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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

#71

Post by anonporridge »

epgui wrote: post #68
anonporridge wrote: post #61

Earlier quoted context omitted.

I'm inclined to agree, because I think our civilization should exist to serve humanity, not use humanity simply as another disposable cog in the machine. But that's not the way our legal and political system actually works.

I don’t disagree with anything you’re saying, but you’re confusing “what is” for “what ought to be”. It’s Hume’s classic “is-ought problem”. Edit: I’ve interpreted the second part of your comment as an objection to the first part, but if that wasn’t the intended message it’s my bad :)

I don't think I'm confusing the two.

I'm suggesting that what I think ought to be the way the world works in fact is not the way it actually works.

This is a criticism of our current system, not using it as a reason to dismiss the idea of changing it to something better.

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

#72

Post by NicoJuicy »

Panzer04 wrote: post #59
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…

If you don’t raise prices, many people/companies will senselessly consume excess electricity they don’t need. Thus, you get power outages instead of merely high prices. That being said, it’s not like most people have a real-time monitor of electricity prices so those that can will actually reduce consumption. Ultimately, in a constrained system, either you raise prices (and ensure availability, at expense) or fix pri…

They obviously did both

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

#73

Post by NicoJuicy »

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…

Ask Canada, they seem to go better.

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

#74

Post by reincarnate0x14 »

JumpCrisscross wrote: post #14
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.

Truly mission critical sites don't rely batteries, they have diesel or gas generators, with UPS batteries or flywheels that keep key circuits live until the generators can take over. It's incredibly cost and size prohibitive to build a battery system capable of handling megawatt/hours of load, particularly when it's only going to be used on average a few hours per years.

In sparsely populated or geographically difficult areas (islands, semi-frontier areas, etc) that is common. It's not an exact comparison, but Texas has roughly equivalent GDP to Canada. They could certainly match Canada's power reliability if the state government cared to do so. Instead the single-party majority has been content for decades to let major events keep happening instead of making commercial entities meet more rigorous reliability requirements. It would certainly be significantly more cost-effective than eating 100-billion USD disasters.

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

#75

Post by thomascgalvin »

spamizbad wrote: post #58
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…

What I don’t understand about the Texas electricity market is that, despite how “free” it is, price per kwh isn’t terribly competitive compared to more tightly regulated states - having the highest average residential rates in the West South Central region: https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

Deregulation isn't about improving consumer outcomes, it's about improving profits. Expecting it to result in lower cost per kWh is a losing game.

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

#76

Post by caf »

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…

The issue identified is that many plants weren't able to stay online to sell energy at the extreme prices that were bid. Those plants didn't make windfall profits for their investors, they weren't selling anything at all.

Essentially it reached a point where electricity wasn't available at any price.

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

#77

Post by lotsofpulp »

_-david-_ wrote: post #60
jackson1442 wrote: post #36

Earlier quoted context omitted.

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

Didn't we see the same issue in Oregon or Washington (I can't remember which) at the same time?

I do not recall any issues in WA. OR had a bunch of people out of power due to downed power lines due to ice forming on trees and then trees or tree branches falling down and taking the power line down.

There was never any problem with supply of power though, since there is plenty here due to hydro.

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

#78

Post by kerblang »

NicoJuicy wrote: post #72
Panzer04 wrote: post #59

Earlier quoted context omitted.

If you don’t raise prices, many people/companies will senselessly consume excess electricity they don’t need. Thus, you get power outages instead of merely high prices. That being said, it’s not like most people have a real-time monitor of electricity prices so those that can will actually reduce consumption. Ultimately, in a constrained system, either you raise prices (and ensure availability, at expense) or fix pri…

They obviously did both

I.E. They raised prices and "ensured" scarcity, yes.

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

#79

Post by [deleted] »

thomascgalvin wrote: post #75
spamizbad wrote: post #58

Earlier quoted context omitted.

What I don’t understand about the Texas electricity market is that, despite how “free” it is, price per kwh isn’t terribly competitive compared to more tightly regulated states - having the highest average residential rates in the West South Central region: https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

Deregulation isn't about improving consumer outcomes, it's about improving profits. Expecting it to result in lower cost per kWh is a losing game.

[deleted]

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

#80

Post by caf »

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?

I've on occasion idly wondered whether modern information processing technology would enable a centrally-planned economy that worked better than the failed 20th century examples.
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