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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

#141

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…

This was absolutely not the problem during the 2021 winter storm. There was an absolute lack of power to be sold, at any price. Raising the spot MWH prices to 9 billion USD would have made no difference in what could be brought on-line, only how badly load serving entities were getting screwed. Empty office buildings all over the state that were lucky enough to be on critical circuits were beaming out lights the whol…

>Raising the spot MWH prices to 9 billion USD would have made no difference in what could be brought on-line, only how badly load serving entities were getting screwed.

Why not? If it's expensive enough you'll get people flying in spare generators from out-of-state to supply the demand.

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

#142

Earlier quoted context omitted.

Every home that uses electricity for heat is a mission-critical site when it's 0 degrees F outside. Kids froze to death in their own beds.

> Kids froze to death in their own beds. Wow, that sounds horrible. I tried googling this since I hadn't heard about this before. I came across one 11 year old who his parents claimed died of hypothermia. However, the autopsy revealed that his death was due to carbon monoxide. Source: https://www.khou.com/article/news/local/conroe-police-autops...

Yep, that is the case I was referring to. I hadn't heard about the autopsy results. I apologize. My claim was somewhere between imprecise and wrong.

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

#143

Earlier quoted context omitted.

If people are freezing in their homes, then damn any availability agreement a datacenter has.

If you shut down the datacenter, then all of the folks that rely on IoT-controlled furnaces will freeze in _their_ homes!

Smart thermostats all fall back to offline manual operation.

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

#144

Earlier quoted context omitted.

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…

My wife got a contract with our provider, we pay normal prices during the day but get 100% free power from 8 PM to I think 5 or 6 AM. Can't really complain.

Sounds great for crypto miners!

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

#145
post #141

Earlier quoted context omitted.

This was absolutely not the problem during the 2021 winter storm. There was an absolute lack of power to be sold, at any price. Raising the spot MWH prices to 9 billion USD would have made no difference in what could be brought on-line, only how badly load serving entities were getting screwed. Empty office buildings all over the state that were lucky enough to be on critical circuits were beaming out lights the whol…

>Raising the spot MWH prices to 9 billion USD would have made no difference in what could be brought on-line, only how badly load serving entities were getting screwed. Why not? If it's expensive enough you'll get people flying in spare generators from out-of-state to supply the demand.

In the middle of a winter storm that has shut down nearly all transportation and frozen the well-heads for natural gas production? riiight.

Unless the Navy happens to have a few nuclear vessels parked in the gulf ready to hook up, it is literally impossible to move hundreds of MW of generation in a week, much less the 20 GW that Texas needed at the time.

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

#146

Earlier quoted context omitted.

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.

If you read all the books covering the history of the deregulation of the regulated electric industry in the US, their reasoning was clear. Many years ago, under regulation (and still for those areas of the US that aren't in a market), it was the job of planners to determine the load growth and to build enough supply to meet demand and get a steady ROR. We did really bad at this in (I think it was the 80s), so there…

"Made possible" also meant that coal burning plants were obsolete and we needed to restructure the generating system so they could go out of business without making the utilities go under.

So much in the energy literature looks like a clock that stopped. For instance you still see cost estimates of advanced combustion systems from the 1970s that have been carried into the future without adjusting for inflation and changes in technology.

People still compare nuclear power to coal but they quit building coal plants circa 1980 for the same reason they quit building nuclear plants -- the capital cost of the steam turbine is an order of magnitude more than a gas turbine, so even if you get the heat for free a current generation coal or nuclear plant is going to struggle to compete against the power plants we've been building since the 1980s.

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

#147

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...

Texas is uniquely dominated by energy interests. Most of the quacking about cheapness is just noise. I have a relative who moved from an “expensive” northeast state to South Carolina. His big bitch was about taxes, but he didn’t really do the math. He saved on property taxes, but between more regressive sales tax, HOA, etc it doesn’t really compute. Most significantly, he discovered the tyranny of local government is…

NJ to Mcclellanville, SC is my guess. Aside tho actual cost of living is gonna be way cheaper for them.

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

#148
post #133

Earlier quoted context omitted.

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.

Exactly, it's about optimizing profits by lowering cost, and not lowering price. A "free" market doesn't mean a competitive or efficient market.

And not by raising price*

You already have all the customers you're going to get

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

#149

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...

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…

Exactly. For a commodity, free market means free to compete. But for a utility, it means free to extract.

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

#150

Earlier quoted context omitted.

And then the long-tail events completely wipe out decades of savings. Griddy was charging over $9/kwh last year.

It's worth clarifying that Griddy wasn't "charging" these rates in an effort to gouge, nor was this rate an active decision they made during the crisis. (You likely know this; just providing context for casual readers.) Griddy charged a fixed monthly subscriber fee, and then passed through delivery charges, taxes/fees, and the 5-minute wholesale electric rate (IIUC, as set by the ercot market). These all came out of…

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