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Texas power crisis revealed flaw in market’s design

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

#41

Post by willis936 »

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?

Markets have never been free. Policy has always dictated the winners and losers, even in cases of state deregulated markets (who gets federal subsidies, who makes out better given lack of state regulation, who paid for that regulation, etc.)

The ideal of a free market is simply not compatible with reality.

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

#42

Post by magicalist »

tomohawk wrote: post #29

Energy in Texas, like everywhere else in the US, is heavily regulated. They can't just raise rates or borrow money whenever they want. These decisions are regulated and political. So there is a set amount of income coming in to improve things and repair things and to pay off debt. They were required to build out wind power. Probably a good thing in the big scheme of things, but that takes money away from other priori…

This seems pretty irrelevant (and not specific to this event)?

Wind power produced above projected rates. The biggest problem was lack of winterization of natural gas infrastructure.

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

#43

Post by MisterBastahrd »

selectodude wrote: post #5
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?

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.

Even not quite so extreme, going without power for an extended period of time basically forces you to throw all your refrigerated and frozen food away. It takes months each times this happens for the supply chain to catch up with the new and unexpected demand.

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

#44

Post by ikiris »

fallingfrog wrote: post #25

If the prices of energy go sky-high every time there’s a supply crunch, that’s a good thing for the investor, is it not? Am I missing something here? What is supposed to be the incentive to avoid that situation exactly? You double your investment, and profit falls. Or, you invest nothing, and rake in the cash. Great plan. I just don’t understand why they expected anything else to happen. Markets are not magical unico…

Usually its just basic understanding of history, but there is a specific faction heavily in power in that area that chooses to pretend that things like this are unpredictable because it gains them influence and money.

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

#45

Post by anonporridge »

nexuist wrote: post #37
SamoyedFurFluff wrote: post #22

Earlier quoted context omitted.

But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?

The solution is to cut off industrial and commercial sites first, which draw the most power anyways, and keep residential zoning online as much as possible. The economy can take a break for one day.

Depends.

Some industrial customers like datacenters have strict availability agreements with customers and won't be able to accept prolonged cutoffs.

Forcing non residential customers like these to curtail their use would likely end up driving the industry (and corresponding tax revenue) elsewhere.

But what you're talking about does already exist, and it's called demand response, https://www.energy.gov/oe/activities/technology-development/...

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

#47

Post by bcrl »

jackson1442 wrote: post #36
tomohawk wrote: post #29

Energy in Texas, like everywhere else in the US, is heavily regulated. They can't just raise rates or borrow money whenever they want. These decisions are regulated and political. So there is a set amount of income coming in to improve things and repair things and to pay off debt. They were required to build out wind power. Probably a good thing in the big scheme of things, but that takes money away from other priori…

You suggest that these problems would be faced everywhere. So why is Texas the only one experiencing them?

Eastern Ontario seems to do fine handling winter temperatures of -28C to -35C every year. Cold isn't the issue driving reliability problems here, wind and ice are.

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

#48

Post by sremani »

kerblang wrote: post #11

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, th…

The gas station analogy is a bad analogy -- understand that demand and supply are being balanced real time on the grid. That is not same with a Gas station or a group of gas stations.

A bit more sophisticated thinking is required here -- if you want people to maintain over-capacity, you either pay them during the good times or pay them during the bad times.

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

#49

Post by PaulHoule »

anonporridge wrote: post #35
SamoyedFurFluff wrote: post #22

Earlier quoted context omitted.

But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?

There's still a dark balancing act going on. We don't have the collective power to save everyone, and if we overextend ourselves trying to do that, then there is a risk that the whole system collapses for everyone, or partially collapses and causes more pain than might have happened without spreading ourselves too thin. We obviously need to struggle to make a good world for everyone, but nature is fucking brutal and…

Back before electricity deregulation we were paying more for electricity but in the process of rate setting we were looking at it from a systems perspective in which reliability was considered holistically.

(The lower rates were not just from ‘efficient markets’ but also it being possible for high cost producers such as steam turbine coal fired power plants to go bankrupt in the fracked gas age w/o bankrupting the whole utility.)

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

#50

Post by cortesoft »

anonporridge wrote: post #35
SamoyedFurFluff wrote: post #22

Earlier quoted context omitted.

But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?

There's still a dark balancing act going on. We don't have the collective power to save everyone, and if we overextend ourselves trying to do that, then there is a risk that the whole system collapses for everyone, or partially collapses and causes more pain than might have happened without spreading ourselves too thin. We obviously need to struggle to make a good world for everyone, but nature is fucking brutal and…

> We don't have the collective power to save everyon

Except we do? We have plenty of resources if they were distributed more evenly. In this particular example, other states are able to provide energy during rare events because they did not choose to go with a pure market based system. They aren’t on the verge of collapse.

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