Reducing end user prices is the claimed outcome explicitly made by conservative groups. Much like the claim that "reducing taxes" will reduce prices.
Yeah, those are called "lies".
Texas power crisis revealed flaw in market’s design
101–110 of 296 posts
Re: Texas power crisis revealed flaw in market’s design
#102Earlier 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 live in central oregon, so I can only speak for where I live. But the power outages we did have, or that I know about, were mostly from wildfire season. However, I just know about my general area and that is not necessarily that same for all of Oregon.
Re: Texas power crisis revealed flaw in market’s design
#103Energy 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…
> They can't just raise rates or borrow money whenever they want.
Uhh, yes they can, and yes they do. Wholesale rates of electricity change every 15min in ERCOT. During the deep freeze weather event you could sign up for electricity plans which exposed you to the wholesale rate of electricity.
The retail rates you pay in the open market are determined by the contract you signed. Lots of REPs offer all kinds of pricing structures on their contracts, the contracts offered change every several days and can all kind of term lengths or even allowed variability.
The amount generators are getting changes constantly in this market. As mentioned earlier, spot prices change every 15 minutes. Bids take place in day-ahead markets as well, which change based on tons of different factors. The only people getting somewhat fixed rates are the distribution companies but even then their rates are allowed to change every now and then, and their prices are based on usage.
Re: Texas power crisis revealed flaw in market’s design
#104Earlier quoted context omitted.
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/…
This is reasonable, but the grid should support such separation then. Each building needs to be connected to a known tier of power grid, and parts of one building may need different tiers: e.g. an ICU that should stay powered no matter what vs the rest of the clinic that could afford to lose power without hurting anyone.
Unless it's already built, it's rather expensive to rebuild.
Re: Texas power crisis revealed flaw in market’s design
#105This 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...
you couldn't have 50 companies in one place and even if you cold the fix cost are high o make it unprofitable, low regulation means less control not more competition in a natural monopoly, making all companies try t extract the most money without making too much attractive to new competences, if you look carefully companies (commercial and industrial) pay less than other countries because they have more bargain power against the power industry but regular citizens cant pay the extra money for a tailor connection and tent to pay what they being offered.
Re: Texas power crisis revealed flaw in market’s design
#106Earlier 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.
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.
If it’s -2°F outside, many people can figure out a way to save their frozen food.
Re: Texas power crisis revealed flaw in market’s design
#107Earlier 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...
This average price is a bit complicated to look at, and requires even more understanding of the Texas market. There are essentially two types of electric customers in ERCOT areas in Texas: those in co-ops and those in open markets where you can choose your Retail Electric Provider and plan. Your physical location determines which kind of market you fall into. In a co-op, those residents do not get to choose their pow…
You pay more per kwh than I do, you get rolling blackouts, and mine is nuclear energy...
Re: Texas power crisis revealed flaw in market’s design
#108Earlier quoted context omitted.
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.
If it’s -2°F outside, many people can figure out a way to save their frozen food.
Small hole in the wall stores in Harbin don’t bother putting ice cream in freezer sun the winter.
Re: Texas power crisis revealed flaw in market’s design
#109Earlier quoted context omitted.
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.
I havent studied this in depth, but my intuition tells me that having capacity payments such that the grid as a whole has sufficient overhead for extreme events nullifies any "efficiency" arguments for having these market mechanisms in the first place. Call me crazy, I think that Texas is doing exactly what it set out to do with deregulation. Run the grid more efficiently via market mechanisms. The method that is use…
And then the long-tail events completely wipe out decades of savings. Griddy was charging over $9/kwh last year.
Re: Texas power crisis revealed flaw in market’s design
#110So, isn't this problem basically the mirror image of insurance? You pay for insurance in a normal year, and every once in a while you get a big payout. The energy companies need to have an incentive to winterize for a once/decade or less event. So, if they sell (i.e. are paid in a normal year) severe winter insurance, and the buyer gets half their windfall profits in a year when there is a shortage, and there is an informed (authorized to audit winterization efforts) buyer, then there is a market incentive.
Much simpler to just mandate that you have capacity available (and inspect and penalize if you aren't winterized), but that will essentially put a cap on the amount of solar, wind, and natgas energy production (until/unless you get much, much bigger battery capacity).