Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Texas power crisis revealed flaw in market’s design

news.cornell.edu

Post reply on HN
Print view View original

11–20 of 296 posts

Re: Texas power crisis revealed flaw in market’s design

#11

Post by kerblang »

Not very informative.

Both gas & electric markets did payout MASSIVELY to those who had resources because the pricing absolutely exploded by well over 10,000%. The Brazos Electric Co-Op went to bankruptcy court (ongoing) because they ran up a multi-billion dollar bill over the course of the week because they didn't want their fucking customers to freeze to fucking death.

If there's such a thing as financial rape, this was it. And yes Texans blamed ERCOT because blaming the right-wing politicians whom they answer to (via the Public Utility Commission) does not digest easily, and it turned out wind & solar couldn't be blamed either even if you could somehow make that Obama's fault.

It's the kind of massive shit show you get when politics is no longer competitive, much like California. Still better than CA, I guess, for the moment...

Wait no I'm not finished. Imagine there's a big hurricane, you gotta get out of town, low on gas, and you pull up to the gas station and the price is... $900.00/gallon. That's how much the price of electricity went up. That is GOUGING. That gas station owner would go to straight to jail if customers didn't murder him outright first. But because this wasn't retail, it was perfectly okay, even though millions of Texans are now paying for it, for years to come. What a crock of fucking shit.

Wait, wait, no I'm STILL not finished. Texas politicians made sure they walled off their own energy grid so that they wouldn't have "interstate commerce" and thus prevent federal oversight, which would not have allowed such extraordinarily low reserves in the first place. This is STRICTLY the fault of those politicians, and they answer for shit, because that's life in a one-party state, be it communist, fascist, democrat, or republican. Again: A crock of fucking shit. Fucking hell.

Re: Texas power crisis revealed flaw in market’s design

#12

Post by simfree »

ryan93 wrote: post #7
selectodude wrote: post #5

Earlier quoted context omitted.

If something is required to survive, it is by definition not a free market. Texas either needs to go all the way and let people freeze to death without getting bailed out or they need to re-regulate. This middle ground where the market is free until there's a market failure is simply moral hazard.

How are you so sure that regulators would have required protection against a once in a hundred year storm? What doesnt the Democratic republic of the Congo regulate the poverty out of existence? Hindsight is 20/20

Rolling blackouts occured during the Groundhog Day Blizzard in 2011 as well: https://en.m.wikipedia.org/wiki/2021_Texas_power_crisis#Back...

Competent regulators can see the past and prepare for things that happened a decade ago to reoccur.

Re: Texas power crisis revealed flaw in market’s design

#13

Post by JaimeThompson »

burlesona wrote: post #4

This is classic “efficiency” vs “antifragility.” There are some things that are okay to ocassionally fail, and for those it’s often good to pursue efficiency. But for something critical like electricity, the market all decided - with good financial justification - that it would be more profitable to just let the system fail occasionally than to be hardened against long-tail events. In systems engineering if we want t…

>Or a regulation that says all plants must be winterized to a certain degree thus the cost of electricity will just be higher for everyone to pay for mitigation of long tail risk

The Southwest Power Pool has such regulations which is why they didn't have the same level of issues in the parts of Texas they serve.

Re: Texas power crisis revealed flaw in market’s design

#14

Post by JumpCrisscross »

burlesona wrote: post #4

This is classic “efficiency” vs “antifragility.” There are some things that are okay to ocassionally fail, and for those it’s often good to pursue efficiency. But for something critical like electricity, the market all decided - with good financial justification - that it would be more profitable to just let the system fail occasionally than to be hardened against long-tail events. In systems engineering if we want t…

Or just be transparent about that trade-off. It's a fair one to make. Putting batteries at mission-critical sites may be the better play than winterizing the entire grid, from hospitals to merry-go-rounds.

Re: Texas power crisis revealed flaw in market’s design

#15

Post by bryanlarsen »

burlesona wrote: post #4

This is classic “efficiency” vs “antifragility.” There are some things that are okay to ocassionally fail, and for those it’s often good to pursue efficiency. But for something critical like electricity, the market all decided - with good financial justification - that it would be more profitable to just let the system fail occasionally than to be hardened against long-tail events. In systems engineering if we want t…

As I understand it, (ie, poorly), California pays for both power and capacity. Capacity payments are paid whether the plant is used or not, and capacity has fairly strict uptime requirements or it doesn't pay for that capacity.

Re: Texas power crisis revealed flaw in market’s design

#16

Post by nine_zeros »

obblekk wrote: post #2

I suppose we've come full circle and stopped trusting in free markets to fully solve all problems. Does anyone know of hybrid central planning / market approaches? Maybe a central planner with a market trying to predict whether the planner is making good decisions?

A hybrid planning approach IS a national grid approach.

A state grid can draw from the national grid when required. The draw can also be preplanned and game dayed before actual disasters.

Re: Texas power crisis revealed flaw in market’s design

#18

Post by enragedcacti »

obblekk wrote: post #2

I suppose we've come full circle and stopped trusting in free markets to fully solve all problems. Does anyone know of hybrid central planning / market approaches? Maybe a central planner with a market trying to predict whether the planner is making good decisions?

You could give The People's Republic of Walmart a read. Full disclosure, I haven't read it, I've just read/listened to media talking about it.

> For the left and the right, major multinational companies are held up as the ultimate expressions of free-market capitalism. Their remarkable success appears to vindicate the old idea that modern society is too complex to be subjected to a plan. And yet, as Leigh Phillips and Michal Rozworski argue, much of the economy of the West is centrally planned at present. Not only is planning on vast scales possible, we already have it and it works. The real question is whether planning can be democratic. Can it be transformed to work for us?

https://www.amazon.com/Peoples-Republic-Walmart-Corporations...

Re: Texas power crisis revealed flaw in market’s design

#19

Post by xxpor »

ryan93 wrote: post #7
selectodude wrote: post #5

Earlier quoted context omitted.

If something is required to survive, it is by definition not a free market. Texas either needs to go all the way and let people freeze to death without getting bailed out or they need to re-regulate. This middle ground where the market is free until there's a market failure is simply moral hazard.

How are you so sure that regulators would have required protection against a once in a hundred year storm? What doesnt the Democratic republic of the Congo regulate the poverty out of existence? Hindsight is 20/20

ERCOT/TX explicitly creating their own grid so they're not regulated by FERC (which covers literally the entire rest of the country) suggests that perhaps they don't have ratepayer's best interests at heart.

I'd love to know if anyone's written anything about say, FERC vs ERCOT's gas pipeline winterization requirements.

Re: Texas power crisis revealed flaw in market’s design

#20

Post by maxerickson »

obblekk wrote: post #2

I suppose we've come full circle and stopped trusting in free markets to fully solve all problems. Does anyone know of hybrid central planning / market approaches? Maybe a central planner with a market trying to predict whether the planner is making good decisions?

Is your first paragraph about Texas specifically or something?

Utilities in most places are pretty heavily regulated. In like that last 20 years we have had ~0 gas outages and probably less than 10 days of power outages here.

The weather event in Texas had the problem of being rather extreme, but it sure wasn't unimaginable or anything like that.

Post reply on HN