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The grid failure in Texas was a market failure

BlueTex said:
Yes, but the state allows the plan to be sold... Essentially day trading your electric rate... No way in hell I would sign up for a plan like that..
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I agree, because I understand the risks. I wonder how many people are looking at a $1000 or more electric bill this month.
 
tacomancer said:
That is part of the calculation though, if an event is rare but costly, then you try to average out a yearly cost to get a better perspective on the real costs, but its even more painful if it hits all at once.

Also, on average people are very stupid when it comes to theoretical risk (and conversely tend to overly worry about more concrete types of risk) this is an inherent and well documented cognitive bias and an example of why complex societies need experts.
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I went with a decent price 5 year fixed rate plan, so far it is working for me, (except when the power was off this week!!!)
 
longview said:
I went with a decent price 5 year fixed rate plan, so far it is working for me, (except when the power was off this week!!!)
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Good, I am glad you did and hope you remain safe.
 
longview said:
Thanks, getting back to normal, water and heat running again, minor pipe repair.
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I had a week power outage about ten years ago when I lived in Georgia ... I remember it being quite romantic ...
 
longview said:
wow! I guess part of the risk of such a plan would include a generator, so when the spot price got above X amount,
you switch to generator power.
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These plans aren't sold to people who can buy and maintain generators... Griddy alone had 29,000 customers...
 
tacomancer said:
I had a week power outage about ten years ago when I lived in Georgia ... I remember it being quite romantic ...
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I have done it after hurricanes, but have a generator now, I just could not get the furnace to run off the generator.
 
BlueTex said:
These plans aren't sold to people who can buy and maintain generators... Griddy alone had 29,000 customers...
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Penny wise pound foolish!
 
BlueTex said:
So who pays these bills?
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I think they own the utility the money, just like your or my electric bill, if they default on the bill, their power gets cut off.
it is not pretty, but they can likely get on some other provider's bad plan, that will be like $.25 per KWh.
I just looked at power to choose, and there is not a lot out there right now.
I think reliant has a plan for even those with bad credit, but it is not cheap.
 
NWRatCon said:
The failure of the power grid in Texas is the result of a long-term failure of imagination, and the inability to understand how markets work - and don't. ERCOT, the "Electric Reliability Council of Texas" (oh, the irony, it burns!), "manages" the electric grid for 90% of Texans (75% of its land area) and operates free of federal oversight. As their own website puts it "Founded in 1970, ERCOT is an independent, not-for-profit organization responsible for overseeing the reliable and safe transmission of electricity over the power grid serving most of Texas. As the Independent System Operator (ISO) since 1996, ERCOT has been the broker between competitive wholesale power buyers and sellers. The ERCOT ISO also provided the platform upon which Texas' electric utility industry made the transition to retail competition on Jan. 1, 2002." (Given their own press, they failed.)

And therein lies the problem: ERCOT sees itself not as a producer, but as a broker. "This isn't the state's first rodeo with widespread blackouts amid unseasonable cold, however. The Texas power grid is designed to independently manage hot summers, not really cold winters. But "what has sent Texas reeling is not an engineering problem," Will Englund reports at The Washington Post. "It is a financial structure for power generation that offers no incentives to power plant operators to prepare for winter. In the name of deregulation and free markets, critics say, Texas has created an electric grid that puts an emphasis on cheap prices over reliable service." The architect of Texas' electricity market says it's working as planned. Critics compare it to late Soviet Russia. (The Week)

That dichotomy of views encapsulates what is wrong in Texas, and why The parts of Texas not on its ERCOT power grid appear to have weathered the freeze with few outages (The Week). "Weatherizing power generation and extraction equipment is voluntary in Texas". Because of that, producers have "deferred" maintenance/upgrades in favor of more profitability, and the State has encouraged such behavior.

What's worse, they have refused to see the problem. "William Hogan, the Harvard global energy policy professor who designed the system Texas adopted seven years ago, disagreed, arguing that the state's energy market has functioned as designed. Higher electricity demand leads to higher prices, forcing consumers to cut back on energy use while encouraging power plants to increase their output of electricity. "It's not convenient," Hogan told the Times. "It's not nice. It's necessary."

Texas consumers disagree.
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This represents the priorities of the people who could have done something to prevent it but didn't and why, money. An ounce of prevention is worth a pound of cure the old saying goes but money keeps it from happening. I'm sure there were other more important things to be done than worry about a once in a forty year event and now millions suffer because those that could have prevented this didn't. Less regulation, less government intervention, let the markets take care of themselves some say. How ya' likin' it now texas? You are reaping what you've sown.
 
tacomancer said:
This is pretty much it, risk management calculations are well known and used by places like insurance companies, disaster recovery firms, data management, etc.

If one's goal is higher reliability, then pay for it, if not, then accept the downside.

None of this is a mystery.
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Most everything and decision in life is a risk/reward vs cost.
 
Media_Truth said:
If I lived in Texas, I would build a bermed home there. A bermed home will never get below 57 deg F (assuming it's closed up, and insulated well). Cool, but manageable, and no frozen water pipes. A bermed home will also stay cooler in the summer, and require less A/C to cool.
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My sister has a half-bermed (they added a second story) home in Missouri, and it performs well in all weather. Those who know Missouri know it is godawful hot in summer and godawful cold in winter. The constant temperature in the lower half keeps energy bills low all year. My house is similar in that the lower story is enclosed on 3 sides.
 
phoenix2020 said:
I believe there is a middle ground. There are some tremendous advantages to a de-regulated marketplace-driven energy market. I cannot tell you how often I've wished to have the flexibility to choose supply the way Texans have been able to. Imagine being able to select your power company based on who provides the best deal for you. Interested in renewables? No need for regulation--sign up with a power company that provides clean energy and you're set. Compared to virtually all other localities where the power utility has a local monopoly (in CA? you're PGE or SCE. In MI? You're DTE. etc.) this flexibility has some real advantages.

I not only wouldn't advocate for Texans to lose that flexibility wholesale, I would like to see the rest of the country adopt some measure of it. Those of us working in this space (specifically renewables!) have long looked to the Texas model as a really interesting one for fast-tracking adoption of emerging energy sources.

The problem is the *lack* of regulation. Energy should be like pharmaceuticals. You have the freedom to choose which drug to take, or choose none at all, but the government is working behind the scenes to make sure no one sells you a drug that will kill you. I'd like to see the U.S. grid overall adopt Texas's market driven structure as a benefit to consumer choice, and I'd like to see Texas to adopt "FDA-level" oversight of the grid to make sure that free market doesn't sell Texans goods that might get them killed the next time a cold snap hits.
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Modern energy grids (the US doesn't have one) perform this balancing act, allowing competition, switching sources easily (keeping costs down by competition), but ensuring standardization, reserves, and system maintenance (like winterizing). ERCOT ensured none of that but competition, and no gouging/windfall prevention, allowing spot pricing to overwhelm customers. In its 25 years of existence, it has failed spectacularly numerous times, frequently fatally.
 
Montgomery said:
It's going to anger the people so much that they will remember it as a good reason for another attempted revolution, led by Trump or more likely somebody else.

These things just keep happening in America!

Which category does this one fit under, that has made America 17th. in quality of life?


  • A good job market
  • Affordability
  • Economic stability
  • Family friendly
  • Income equality
  • Politically stable
  • Safety
  • Well-developed public health system
  • Well-developed public education system

dailyhive.com

Canada ranked #1 country in the world for Quality of Life | News

Canada is ranked the #1 country in the world in 2019 for Quality of Life. We have also been ranked as the third best country in the world.
dailyhive.com dailyhive.com

Income inequality and safety?
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If the quality of life is so good in Canada why does half of Canada spend 6 months in the US? ;) They should do the survey again now that most Canadians have been trapped by the Corona.
 
tacomancer said:
This is pretty much it, risk management calculations are well known and used by places like insurance companies, disaster recovery firms, data management, etc.

If one's goal is higher reliability, then pay for it, if not, then accept the downside.

None of this is a mystery.
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In my view, government's main purpose is risk management on behalf of its denizenry. Governments that fail usually fail for that reason. Indeed, the Constitution's structure is principally about managing such risk. Think about it: checks and balances; majority rule and minority protections (civil rights); a strong central government and robust State authority; two chambers of Congress. It doesn't always work well, but it seldom fails.
 
Eriech said:
If the quality of life is so good in Canada why does half of Canada spend 6 months in the US? ;) They should do the survey again now that most Canadians have been trapped by the Corona.
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I don't know why? Right now it's about 45F outside here in B.C. and on Vancouver Island where I live I don't know of any time when it's got as cold as Texas and some of the other southern states have been this year.
Qualicum beach on Vancouver Island is considered to be the healthiest climate in the entire world, by some people at least. Go figure? They could by lying?

If you want to know why Canada's rated as the best quality of life in the world and the US is rated at 17th., I can tell you in a general way why that is. You have to want to know though.
 
BlueTex said:
For those who think the effects of this will end in a few weeks...

Griddy, however, is in a different position. Its service is simple -- and controversial. Members pay a $9.99 monthly fee and then pay the cost of spot power traded on Texas’s power grid based on the time of day they use it. Earlier this month, that meant customers were saving money -- and at times even getting paid -- to use electricity at night. But in recent days, the cost of their power has soared from about 5 to 6 cents a kilowatt-hour to $1 or more. That’s when Fallquist knew it was time to urge his customers to leave.

“I can tell you it was probably one of the hardest decisions we’ve ever made,” he said. “Nobody ever wants to see customers go.”

Griddy isn’t the only one out there actively encouraging its customers to leave. People were posting similar pleas on Twitter over the holiday weekend from other Texas retail power providers offering everything from $100 rebates to waived cancellation fees as incentives to switch.

Customers may not even be able to switch. Rizwan Nabi, president of energy consultancy Riz Energy in Houston, said several power providers in Texas have told him they aren’t accepting new customers due to this week’s volatile prices.

Hector Torres, an energy trader in Texas, who is a Griddy customer himself, said he tried to switch services over the long weekend but couldn’t find a company willing to take him until Wednesday, when the weather is forecast to turn warmer.

“I’ll find out in the next week if I’m getting a huge bill,” he said.

www.houstonchronicle.com

Power retailer Griddy to customers in face of freeze: Please, leave us

“We made the unprecedented decision to tell our customers -- whom we worked really hard...
www.houstonchronicle.com www.houstonchronicle.com
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These are the second and third order effects they didn't build into their planning.
 
dairyair said:
Texas consumers got exactly what they paid for.
And voted for.

Works great and cheap, 99% of the time.
Fails 1% of the time.

The question is, which costs more overall.
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And what "costs" are you willing to bear (or make someone else bear).
 
NWRatCon said:
In my view, government's main purpose is risk management on behalf of its denizenry. Governments that fail usually fail for that reason. Indeed, the Constitution's structure is principally about managing such risk. Think about it: checks and balances; majority rule and minority protections (civil rights); a strong central government and robust State authority; two chambers of Congress. It doesn't always work well, but it seldom fails.
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America's government has failed the people. The truth is that America is now 17th. in the world on quality of life for it's people.
You're going to have to accept that your theories are mostly wrong.
It becomes a detailed conversation but before that, you Americans need to acknowledge the truth and then want to know what's gone wrong.
The attempted revolution, even though it was a complete failure and a joke, happened for a reason!
 
tacomancer said:
That is part of the calculation though, if an event is rare but costly, then you try to average out a yearly cost to get a better perspective on the real costs, but its even more painful if it hits all at once.

Also, on average people are very stupid when it comes to theoretical risk (and conversely tend to overly worry about more concrete types of risk) this is an inherent and well documented cognitive bias and an example of why complex societies need experts.
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No one could put it better.
 
NWRatCon said:
No one could put it better.
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There's no sense in trying to rationalize the Texas failure. So although you seem to understand the basics on risk taking, your assessment is skewed out of the reality of the situation.

Sure the left's media are going to town on it for their political gain! But Texas gave them the license to do so.

And again, America's 'quality of life' for it's people has fallen to 17th. in the world now. This serves as another demonstration of the reasons why!
And that's why you're wrong.
 
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