5 ms·

Something I haven't quite understood in all this is, can Griddy remotely turn off your power? Or was it up to the end user to cut off power to their house (I g

Something I haven't quite understood in all this is, can Griddy remotely turn off your power? Or was it up to the end user to cut off power to their house (I guess via the breaker box?), or should they have followed Griddy's advice to switch to another electricity supplier? Yet if electricity prices were so high due to an extreme decrease in generating capacity, how would switching to another supplier solve the price issue? Which gets to me other point in: besides the seriously unlucky residential users, who is paying these extreme prices? Factories which can't go down? Critical infrastructure?

maxerickson 6y ago
My understanding is that you manage your own power with Griddy. I don't know the specifics in Texas, but here the utility has to follow some process to change prices, with the price set so that the grid operator is likely to average some profit over time. When wholesale prices here spike, the grid operator is contractually obligated to continue providing residential customers power at the fixed price and has to spend reserves that they have built up when wholesale prices were lower than the fixed price. I think they aren't immediately on the hook for penalties if there is an outage, but they have reliability standards that they are supposed to meet.
wmf 6y ago
Normal electric retailers were selling at a loss this week because they only update prices once a year or something like that and hope it averages out. It's kind of scammy to use Griddy when prices are low then switch to another retailer when prices are high, like only getting health insurance when you're sick. I assume large industrial users have hedges in place to buffer price swings.
- mindslight 6y ago
  I would imagine most of the buyers (including traditional consumer-facing electric companies) aren't paying spot prices for all of their electricity, having negotiated contracts with generators ahead of time? But I have no idea on the specifics of Texas's energy market. As for the scamminess, doesn't our current business culture revolve around doing whatever you can get away with? I know I'm contributing to the downfall of society writing this, but it seems like you're just harming yourself by holding back based on morals while businesses no longer function that way. In this framework, it's up to the businesses to prevent you from switching instantaneously - like open enrollment periods for health "insurance".
- tinus_hn 6y ago
  Is it? Or is it just tough luck if Griddy chooses a business model that doesn’t work? Would it be a scam to get two connections and use the cheapest? I don’t think so.
cosmie 6y ago
> Which gets to me other point in: besides the seriously unlucky residential users, who is paying these extreme prices? Factories which can't go down? Critical infrastructure? The residential consumers in this unlucky boat were ones that explicitly opted into it. Most residential plans don't directly expose the consumer to wholesale pricing fluctuations - the consumer pays a flat rate per kwh, and the electric provider takes on the risk of their wholesale costs going above the retail rates their customers are paying. The "known flat rate" usually get adjusted on a periodic basis, so right now the electric companies are eating the loss themselves and will have to make up for it when they next adjust the flat rate consumers pay. But on the short term, the consumer is protected from the volatility of the wholesale rate spikes and the electric company ends up on the hook to carry that debt load. ... unless you opted into one of the providers in Texas that give you "access" to wholesale rates. Because fixed rate plans have to factor in wholesale pricing uncertainty (like this exact situation), they typically have higher rates than plans pegged to wholesale. So the people in this situation took a deliberate gamble - generally they had cheaper-than-retail rates due to direct access to wholesale pricing. But they also took on the risk of wholesale pricing volatility, so it's now coming back to bite them in the current situation. It's still seriously unlucky. But it's also wholly avoidable, and those in it have been enjoying the benefit of generally lower rates by opting into this risk exposure.

maxerickson 6y ago

My understanding is that you manage your own power with Griddy. I don't know the specifics in Texas, but here the utility has to follow some process to change prices, with the price set so that the grid operator is likely to average some profit over time. When wholesale prices here spike, the grid operator is contractually obligated to continue providing residential customers power at the fixed price and has to spend reserves that they have built up when wholesale prices were lower than the fixed price. I think they aren't immediately on the hook for penalties if there is an outage, but they have reliability standards that they are supposed to meet.

wmf 6y ago

Normal electric retailers were selling at a loss this week because they only update prices once a year or something like that and hope it averages out. It's kind of scammy to use Griddy when prices are low then switch to another retailer when prices are high, like only getting health insurance when you're sick. I assume large industrial users have hedges in place to buffer price swings.

mindslight 6y ago
I would imagine most of the buyers (including traditional consumer-facing electric companies) aren't paying spot prices for all of their electricity, having negotiated contracts with generators ahead of time? But I have no idea on the specifics of Texas's energy market. As for the scamminess, doesn't our current business culture revolve around doing whatever you can get away with? I know I'm contributing to the downfall of society writing this, but it seems like you're just harming yourself by holding back based on morals while businesses no longer function that way. In this framework, it's up to the businesses to prevent you from switching instantaneously - like open enrollment periods for health "insurance".
tinus_hn 6y ago
Is it? Or is it just tough luck if Griddy chooses a business model that doesn’t work? Would it be a scam to get two connections and use the cheapest? I don’t think so.

cosmie 6y ago

> Which gets to me other point in: besides the seriously unlucky residential users, who is paying these extreme prices? Factories which can't go down? Critical infrastructure? The residential consumers in this unlucky boat were ones that explicitly opted into it. Most residential plans don't directly expose the consumer to wholesale pricing fluctuations - the consumer pays a flat rate per kwh, and the electric provider takes on the risk of their wholesale costs going above the retail rates their customers are paying. The "known flat rate" usually get adjusted on a periodic basis, so right now the electric companies are eating the loss themselves and will have to make up for it when they next adjust the flat rate consumers pay. But on the short term, the consumer is protected from the volatility of the wholesale rate spikes and the electric company ends up on the hook to carry that debt load. ... unless you opted into one of the providers in Texas that give you "access" to wholesale rates. Because fixed rate plans have to factor in wholesale pricing uncertainty (like this exact situation), they typically have higher rates than plans pegged to wholesale. So the people in this situation took a deliberate gamble - generally they had cheaper-than-retail rates due to direct access to wholesale pricing. But they also took on the risk of wholesale pricing volatility, so it's now coming back to bite them in the current situation. It's still seriously unlucky. But it's also wholly avoidable, and those in it have been enjoying the benefit of generally lower rates by opting into this risk exposure.