Texas electric firm files for bankruptcy citing $1.8B in claims • Hacker News Board

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#181

Post by rayiner » Mon, Mar 01, 2021, 2:27 PM UTC

snidane wrote: post #94

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

The "deregulated" energy industry is built around that exact principle you're talking about, both in the US and the EU. The "platform" is the grid, which delivers electricity from plants to homes and businesses. Because competition in this area is limited, these companies are regulated monopolies, whose infrastructure decisions and rates are closely supervised by a government energy board. These entities work as part of a regional transmission organization, a highly regulated entity that ensures stability of the grid as a whole (https://en.wikipedia.org/wiki/Regional_transmission_organiza...).

Generators and users of electricity operated on top of that platform. Generation is a competitive market--many entities can be delivering power into the grid, and the product is fungible. Users don't care where the electricity comes from, just about the price. Electricity generation is therefore quite suitable for market mechanisms.

What happened in Texas was not an example of a privatized "platform" failing. The platform (the grid) was fine. Instead, adverse weather events caused a shortage of the product (electricity) running on top of the platform. Put differently, this is not like a scenario where Texas decided to privatize roads and things went sideways. It's like a scenario where packages didn't get delivered on Christmas because COVID caused an unexpected spike in demand for package delivery, as well as an unexpected shortage of drivers for delivery vehicles.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#182

Post by mschuster91 » Mon, Mar 01, 2021, 2:29 PM UTC

yourapostasy wrote: post #124

snidane wrote: post #104

Earlier quoted context omitted.

That's actually land monopoly problem. Ie. whoever came first to claim the land has exclusive use rights on it forever, or as long as his descendants go. It's yet another monopoly problem even though it doesn't look like it at first glance. Each house basically sits on a piece of mlonopoly for the parcel below it, preventing others from use. It's not much of a big deal in general, but in congested big cities, it is a…

> You pay yearly percentage of the market value. Establishing "market value" is the rub. Texas for example, does not make real estate sales prices public. This has a lot of perverse effects, one of which is deep-pocketed commercial interests have pummeled public assessors until commercial property is tacitly way undervalued for tax purposes, yet is openly sold for much more than the purported tax basis. I've heard of…

> I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use.

There is one major consequence: investor/VC backed/mega-rich major chains would instantly drown out family owned and small businesses that can't compete with gentrification. This is already a plague with Walmart and Amazon absolutely flattening local economies, your proposal would make it an epidemic of yet-unimaginable scale.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#183

Post by mschuster91 » Mon, Mar 01, 2021, 2:32 PM UTC

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

> Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay.

Generally speaking I'm on your side - but here? No. This case is an incentive for future shareholders of electric utility ops to keep their company accountable for disaster preparation, so that the shareholders don't lose their investment.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#184

Post by yohannparis » Mon, Mar 01, 2021, 2:39 PM UTC

confidantlake wrote: post #165

volta83 wrote: post #73

Earlier quoted context omitted.

> . When private companies screw up, who gets left with the bill? The share holders (which often includes the leadership). Their shares drop relatively quickly to close zero. I think, however, that this is not enough. Share holders of a company should be liable as individuals for the damages the company causes in case the company cannot pay. This would strongly encourage share holders to pressure the CEO (which is al…

I have non voting shares in 500+ companies due to index funds. I really don't think making me personally financially liable makes sense.

So you are effectively gambling on a speculative value of the company and not investing in it.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#185

Post by wiether » Mon, Mar 01, 2021, 2:40 PM UTC

I... declare... BANKRUPTCYYYYYYYYY

https://youtu.be/CcoLAhKn8uU?t=218

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#186

Post by tjalfi » Mon, Mar 01, 2021, 2:44 PM UTC

aljp wrote: post #79

baxtr wrote: post #70

Earlier quoted context omitted.

> Privatise the profit, socialise the losses. I always wondered about that. Maybe because I don’t understand what it’s trying to say. I mean profits of companies benefit many, don’t they? Through jobs, taxes, dividends in case it’s a public company and so on. What am I getting wrong here?

One of the most egregious examples of this that I like to use is in natural resource extraction, mining, deforestation, etc. When mining companies start a project to dig a quarry (in Australia), they are meant to set aside funds for rehabilitation of the environment when they are done, this should come out of the profits from the endeavor. I consider destruction of the environment a socialised cost. Unfortunately, qu…

The book Game of Mates[0] has some detailed examples of this behavior.

[0] https://gameofmates.com/

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#187

Post by lmeyerov » Mon, Mar 01, 2021, 2:45 PM UTC

rayiner wrote: post #181

snidane wrote: post #94

Earlier quoted context omitted.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

The "deregulated" energy industry is built around that exact principle you're talking about, both in the US and the EU. The "platform" is the grid, which delivers electricity from plants to homes and businesses. Because competition in this area is limited, these companies are regulated monopolies, whose infrastructure decisions and rates are closely supervised by a government energy board. These entities work as part…

I thought energy generation is still regional in practice -- loosely, the further it goes, the more expensive -- and private co's deciding to cheap out on weather protections showed the king has no clothes in this case? grid sounds nice and platform-y, but when you zoom in, similar to us telcos: not quite as stable and abundant as the lobbyists advertise for any given region when you look.

as an intuition, a solar panel farm in some isolated arizona desert doesn't help folks in maine. conversely, as neither region has that many local suppliers, a few private businesses making rational personal $ decisions to not supply in critical scenarios will put all citizens at risk when those scenarios happebs.

(written as someone living through periodic wildfires allowed through similar market optimism.)

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#188

Post by guerrilla » Mon, Mar 01, 2021, 2:47 PM UTC

imtringued wrote: post #180

guerrilla wrote: post #64

Earlier quoted context omitted.

> The infrastructure to produce food is pretty vital, but I think it's also mostly market-driven and works well. You're talking about on of the most subsidised matkets on Earth. It's hardly market-driven.

Yeah and that is by design. We consider famines as simply unacceptable and thus we make sure that the agriculture sector works, even when it shouldn't. Compare that to countries who are dependent on food imports for basic nutrition. They simply aren't doing nearly as well as the EU or USA.

Nobody claimed otherwise. I was responding to it being "mostly market-driven" which it isn't remotely.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#189

Post by yohannparis » Mon, Mar 01, 2021, 2:48 PM UTC

CydeWeys wrote: post #156

maxerickson wrote: post #119

Earlier quoted context omitted.

The regulator set prices at $9000 with the idea that the high price would reduce the shortage.

And it did. Plenty of Texans were reducing their power usage to the absolute bare minimum once they got word of how expensive power had just become.

Of course, now people are going to keep an eye on daily utility prices, to avoid life braking bills. The superiority of a free market with poor regulations!

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#190

Post by rout39574 » Mon, Mar 01, 2021, 2:50 PM UTC

yourapostasy wrote: post #124

snidane wrote: post #104

Earlier quoted context omitted.

That's actually land monopoly problem. Ie. whoever came first to claim the land has exclusive use rights on it forever, or as long as his descendants go. It's yet another monopoly problem even though it doesn't look like it at first glance. Each house basically sits on a piece of mlonopoly for the parcel below it, preventing others from use. It's not much of a big deal in general, but in congested big cities, it is a…

> You pay yearly percentage of the market value. Establishing "market value" is the rub. Texas for example, does not make real estate sales prices public. This has a lot of perverse effects, one of which is deep-pocketed commercial interests have pummeled public assessors until commercial property is tacitly way undervalued for tax purposes, yet is openly sold for much more than the purported tax basis. I've heard of…

Is there more "game the system" necessary than to say I have no right not to sell? This strategy is just privatizing, and then trivializing, eminent domain.