3 ms·

I think Abbott is one of those right twice a day kind of guys, and in this is one of those cases. The engineering side like to focus on the difficulty of stabi

I think Abbott is one of those right twice a day kind of guys, and in this is one of those cases. The engineering side like to focus on the difficulty of stabilizing a grid with a lot of renewables. But this isn't really TX's problem since we have all these NG plants that spin up a few times a year and make their entire yearly operating budget. But there is also financial destabilization because the wind generators are putting a lot of financial pressure on the entire system. None of those NG plants would have wanted to miss out on the last couple days, but they did because they are also operating at fairly thin margins because the wind has fairly low capital costs and just pumps energy into the grid when it feels like it, even when they aren't actually making any money. If the price of NG goes up much, this will become completely unsustainable. Frankly, I think what we need is a power demand tax/fee. If your a generator and you can't supply energy during peak demand times you get hit with say a 20% generating fee that get transferred to the energy sources that do. That would force the intermittent sources to at least pay for part of the peaking and base load capacity that has to deal with the intermittent sources flooding the market. It would also strongly discourage market manipulation by "accidentally" having a bunch of generation capacity offline at the same time.

hayst4ck 6y ago
You prescribed a solution to the problem and justified it with a single way the solution will work. When explained this way, it is obviously a bad way to justify something. What is a vastly more interesting question is what is the most perverse set of incentives the proposed system could result in, or what are ways the new system could fail, sometimes you never understand these until implementation, and only at that point is it discovered that most problems are not simple. Your entire proposition is founded on the axiom that the free market is the ultimate good in running efficient systems, but the free market is reactionary (a way to fail) and the free market makes distinctions between owner class people, intermediary class people, and customer class people (misaligned incentives are a way to fail). Fundamentally there is a disconnect between who pays for a water pipe that bursts and who pays to weatherize power plants, so you end up with a terrible set of incentives. Unless every owner of a burst pipe can successfully sue the power company for losses, I can't see a situation in which the free market would win over a well planned/regulated system. We went to the moon. We built nuclear subs. The world runs on American technologies which are a major output of our institutions. We are one of the few countries with clean water running into our kitchen faucets. Strong, responsible, accountable institutions have proven to make this country great. There are multiple potentially valid ways to do better than last time: - Guide the free market (your solution) - Regulate customers (pipes must be insulated/buried) - Regulate the producers (all power plants must be weatherized) - Give regulatory authority to experts (like regulation, but lighter weight, and much more easily changable) - Nationalize infrastructure I am pretty unconvinced that the free market can offer efficient/acceptable solutions to disaster scenarios.
- StillBored 6y ago
  I don't disagree with anything you said, except that I don't believe regulations is a complete solution either. See CA. I also don't think you can sue the power generation, thats like suing the police, you won't inact any kind of reform and the costs are just going to be passed on to the consumers. At that point your just turning the power co into a form of insurance. I tend to think the best way to assure system wide stability is to reintegrate the generators+transmission+retail portions to avoid all the perverse incentives. You know, the old public/CoOp utility model. Plus, the more you can keep politics and MBAs out of it, except to provide some guiding principals (aka lets try to reduce carbon, and keep costs low) the better off its going to be. But realistically, politics in TX, so a solution that can be passed by the government is going to involve some kind of free market adjustment. Usually that is just to raise the power cap (now at $9000) further, but as recently proven it doesn't do crap either. I said elsewhere let the engineers run it, but people assumed I was just talking about engineers, when really what I should have said is keep the decision making close to the people on the ground. If the plant operator thinks his plant needs some maintenance/etc he better not get overridden. Same with other bits, when the lineman noticed a problem with a pole, or an engineer runs a wind loading simulation and discovers a problem, if gets resolved rather than ignored.
  - solidsnack9000 6y ago
    Yeah, I think this highlights that it all comes back to accountability: there's no solution that works if we don't hold regulators accountable and the regulators don't hold the industry accountable. The people of Texas need to be organized and have a voice in this.
sand_castles 6y ago
Taxes generally distorts incentives and lead to misallocations of resources. It's better to let the prices do the talking with caps on retail prices ( barrier function ). generators that can keep the lights on during peak demand get better "credit score" in the form of matched investment loans at lower interest rates. generators that can keep their price low and stable during peak demand ( on retail ) get matched prices to the highest priced utility. So during peak demand : - G1 charges 0.7 USD / kWh - G2 charges 1.0 USD / kWh G1 gets paid 0.3 USD / kWh by the state, giving them strong incentive to find cheaper ways to meet peak demand. Why wont G1 just jack it up to 1 USD ? because retail would notice, why not switch to G2 if G1 and G2 are charging the same amount ? --------------------------- There is another simple policy that the state can adopt. Create 3 tiers of power demand ( each hour is put in one of the bins ): - Demand Min, Demand Avg, Demand Max. - whatever the price is at each tier, the state pays a small surcharge. - DM ( 0% ), DA ( 2% ), DM ( 5% ). This way nobody is unnecessary penalized, and everybody has the correct incentive to play along.

hayst4ck 6y ago

You prescribed a solution to the problem and justified it with a single way the solution will work. When explained this way, it is obviously a bad way to justify something. What is a vastly more interesting question is what is the most perverse set of incentives the proposed system could result in, or what are ways the new system could fail, sometimes you never understand these until implementation, and only at that point is it discovered that most problems are not simple. Your entire proposition is founded on the axiom that the free market is the ultimate good in running efficient systems, but the free market is reactionary (a way to fail) and the free market makes distinctions between owner class people, intermediary class people, and customer class people (misaligned incentives are a way to fail). Fundamentally there is a disconnect between who pays for a water pipe that bursts and who pays to weatherize power plants, so you end up with a terrible set of incentives. Unless every owner of a burst pipe can successfully sue the power company for losses, I can't see a situation in which the free market would win over a well planned/regulated system. We went to the moon. We built nuclear subs. The world runs on American technologies which are a major output of our institutions. We are one of the few countries with clean water running into our kitchen faucets. Strong, responsible, accountable institutions have proven to make this country great. There are multiple potentially valid ways to do better than last time: - Guide the free market (your solution) - Regulate customers (pipes must be insulated/buried) - Regulate the producers (all power plants must be weatherized) - Give regulatory authority to experts (like regulation, but lighter weight, and much more easily changable) - Nationalize infrastructure I am pretty unconvinced that the free market can offer efficient/acceptable solutions to disaster scenarios.

StillBored 6y ago
I don't disagree with anything you said, except that I don't believe regulations is a complete solution either. See CA. I also don't think you can sue the power generation, thats like suing the police, you won't inact any kind of reform and the costs are just going to be passed on to the consumers. At that point your just turning the power co into a form of insurance. I tend to think the best way to assure system wide stability is to reintegrate the generators+transmission+retail portions to avoid all the perverse incentives. You know, the old public/CoOp utility model. Plus, the more you can keep politics and MBAs out of it, except to provide some guiding principals (aka lets try to reduce carbon, and keep costs low) the better off its going to be. But realistically, politics in TX, so a solution that can be passed by the government is going to involve some kind of free market adjustment. Usually that is just to raise the power cap (now at $9000) further, but as recently proven it doesn't do crap either. I said elsewhere let the engineers run it, but people assumed I was just talking about engineers, when really what I should have said is keep the decision making close to the people on the ground. If the plant operator thinks his plant needs some maintenance/etc he better not get overridden. Same with other bits, when the lineman noticed a problem with a pole, or an engineer runs a wind loading simulation and discovers a problem, if gets resolved rather than ignored.
- solidsnack9000 6y ago
  Yeah, I think this highlights that it all comes back to accountability: there's no solution that works if we don't hold regulators accountable and the regulators don't hold the industry accountable. The people of Texas need to be organized and have a voice in this.

sand_castles 6y ago

Taxes generally distorts incentives and lead to misallocations of resources. It's better to let the prices do the talking with caps on retail prices ( barrier function ). generators that can keep the lights on during peak demand get better "credit score" in the form of matched investment loans at lower interest rates. generators that can keep their price low and stable during peak demand ( on retail ) get matched prices to the highest priced utility. So during peak demand : - G1 charges 0.7 USD / kWh - G2 charges 1.0 USD / kWh G1 gets paid 0.3 USD / kWh by the state, giving them strong incentive to find cheaper ways to meet peak demand. Why wont G1 just jack it up to 1 USD ? because retail would notice, why not switch to G2 if G1 and G2 are charging the same amount ? --------------------------- There is another simple policy that the state can adopt. Create 3 tiers of power demand ( each hour is put in one of the bins ): - Demand Min, Demand Avg, Demand Max. - whatever the price is at each tier, the state pays a small surcharge. - DM ( 0% ), DA ( 2% ), DM ( 5% ). This way nobody is unnecessary penalized, and everybody has the correct incentive to play along.