preference ends up causing shortages. I'm not sugges…

> But most customers want fixed-rate electricity. And what they got was no electricity when they needed it most. > So in a free market, that's what they buy. Some did buy the variable plan. They had electricity (although at a high price).

> And what they got was no electricity when they needed it most.

Yes. And what I'm saying is that it's a natural outcome of having a market.

As far as I can tell you're arguing for "market pricing" but arguing against government interference in pricing, but I don't think you can have both of those at the same time.

If the government doesn't intervene, most people will buy fixed-price electricity contracts instead of market-priced contracts.

If you want the average person to avoid blackouts in a situation like this ('like this' meaning no huge grid overhauls), then you need to ban fixed-price electricity contracts.

> Some did buy the variable plan. They had electricity (although at a high price).

Are you sure? As far as I'm aware the outages were a function of location, not what type of plan you bought.

Re: Clearing price for supplying power to Texas grid –$31.65

#76

Post by WalterBright »

Dylan16807 wrote: post #75
WalterBright wrote: post #71

Earlier quoted context omitted.

> But most customers want fixed-rate electricity. And what they got was no electricity when they needed it most. > So in a free market, that's what they buy. Some did buy the variable plan. They had electricity (although at a high price).

> And what they got was no electricity when they needed it most. Yes. And what I'm saying is that it's a natural outcome of having a market. As far as I can tell you're arguing for "market pricing" but arguing against government interference in pricing, but I don't think you can have both of those at the same time. If the government doesn't intervene, most people will buy fixed-price electricity contracts instead of…

> you're arguing for "market pricing" but arguing against government interference in pricing

Market pricing is prices not set by the government. By definition.

> If the government doesn't intervene, most people will buy fixed-price electricity contracts instead of market-priced contracts.

That's speculation. Even if true, it would be their choice.

> Are you sure?

They were being portrayed as victims in the news because of their high bills. Having a bill means they had electricity.

Re: Clearing price for supplying power to Texas grid –$31.65

#77

Post by sep_field »

WalterBright wrote: post #45
asmithmd1 wrote: post #29

Earlier quoted context omitted.

They may have delivered low prices, but it was at the cost of ignoring handling “black swan” events. As the ERCOT CEO said, If they had not blacked out millions of customers, grid and consumer equipment would have been destroyed - wiping out all the accumulated cost savings. ERCOT does not pay producers for standby capacity. Just this week the New England grid completed its annual auction for capacity to be available…

If the consumer retail electricity rate was allowed to float minute by minute, there'd be no need for "peaker" plants. The notion of fixed electricity rates is the source of most of the problems. After all, there are regular events where oil refineries go off like, burn down, blow up, etc., and yet I'm still able to buy gas because the pump prices go up, reducing demand to match the supply. Note that this big freeze…

One problem with this is it forms a regressive structure where poor people are priced out while rich people get to keep consuming at whatever rate they can stomach.

It would work better and much more fairly if the floating rate was scaled by the net worth of the customer.

Re: Clearing price for supplying power to Texas grid –$31.65

#78

Post by rhodozelia »

Osiris wrote: post #35
mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

If the market solves all problems why would the government even need to mandate winterization? Wouldn't smart businesses have done the risk analysis and done the work? Maybe the problem here is that loss of electrical power has a significant external cost that isn't absorbed by the utilities. In other words, the cost of winterization was more than the cost to fix the damage to their equipment but doesn't take into ac…

Vertically integrated government owned and operated utilities have imploded too- notably Ontario hydro failed due to costs related to their nuclear plants, and the rate payers had an extra line item on their bill - $10/mo? - for I don’t know how many decades to pay down the stranded debt.

I don’t think markets are the right tool for electricity generation transmission and distribution - too much coordination is required between the different functions, central planning optimizes the outcomes, and the lead times are so long on significant projects that a high $/MWh for a week in 2021 isn’t going to result in a new nuclear plant.

There are natural monopolies in distribution and maybe transmission as well.

100% regulated even if there are private players is the way.

Re: Clearing price for supplying power to Texas grid –$31.65

#79

Post by khuey »

throw0101a wrote: post #72
mrDmrTmrJ wrote: post #18

Earlier quoted context omitted.

Why do you hate ERCOT? I ask because I broadly understand ERCOT to have delivered the lowest prices and the highest reliability over the last decade. A far better outcome than PJM or CALISO. Last weeks failure was because the natural gas pipeline infrastructure isn't winterized - a separate issue from the structure of the electricity market. What leads you to a different opinion?

> I ask because I broadly understand ERCOT to have delivered the lowest prices and the highest reliability over the last decade. Until they didn't. Until any money savings you may have gotten over the last decade was eaten up by what will be the cost of the burst pipes and flooding of your house. How are ERCOT's prices compared to El Paso's? > El Paso Electric said they always try to prepare for the future and after…

> Until they didn't. Until any money savings you may have gotten over the last decade was eaten up by what will be the cost of the burst pipes and flooding of your house.

Yeah but that's going to be paid for property insurers or perhaps federal disaster relief funds. ERCOT successfully externalized the cost of coping with frigid temperatures, allowing them to provide power at lower prices.

Re: Clearing price for supplying power to Texas grid –$31.65

#80

Post by GhostVII »

Osiris wrote: post #35
mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

If the market solves all problems why would the government even need to mandate winterization? Wouldn't smart businesses have done the risk analysis and done the work? Maybe the problem here is that loss of electrical power has a significant external cost that isn't absorbed by the utilities. In other words, the cost of winterization was more than the cost to fix the damage to their equipment but doesn't take into ac…

I don't think anybody said the market solves all problems. It's completely possible to have a free market with some regulations, you just say that to participate in the market you must meet certain reliability standards, like being able to withstand low temperatures for a long period of time. Private businesses can count on being bailed out when once in a few decade disasters happen (which makes some sense, imo, since it's not efficient for each business to prepare for disasters), so the only way they will prepare is if they are required to.
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