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> prices where capped by regulators Not true. Early in the crisis so much generation capacity went offline that there was no way that that it could meet all o

> prices where capped by regulators Not true. Early in the crisis so much generation capacity went offline that there was no way that that it could meet all of the price-insensitive demand (most consumers pay a fixed price, regardless of wholesale prices). If you attempt to run the grid when demand exceeds supply it will damage generators, making the problem worse. To avoid that, regulators shut off power to people who still had a working connection to the grid and would have been happy to consume power at their contracted rates. As generation came back online, prices dropped quite low because demand was artificially constrained. The regulators then overrode the market and set the price to the maximum allowed by the system to encourage all generators to come online, which would then allow them to start turning people's power back on.

Retric 6y ago
Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented. Those blackouts where excessive and thus reduced the wholesale price below it’s maximum. As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts. Regulators said, you can only have rolling blackouts while rates are near the maximum because otherwise you’re simply going to keep cutting people’s power off to save yourself money. Granted, outside of context it seems like really odd behavior. But again this was retroactively filling in periods where prices dropped artificially rather than proactively increasing the prices. It’s no different than the SEC stepping in when someone manipulates a financial market. PS: That said some of this was simply technical as blackouts aren’t capable of the kind of fine grained second by second control needed to maintain a stable electric grid.
- scott00 6y ago
  > Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented Again, no. The cap was in place before the floor, but was never binding: they did blackouts before the price hit the maximum, not after. > As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts The decision to do blackouts was made by ERCOT, not by transmission operators or power retailers. (Retailers are the only ones who have an incentive to do blackouts, though transmitters generally also have a retail operation.)
  - Retric 6y ago
    What’s the price on an expiring naked short when their isn’t enough of the stock to meet your demand? All your money. As utilizes are required to sell at contracted prices to the general public and must buy from insufficient supply that’s the situation. Actually breaking equipment isn’t needed to demonstrate this. If you’re doing rolling blackouts from insufficient supply then your at price infinity or whatever price limit is setup to protect you. I am using utilities rather than TDU’s as while they are required to provide access to others, enough do both to make the distinction meaningless in this instance. PS: ERCOT making that decision is only relevant if it could have been avoided. So, if you can find someone saying their was sufficient supply to cover demand then I will withdraw my argument.

Retric 6y ago

Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented. Those blackouts where excessive and thus reduced the wholesale price below it’s maximum. As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts. Regulators said, you can only have rolling blackouts while rates are near the maximum because otherwise you’re simply going to keep cutting people’s power off to save yourself money. Granted, outside of context it seems like really odd behavior. But again this was retroactively filling in periods where prices dropped artificially rather than proactively increasing the prices. It’s no different than the SEC stepping in when someone manipulates a financial market. PS: That said some of this was simply technical as blackouts aren’t capable of the kind of fine grained second by second control needed to maintain a stable electric grid.

scott00 6y ago
> Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented Again, no. The cap was in place before the floor, but was never binding: they did blackouts before the price hit the maximum, not after. > As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts The decision to do blackouts was made by ERCOT, not by transmission operators or power retailers. (Retailers are the only ones who have an incentive to do blackouts, though transmitters generally also have a retail operation.)
- Retric 6y ago
  What’s the price on an expiring naked short when their isn’t enough of the stock to meet your demand? All your money. As utilizes are required to sell at contracted prices to the general public and must buy from insufficient supply that’s the situation. Actually breaking equipment isn’t needed to demonstrate this. If you’re doing rolling blackouts from insufficient supply then your at price infinity or whatever price limit is setup to protect you. I am using utilities rather than TDU’s as while they are required to provide access to others, enough do both to make the distinction meaningless in this instance. PS: ERCOT making that decision is only relevant if it could have been avoided. So, if you can find someone saying their was sufficient supply to cover demand then I will withdraw my argument.