5 ms·

Griddy claims[0]—a claim I don't have the knowledge to verify—that this price spike was a political intervention, not a natural consequence of the market, and t

• cozzyd 6y ago
  On the contrary, the price likely would have gone higher without the regulatory cap...
  • throwawaysea 6y ago
    The article shows the real time supply and demand price at the time being 300x lower. It wasn’t a price cap but more like a mandatory price increase. At least that’s how the linked post from Griddy describes it.
    • cozzyd 6y ago
      When demand exceeded supply and load had to be shed, the fair market price likely would have been much higher. Griddy is advocating for having their cake and eating it too here, I think.
• jrumbut 6y ago
  The political intervention was done using the mechanism described in the rules (according to my reading of your link). They relied on conditions staying static when the rules say things can change a lot in an emergency.
• khuey 6y ago
  Griddy is being a bit disingenuous here, IMO. ERCOT operates a power-only market, unlike most grid operators. No producers get paid "for capacity" (for agreeing to be ready to provide power, even if they're not currently doing so). To provide a motivation for producers to have excess capacity, ERCOT allows the wholesale price of electricity to rise as high as $9000/MWh in shortage conditions. During the past week when massive amounts of supply went offline ERCOT forced the downstream utilities to disconnect customers (shed load) to avoid bringing down the entire grid. This is what the "EEA 3" in Griddy's graphic means. After vast swathes of Texas were disconnected from the grid and prevented from buying power at any price, the market clearing price for those remaining on the grid was around $1200/MWh. The Texas PUC ordered ERCOT to raise the price to the cap of $9000/MWh to accurately reflect that demand was vastly exceeding supply at that moment. So was it an intervention? Yes. But the intervention was there to make the market function more like it was intended to. Shedding load from the grid was also (an earlier) intervention in the market. It's not really possible to operate a completely "free market" in electricity because of physical and moral constraints (are you really going to turn off electricity to the water treatment plant before some guy's mansion?) as we're seeing.
  • X-Istence 6y ago
    Right... the wholesale cost was artificially being held low during that time because ERCOT was load shedding by disconnecting consumers. The algorithm just sees load < available power and sets the price. This means that as the load continued to shed, wholesale price would have continued to plummet, which would have caused more generation to go offline (as there's no demand for it, and price per kWh is dropping), which is the exact opposite of what was required to stabilize the grid. Generation needed to be brought back online, and wholesale customers still connected to the grid (think large industry) should have pulled their load off the grid to restore capacity for the retail consumer.