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Griddy Is Shutting Down

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Re: Griddy Is Shutting Down

#181

Post by salawat »

nrmitchi wrote: post #75
gpm wrote: post #62

Earlier quoted context omitted.

This being wholesale doesn't somehow make it not price gouging. Raising prices on a product (electricity) that you were already selling during an emergency is widely considered to be highly immoral, and is illegal almost everywhere, including Texas [1]. There does not appear to be any exception for "wholesale" goods, or b2b transactions, nor should there be morally since that would defeat the whole purpose of keeping…

I believe there is an exception to price gouging laws if the cost of producing the direct item/product/service is impacted. In this case Griddy's cost went way up as well, which makes them not-clearly-in-the-wrong. For the power producers on the other hand, it seems exceptionally clear (to me anyways) that this was just state-sponsored price gouging: https://theintercept.com/2021/02/23/texas-winter-storm-gas-p...

Do you have any idea how much damage can be done to the grid if there is a great disparity that forms between demand and supply?

You literally had machines running on redline to keep up with demand because so much generation capacity went offline at the same time, and the weather precliuded deployment of either the personnel or equipment to handle it safely and quickly.

That is why the statutory max price was set. If you were going to use that power, and put that generating capacity at risk, so PUC thought, you were going to pay for it. They figured the pricing signal would control demand.

Well... They were wrong.

"Your debt collection stops being my concern when my and my dependent's survival is on the line." --Every human being in the back of their head, in the lizard brain, ever.

Sure, it feels bad afterward, and you try to follow what guidance you can at the end of the day, and reach out to those you're in a position to reasonably help, but that was a demand inelastic situation. Be able to pump a certain threshold of BTU's into your environment by money, barter, burning, or retaining via insulation... Or die.

I'll give ERCOT and PUC the benefit of a assumption of reasonability given info at the time; but I really can't forgive the human nature centric myopia that the homo economicus model has foisted on the world.

Re: Griddy Is Shutting Down

#183

Post by tialaramex »

thaumasiotes wrote: post #179
tialaramex wrote: post #173

Earlier quoted context omitted.

Suppose there is apparent demand for 100GW of power. Due to faults your region's generators are only able to supply 75GW of power maximum no matter what price you offer. So you deliberately drop some groups of customers (rolling blackouts to residential areas). Now your residual demand (ignoring those customers freezing in the dark) sum to only 65GW†, you can supply them all. Great! If your system automatically adjus…

You seem to have omitted the part of the model that would explain why you want the price to be higher. You specify that > your region's generators are only able to supply 75GW of power maximum no matter what price you offer. Want 100GW all you like, you won't get there. What are you trying to accomplish?

As I understand it, Texas hopes to stimulate supply by offering higher prices. Does that work? Well, it clearly works to some extent normally.

If your legislature (not to mention local culture) has insisted you must only use a hammer, those screws are getting hammered in, too bad.

If you have greater import/export capacity the higher prices ensure you're importing. In this particular case that would likely have made no difference, it's not as though the storm was just affecting Texas, but in other cases or with a smaller deficit that might save your backside.

Also as I understand it, some places pay generators for their capacity to deliver power if it were needed, even if in fact they're never needed. So that can be a better plan because it makes the incentive not to fail clearer.

Re: Griddy Is Shutting Down

#184

Post by salawat »

unishark wrote: post #143
nrmitchi wrote: post #100

Earlier quoted context omitted.

> it'd be worth it to airlift diesel generators across the country to make up the shortfall. Hell, you can probably fly in temp workers from europe/asia to do the necessary fixes. This event lasted 3 days. You think these private entities had the ability to coordinate airlifting generators (for what it's worth, IIRC fuel was the problem, not generators), and bringing in foreign skilled labor, to address a situation t…

Someone did this in the aftermath of hurricane Rita I believe. They rented a uhaul and bought some generators, and drove halfway across the country to sell them to people the very next day. Then they got charged with price gouging. Restricting them to a maximum 25 percent markup for all that effort (i.e. making them eat a loss) will obviously prevent people doing it. It's still just another example of the economic ru…

Price gouging is when you're you're trying to maximize value extraction for minimum effect.

People can deal with propping up a profit for someone going out of their way to get something done as cheaply as they can. Where they get annoyed is when you have the help there, but hold it hostage because you aren't feeling like people are willing to pay you enough. Not once on showing justifiable expenses has anyone ever argued at me being unreasonable.

Further, there's a point of diminishing returns where individual action is best avoided or at least organized to increase effectiveness.

Have your town pool money to hire tankers to run down instead of filling your pickup with gas cans. Force multipliers.

Price gouging laws are there to hedge civic stability. You can't organize people to solve a problem peacefully and efficiently if they're taking up torches amd pitch forks against those greedy haves. Everyone has to still be set, plus a bit extra to give to get community driven force multiplication.

Re: Griddy Is Shutting Down

#185

Post by ubercow13 »

sephamorr wrote: post #160
aaomidi wrote: post #95

Earlier quoted context omitted.

oh my lord, what is this thinking. People have enough shit to be worried about than to worry about their power ticker going up and down. This is not something we should add as a burden to our citizens. Next I'm going to hear people wanting to short electricity.

'People' can simply choose a different electricity retailer if they want a constant rate and to not worry about this. If they were adequately informed about risks, why shouldn't we be allowed to choose our path? Industrial customers usually buy on the wholesale market, it doesn't seem a stretch that consumers could benefit from that too.

I mean, what you're suggesting is what was allowed. And look what happened (OP). Not a particularly surprising outcome.

Re: Griddy Is Shutting Down

#186

Post by salawat »

stefan_ wrote: post #73
freeone3000 wrote: post #34

Earlier quoted context omitted.

It is, but then people couldn't pay -- and since they couldn't pay, neither can Griddy, since it ran cash-lean and didn't extract enough profit during low rate periods to cover this amount of delinquency. The $2.1B shortfall is being assessed equally among resellers, so Griddy acting like they're some victim instead of just another participant is a bit silly. You don't see Encor complaining about the shortfall makeup…

Griddy is obviously insolvent since its members are, so far with you. But many other providers are also defaulting. Why are they forcing only Griddy to shut down? Conspiracy theory: putting them into bankruptcy with no hope of recovery has a good chance of making all those huge bills you have read about in the press go away. This strikes to me as a typical American solution to peoples crass financial ignorance: socia…

Further I don't think Griddy was actually a generator. I believe they fundamentally operated as broker/transmitters at best. I.e. futures trading. Everyone else had the capacity to meet demand, and Griddy served as the buyer to connect client demand to supplier generation capacity. Most of the other utilities have privately owned electrical infrastructure in play. That's part of the reason why Griddy got away for so long running as cash lean as they were. No infra upkeep, no maintenance to coordinate or hedge, just price discovery and arbitrage.

When all their customers were in a position, however, where they needed electricity from Griddy, but no one had any to sell... Well... That's why spot buying can leave you with your arse out in the cold.

I do feel sympathy for those caught out, but I also understand what Griddy's intent was, even if I think the position and business model they chose was unwise. It goes good when its all good, but when things go bad, you have a responsibility to have been planning for that eventuality.

It sucks. It feels wrong that it should end up happening that way. That's kinda jow life rolls though. At least, has been for me.

Re: Griddy Is Shutting Down

#187

Post by astrange »

irrational wrote: post #152
Robotbeat wrote: post #77

So, a thing I've been thinking of is that... because most people are on constant rate plans (where there isn't any incentive to cut back during a supply and/or demand crunch), the overall grid demand is a lot more inelastic than it would be if everyone where on a Griddy-like service. When, say, 75% of demand is insensitive to price signals, to get the 25% of demand that is sensitive to respond takes a MUCH bigger pri…

We installed solar panels a few years ago. They take care of 100% of our electrical needs (and we live in Portland Oregon where it is cloudy 9 months out of the year). I haven’t had to pay more than $12/month, and that is the fee we are charged by PGE to be hooked into the grid so we can sell them our excess. One thing I’ve found out is that we no longer worry about electricity usage. I used to fret about lights bein…

What kind of lights do you have? As far as I know it takes a lot of LED lights before you have to care if you left them on or not, even if you left them on all year.

Re: Griddy Is Shutting Down

#188

Post by astrange »

nannal wrote: post #162
m463 wrote: post #155

Earlier quoted context omitted.

On the other hand, electricity pricing is a construct. To some extent it is designed so that you do worry and limit use of a shared resource. I think other utilities like internet service adopt this construct, then monetize worry to get you to pay a little more for all-you-can-eat. There's an interesting quote from a former chairman of the atomic energy commission: It is not too much to expect that our children will…

Can you imagine being that hopeful about the future, I know a lot of people are opting not to have children due to the environmental nightmare those children would have to survive.

That's more relative than absolute expectations, or maybe you just know a lot of neurotic people.

Even if climate change is as bad as WW2 (doubtful over the same time scale), people still had children then, and they still had children when every city was covered in a foot of horse poop, all your kids died at 14 and doctors didn't believe in handwashing. In fact they had more!

Re: Griddy Is Shutting Down

#189

Post by astrange »

myself248 wrote: post #117
gruez wrote: post #70

Earlier quoted context omitted.

AFAIK because electricity is so essential, you can't cut off people's power without going through a lengthy process. You also can't cut off people's power during the winter, either.

So there's a form of it called "interruptible service", which is intended for things like water heaters. It lets the utility shed load during peak times, but it's part of the consumer rate plan so there are limits on how often and how long they can interrupt it for, etc.

There's also programs like OhmConnect (https://www.ohmconnect.com) where they just ask you nicely to stop using power under load, and maybe turn off your A/C, and pay you for it.

I gave up optimizing too much because my water heater forgets its temperature setting when you cut the power, and it's not like they paid me much anyway. Good thing I'm on the 100% renewable SVCE plan.

Re: Griddy Is Shutting Down

#190

Post by salawat »

austhrow743 wrote: post #46
Analemma_ wrote: post #5

Earlier quoted context omitted.

I disagree completely. This business model should never have been allowed to exist, in the same way and for the same reason that " almost fully self-driving cars" should not be allowed on the roads: humans are just not capable of quickly and correctly responding in situations where 99.99% of the time no input is required and once in a blue moon you have to act immediately to avoid disaster. Good riddance.

Almost fully self driving cars are physically dangerous to others. Whether or not you think people should be allowed to bankrupt themselves speculating on wholesale energy prices; it’s an entirely different situation.

Not really. You're just gambling/risk taking in a different way. It's like a waterbed. Push down the risk in one place, pops up in another.
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