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On power markets, snow storms, and $16k power bills

astanway.medium.com

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Re: On power markets, snow storms, and $16k power bills

#91

Post by bitcurious »

ryanmarsh wrote: post #74
ahepp wrote: post #66

>Those that chose Griddy, chose higher risk, which comes with high potential rewards but also high potential losses When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot. They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied thro…

Griddy didn't have to beat the bricks like most REP's in Texas. Smart consumers aware of the risk beat a path to their door. Unfortunately, as with anything like this, the followers and fools soon showed up (reminiscent of $GME) and a good thing somehow suddenly became "a scam".

Given that neither the power companies nor the regulatory bodies correctly anticipated this risk I think it’s a huge stretch to say that consumers did.

Re: On power markets, snow storms, and $16k power bills

#92

Post by sokoloff »

ArkanExplorer wrote: post #53
sokoloff wrote: post #11

Earlier quoted context omitted.

There's no fundamental technical reason. It costs money to install the smart meters. It would cost more money to install control systems and automatic transfer switches, but even the smallest generator-backed (or multi-feed) datacenter has all the equipment technically needed to implement what you describe. Many large UPS units have everything as well. It's probably an additional $3-6K on top of the smart meter to bu…

Every second appliance has Wifi nowadays - but we need an industry standard that allows consumers to control usage based on price, perhaps by assigning specific appliances in your house to your energy retailer web account, and then allowing the retailer/grid operator to control when they are turned off and on (or to adjust their energy intensity) in return for a monthly discount. For example just by heating and cooli…

They're not grid-reactive, but for $20 you can get a programmable T-stat already. That's a huge part of the peak demand in cooling-dominated climates. (Heating demand peaks tend to hit overnight, of course.)

Re: On power markets, snow storms, and $16k power bills

#93

Post by gregw2 »

jerf wrote: post #7

I am not in Texas, so a couple of questions for those who may be affected by this story, because I've been wondering about this: 1. If you are on this plan, what is your visibility into current prices for electricity? e.g., are there any alerts that you could have signed up, even if you hadn't before? 2. Have you been bitten by unexpected high prices before, perhaps in the summer? 3. Prior to this event, would you sa…

A coworker of mine used Griddy before this event for about a year, but left it 6-9 months ago.

To answer your question 2/3, when I tried to congratulate him on getting out of it before the storm, he was still pretty down on it. He's an analytical type but his conclusion was that he lost $600 by being on it and wished he'd left it sooner.

When I looked around in Texas for power, my findings were that A) pricing averaged about 11cents/kWh, but if you looked to find the best rates, you could get about 6 cents/kWh. Which, post-storm, seems not that different from the wholesale rates with no tail risk.

Re: On power markets, snow storms, and $16k power bills

#94

Post by twunde »

ahepp wrote: post #66

>Those that chose Griddy, chose higher risk, which comes with high potential rewards but also high potential losses When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot. They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied thro…

TX is __slightly__ different in that its fully deregulated and there's simply more knowledge about REPs/ESCOs and their pricing (because they customers HAVE to choose a REP). Also in what other state do you see billboard ads for REPs?

What is genuinely sad is that Griddy has a "price-lock" (ie a fixed rate) for the summer, which is exactly what you're talking about regarding tail risk. They just don't have it for the winter, which is normally the cheapest time in TX and clearly couldn't set up a decent fixed rate quickly after they understood the implications of the polar vortex. What they should have done is sent an email to their customers offering a fixed rate for the month even if it was expensive.

Re: On power markets, snow storms, and $16k power bills

#95

Post by tedunangst »

xur17 wrote: post #36
astanway wrote: post #20

Earlier quoted context omitted.

Yep - this is what 99% of electricity retailers do.

But most electricity retailers just set a fixed price for electricity completely disconnected from the actual costs. I'm specifically wondering if it's possible to allow for wholesale purchasing, but set a cap at something like $10 or $100/kwhr - still crazy high, but keeping obscene rates away. Maybe let the customer choose what level of cap they want.

Why would anyone agree to sell you power at cost, unless the cost goes too high, and then sell it below cost?

Re: On power markets, snow storms, and $16k power bills

#96

Post by greedo »

ryanmarsh wrote: post #74
ahepp wrote: post #66

>Those that chose Griddy, chose higher risk, which comes with high potential rewards but also high potential losses When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot. They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied thro…

Griddy didn't have to beat the bricks like most REP's in Texas. Smart consumers aware of the risk beat a path to their door. Unfortunately, as with anything like this, the followers and fools soon showed up (reminiscent of $GME) and a good thing somehow suddenly became "a scam".

Nice victim blaming.

Re: On power markets, snow storms, and $16k power bills

#97

Post by toss1 »

From the article: >> TL;DR: time of use rates are, on net, a Good Thing; markets are great, except when they fail; low risk isn’t the same as no risk; ...

NO, this is not an example of "Free Markets" failing.

This is Free Markets working exactly as designed.

Demand massively increased, due to the cold weather Supply dramatically shrank due to the same cold weather The market is dynamically priced OF COURSE prices went hyperbolic

Why wasn't this tail risk/opportunity anticipated by the various suppliers, so they pre-built their systems to withstand such cold weather, to be able to take advantage of the windfall?

Because literally no one could afford to do so. The general market is a free-for-all low-cost race to the bottom. Invest more and you won't be competitive. Moreover, if enough people follow your strategy, you'll never see the windfall. No one can make the decision to invest in any quarter, so it never gets done.

Yes, intelligent regulation is a pain in the arse, but free markets really do only one thing well - dynamically allocate resources and adjust pricing. Important, for sure.

But a complex society also needs disaster planning and resource allocation, and to prevent Tragedies Of The Commons, both of which Free Markets(TM) will not only fail to solve, but will aggressively screw up.

Re: On power markets, snow storms, and $16k power bills

#98

Post by Anon1096 »

ahepp wrote: post #66

>Those that chose Griddy, chose higher risk, which comes with high potential rewards but also high potential losses When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot. They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied thro…

The existence of Griddy is unrelated to energy deregulation. I keep seeing that term thrown around but no one using it seems to know what it means.

Griddy is simply an energy provider you can choose to hedge your bets and save money if you are smart. Plenty of people using it shut off their power or switched providers when they were informed of the incoming price surge. That some households ignoring the warnings shouldn't be a reason a service like Griddy can't exist.

Re: On power markets, snow storms, and $16k power bills

#99

Post by JumpCrisscross »

Griddy should have bought calls and passed along the premium cost and protection. I don’t know energy market options pricing, so maybe this is not viable.

> the amount of money they are due as a result of this market design ($50 billion!!!) is truly staggering and disproportionate to the value created

This is a screaming incentive for winterisation and energy storage. The premium is fine. It was mostly paid for by intermediaries.

Re: On power markets, snow storms, and $16k power bills

#100

Post by gregw2 »

kingaillas wrote: post #27
egwor wrote: post #12

Earlier quoted context omitted.

To 1.: didn't one provider email their client base to warn them of this?

Yes that was Griddy that emailed their client base. Whether or not they did it and gave their customers sufficient time to do the switch is another matter (i.e. close of business day timing, normal delays involved in new account enrollment, and so on). EDIT: To be clear I'm not throwing Griddy under the bus for sending email late or without more time. I think they were doing what they could for their customers upon s…

I heard on the news here in Texas that reporters indicated it takes a few days to switch, so while Griddy sent the email, their customers were not able to really act on the advice amidst the crisis.

That said, I think it was bad advice from Griddy for a second reason.

I think they should have told their customers to just go to their house fuse box and shut off their power to avoid the inevitable huge bill.

I'm not sure why others haven't mentioned this but the customers did ultimately have that recourse. This is the unfortunate but logical thing to do when your 6c/kWh bill grows to $9/kWh. And at least you can intermittently turn it back on when needed to heat your house for a short bit, etc which is still better than being totally out for 3 days as many people here were.

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