Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Texas electric firm files for bankruptcy citing $1.8B in claims

reuters.com

Post reply on HN
Print view View original

71–80 of 281 posts

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#71

Post by croes »

dan-robertson wrote: post #51
jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

When a politician enacts a policy that ignores some big tail risk, they won’t be in office when it eventually blows up. Who foots the bill in that case? Certainly the politician and maybe their party won’t suffer election losses from it.

You are ignoring the profit part. Public company = maybe profits, maybe losses for the taxpayer Private company = maybe losses, never the profits for the taxpayer. Is 2008 already forgotten?

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#72

Post by lawnchair_larry »

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

There is no profit. It’s a 501(c)(12).

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#73

Post by volta83 »

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

> . When private companies screw up, who gets left with the bill?

The share holders (which often includes the leadership). Their shares drop relatively quickly to close zero.

I think, however, that this is not enough.

Share holders of a company should be liable as individuals for the damages the company causes in case the company cannot pay.

This would strongly encourage share holders to pressure the CEO (which is also usually a share holder) to run the company in a sustainable way.

Also if the CEO does "gross mismanagement", share holders should be able to sue them as individuals, but from the point of customers, share holders should pay.

The only reason "stonks can only go down to zero" is because we have put in rules in the system to make it that way. When a company fills for bankrupcy, the risk for share holders is limited (to their original investment).

If we change the rules and make share holders accountable, then stonks will definetly be able to go way below zero and share holders will need to foot a bill here, potentionally leaving them all bankrupt.

Once that happens, then customers might still be left in debt. IMO at that point employees of the company should start footing the bill. Many employees look away at wrong business practices because there is nothing in for them in trying to push for change and doing the right thing.

If everyone involved with the company would be personally liable, most companies would be run very differently.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#74

Post by lawnchair_larry »

fredophile wrote: post #54
Sebb767 wrote: post #28

Earlier quoted context omitted.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

> Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? How is it not personal benefit? This company was essentially acting in the same role as an insurance company for retail customers. They charge a fixed fee for electricity that is above the average price of electricity. When electricity costs less than they charge they make money. When it costs more…

As a 501(c)(12), they provided services at cost to all “customers” (members), as legally required.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#76

Post by robotmay »

adwww wrote: post #63
TheOtherHobbes wrote: post #60

Earlier quoted context omitted.

Insurance companies in the UK have been discussing this for over a decade. There have been some consequences. It's no longer possible to get buildings insurance or mortgages in certain flood prone areas. This effectively makes them uninhabitable, because uninsured flood damage can easily bankrupt a house owner.

> uninhabitable Surely just unmortgageable?

Which for the majority of the UK means unpurchasable. With high rents in many places it's getting extremely difficult for a lot of people to save enough even for a deposit on a house, let alone buy it outright.

Oddly I think refusing to mortgage homes on flood plains is actually a good call by the banks. The local councils are just building in whatever idiotic places they like, stripping hills of the foliage which absorbs water to put houses there, then putting even more houses below where all the water now has to flow.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#77

Post by ldng »

fredophile wrote: post #54
Sebb767 wrote: post #28

Earlier quoted context omitted.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

> Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? How is it not personal benefit? This company was essentially acting in the same role as an insurance company for retail customers. They charge a fixed fee for electricity that is above the average price of electricity. When electricity costs less than they charge they make money. When it costs more…

It is incredible that such a fund is not mandatory

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#78

Post by lawnchair_larry »

ansible wrote: post #58
Sebb767 wrote: post #28

Earlier quoted context omitted.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

But they were benefiting. They have had years of not winterizing their systems, which helped them earn quarter after quarter of profits. Those profits were paid to executives and shareholders, who will not help make up the shortfall now.

No, they were not. Did you look at their financials? Maybe you should see how much this was very much not the case before saying more on the topic.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#79

Post by aljp »

baxtr wrote: post #70
jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

> Privatise the profit, socialise the losses. I always wondered about that. Maybe because I don’t understand what it’s trying to say. I mean profits of companies benefit many, don’t they? Through jobs, taxes, dividends in case it’s a public company and so on. What am I getting wrong here?

One of the most egregious examples of this that I like to use is in natural resource extraction, mining, deforestation, etc. When mining companies start a project to dig a quarry (in Australia), they are meant to set aside funds for rehabilitation of the environment when they are done, this should come out of the profits from the endeavor. I consider destruction of the environment a socialised cost. Unfortunately, quite often, these companies will avoid rehabilitating the environment and misappropriate those funds, and then pay out massive bonuses to the few executives that could make it happen. Some of these areas will not be habitable for native wildlife for decades because the process is destructive and leaves the area toxic. The Flint water crisis is a specific example of this in America that really is affecting people. While I think you are technically correct, I don't think you considered the scope of the issue of privatizing profits and socialising losses.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#80

Post by xhedley »

Sebb767 wrote: post #28
gonzo41 wrote: post #14

Earlier quoted context omitted.

Well the electric grid falls in that category of service, like the military where the market is potentially a bad solution. So in this regard. The electric company was able to be negligent to their personal benefit of 1.8 billion dollars of unfunded liability it created. And then they call bankruptcy and that's the end of that chapter.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

If a customer owes money to an electricity company which goes bankrupt, that doesn’t cancel the customer debt. The insolvency firm will sell the debt on for what they can get in order to repay some of the company’s creditors.
Post reply on HN