4 ms·

Not a fan of this. People buying electricity at wholesale prices is on them.

Analemma_ 6y ago
I disagree completely. This business model should never have been allowed to exist, in the same way and for the same reason that "almost fully self-driving cars" should not be allowed on the roads: humans are just not capable of quickly and correctly responding in situations where 99.99% of the time no input is required and once in a blue moon you have to act immediately to avoid disaster. Good riddance.
- Rebelgecko 6y ago
  Griddy seems like it would be a win-win for people with solar panels and decent battery storage
  - nrmitchi 6y ago
    Or people who knowingly, and flexibly, use a large amount of power.
  - jasonjayr 6y ago
    Do they do net-metering down in TX ?
    - freeone3000 6y ago
      Better. Retail price in Texas depends on time-of-use, so you're paid more per kWh for the electricity you net-generate during the day than the electricity you net-use during the night.
      - dragonwriter 6y ago
        Of course, once enough people do it, peak price time moves out of solar-generating-but-home-use-low time (see, e.g., California.)
- bpodgursky 6y ago
  The only way other electric companies would be able to eat the difference between retail and wholesale rates would be to overcharge for years, hoard cash, and then pay out that buffer during this crisis. Presumably, this is what they did. Doesn't actually seem better for consumers?
  - freeone3000 6y ago
    Except during events like this, that people are not and cannot be prepared for. Griddy going out of business is nothing -- if someone else wants to take up the business model, they can tomorrow. Individual people being charged thousands for debts difficult to discharge is the real harm.
    - nrmitchi 6y ago
      That's an interesting point actually. For one, I suspect that ERCOT wouldn't allow a new company with this model access to the grid immediately, at least until this blows over a bit. But regarding "thousands in debts"; I'm curious how that will be handled. It seems that these are debts to Griddy, but Griddy no longer exists, apparently for non-payment, which implies that ERCOT does not expect to be paid. Do these customers now owe this debt to ERCOT directly?
      - dragonwriter 6y ago
        > Griddy no longer exists Griddy is shutting down. They exist for the moment, the debt they are owed is an asset, and even if they are dissolved their assets will be sold off to pay their creditors, so someone will be owed the money.
        nrmitchi 6y ago
        The customer debt from this can be sold off, but you might be lucky to get a penny-on-the-dollar for it.
        6y ago
- myself248 6y ago
  I would love the opportunity to sign up for this, if and only if they could send me some test messages so I could make sure my load-shedding scripts work. The opportunity to engage more directly with the market would be cool and useful for folks with the technical chops to participate appropriately. And if everyone's smart appliances and bitcoin miners could actually cut themselves off with price spikes, _the grid would be healthier for it_. I think of it like self-insurance. If you have the financial resources to weather the foreseeable eventualities, you can forego many traditional types of insurance. However, you have to prove that you have the money in the bank. In this case, there was nobody checking that these wholesale customers had the technical chops to meaningfully participate in the wholesale market. THAT is the problem. The market should exist, but just like you can't register a car without either normal insurance or proving your self-insurability, you shouldn't get electrical service without either paying normal consumer rates or proving your ability to play the wholesale game.
  - deleted 6y ago
    [deleted]
- austhrow743 6y ago
  Almost fully self driving cars are physically dangerous to others. Whether or not you think people should be allowed to bankrupt themselves speculating on wholesale energy prices; it’s an entirely different situation.
  - salawat 6y ago
    Not really. You're just gambling/risk taking in a different way. It's like a waterbed. Push down the risk in one place, pops up in another.
    - fastball 6y ago
      How am I impacted if some random person can't pay their energy bills because they used a lot of power when the prices were high? Meanwhile getting run over by a semi-autonomous vehicle is a fairly direct consequence of such things.
teeray 6y ago
It’s surprising there isn’t some insurance product to defend against the surprise bills.
- myself248 6y ago
  Like, oh, say, "regular consumer electric rates" that everyone ordinarily pays?
- Analemma_ 6y ago
  How would that differ from just paying retail price for electricity?
  - dnautics 6y ago
    Well for starters you're adding a third party into the mix. I guess that sounds sarcastic, because probably for most people it's not worth it, but there's probably a point where the added overhead of the third party is worth the savings. Maybe then the third party insurer would be motivated to build active cost monitoring device that will cut the power to your house when the price gets too high. Do you trust your power provider to build un-backdooered logic, that they won't use for other purposes, for such a thing? It being a third party also affords other opportunities, like, not buying the insurance and building your own power/price monitoring kit/algorithm. Suppose you are willing to pay a high premium to keep your freezer running but not the wall warts on all of your voltage-transformed devices?
- robbiep 6y ago
  It would be called having a fixed cost contract
- nrmitchi 6y ago
  I assume you're being sarcastic, but if not, that "insurance product" is "use a fixed-rate pricing provider", like pretty much everyone in the state.
  - Schiendelman 6y ago
bpodgursky 6y ago
The problem here as I understand it is that ERCOT stepped in and artificially set an absurdly high wholesale price, to try to stimulate production. And then Griddy was forced to pass this price straight down to their customers. The narrative about this being a "market failure" seems really wrong. Really seems like it should be on TX to make the customers whole here, given that they ordered Griddy to pass along huge amounts of money to producers for days.
- Afforess 6y ago
  >The problem here as I understand it is that ERCOT stepped in and artificially set an absurdly high wholesale price Incorrect. ERCOT set a price ceiling, not a price. The wholesale price without the ERCOT price ceiling would have been far, far higher than $9000 kwh. That ERCOT is at blame for the price ceiling is absurd. * ERCOT is to blame for a lot of other things though.
  - coryrc 6y ago
    https://news.ycombinator.com/item?id=26282576 https://news.ycombinator.com/item?id=26282576 disagrees with you
    - creato 6y ago
      I don't think it does. I think you are misreading it.
      - nrmitchi 6y ago
        > On February 15, during the power crisis, the state's Public Utility Commission required ERCOT to set the price to the $9,000 maximum. Which part do you think they're mis-reading?
  - bpodgursky 6y ago
    I don't think you are correct. Here's another source: https://thetexan.news/texas-utility-regulator-increased-electricity-prices-during-blackouts-to-accurately-reflect-market-conditions/ https://thetexan.news/texas-utility-regulator-increased-elec... > “Because energy prices should reflect scarcity of the supply, the market price for the energy needed to serve load being shed in the face of scarcity should also be at its highest,” the PUC’s news release stated. > The PUC added, “The decision was spurred by ERCOT’s discovery that energy prices across the system were clearing at less than the current system-wide offer cap of $9,000 established by Commission rule.” > In addition, the PUC ordered wholesale prices be backdated to February 15 when the storm escalated circumstances in the state.
deleted 6y ago
[deleted]
freeone3000 6y ago
It is, but then people couldn't pay -- and since they couldn't pay, neither can Griddy, since it ran cash-lean and didn't extract enough profit during low rate periods to cover this amount of delinquency. The $2.1B shortfall is being assessed equally among resellers, so Griddy acting like they're some victim instead of just another participant is a bit silly. You don't see Encor complaining about the shortfall makeup assessment, despite all of their customers being on fixed-rate.
- stefan_ 6y ago
  Griddy is obviously insolvent since its members are, so far with you. But many other providers are also defaulting. Why are they forcing only Griddy to shut down? Conspiracy theory: putting them into bankruptcy with no hope of recovery has a good chance of making all those huge bills you have read about in the press go away. This strikes to me as a typical American solution to peoples crass financial ignorance: socialize the debts. Here is what happens next: > If buyers are not able to cover their bills, Ercot will pay the generator and the charges will ultimately be spread out to other market participants, including other generators and traders, as permitted by regulations.
  - freeone3000 6y ago
    To be clear, today's decision actually is your quoted statement -- there was a $2.1B shortfall, so ERCOT is requiring payments from its transmitters to cover the payments it already made to the producers. Griddy is unable to cover its portion of this payment, so is exiting the business instead. There are other resellers in deficit, but none that I know of in default -- Green Mountain, Reliant, Encor, Vital, NEC and so on will simply pay their portion of the assessed shortfall and continue business as usual.
  - salawat 6y ago
    Further I don't think Griddy was actually a generator. I believe they fundamentally operated as broker/transmitters at best. I.e. futures trading. Everyone else had the capacity to meet demand, and Griddy served as the buyer to connect client demand to supplier generation capacity. Most of the other utilities have privately owned electrical infrastructure in play. That's part of the reason why Griddy got away for so long running as cash lean as they were. No infra upkeep, no maintenance to coordinate or hedge, just price discovery and arbitrage. When all their customers were in a position, however, where they needed electricity from Griddy, but no one had any to sell... Well... That's why spot buying can leave you with your arse out in the cold. I do feel sympathy for those caught out, but I also understand what Griddy's intent was, even if I think the position and business model they chose was unwise. It goes good when its all good, but when things go bad, you have a responsibility to have been planning for that eventuality. It sucks. It feels wrong that it should end up happening that way. That's kinda jow life rolls though. At least, has been for me.
Lammy 6y ago
> People buying electricity at wholesale prices is on them. This feels too much like victim blaming for me to agree with. In general, people are lead to believe "wholesale" just means something like "cheaper in bulk" à la Costco. I am sympathetic to anyone who was ignorant of the fact that it meant their personal rates could be much much higher too.
- fastball 6y ago
  You're not a victim if: 1. You're directly in this position due to choices you made. 2. The "perpetrator" is mother nature.
gpm 6y ago
This being wholesale doesn't somehow make it not price gouging. Raising prices on a product (electricity) that you were already selling during an emergency is widely considered to be highly immoral, and is illegal almost everywhere, including Texas [1]. There does not appear to be any exception for "wholesale" goods, or b2b transactions, nor should there be morally since that would defeat the whole purpose of keeping necessities flowing. The fact that ERCOT sets the prices makes this whole situation complicated, I have no clue if anyone actually broke the law here. But certainly setting the price this high was immoral, useless, and just a transfer of money from people buying electricity to the people who were already producing as much electricity as they could at 1/10th the price. The fact that these people participated in the wholesale market assuming that that market operated under the normal norms of western civilization is not particularly their fault, but an entirely reasonable thing for them to have done. The solution to this problem is not to not let people participate in markets, but to make markets actually follow the normal norms of civilization and not engage in unethical price gouging during emergencies. [1] https://www.texasattorneygeneral.gov/consumer-protection/disaster-and-emergency-scams/how-spot-and-report-price-gouging https://www.texasattorneygeneral.gov/consumer-protection/dis...
- nrmitchi 6y ago
  I believe there is an exception to price gouging laws if the cost of producing the direct item/product/service is impacted. In this case Griddy's cost went way up as well, which makes them not-clearly-in-the-wrong. For the power producers on the other hand, it seems exceptionally clear (to me anyways) that this was just state-sponsored price gouging: https://theintercept.com/2021/02/23/texas-winter-storm-gas-prices-executives/ https://theintercept.com/2021/02/23/texas-winter-storm-gas-p...
  - gpm 6y ago
    Yes, definitely wasn't trying to accuse Griddy of price gouging here, they're just a middle man. I am accusing the people who set the price of doing so (at least morally), and perhaps even the producers of the electricity who didn't set the price (as well as those who were involved in setting it) since they are going along with selling it at that exorbitant price.

I disagree completely. This business model should never have been allowed to exist, in the same way and for the same reason that "almost fully self-driving cars" should not be allowed on the roads: humans are just not capable of quickly and correctly responding in situations where 99.99% of the time no input is required and once in a blue moon you have to act immediately to avoid disaster. Good riddance.

Rebelgecko 6y ago
Griddy seems like it would be a win-win for people with solar panels and decent battery storage
- nrmitchi 6y ago
  Or people who knowingly, and flexibly, use a large amount of power.
- jasonjayr 6y ago
  Do they do net-metering down in TX ?
  - freeone3000 6y ago
    Better. Retail price in Texas depends on time-of-use, so you're paid more per kWh for the electricity you net-generate during the day than the electricity you net-use during the night.
    - dragonwriter 6y ago
      Of course, once enough people do it, peak price time moves out of solar-generating-but-home-use-low time (see, e.g., California.)
bpodgursky 6y ago
The only way other electric companies would be able to eat the difference between retail and wholesale rates would be to overcharge for years, hoard cash, and then pay out that buffer during this crisis. Presumably, this is what they did. Doesn't actually seem better for consumers?
- freeone3000 6y ago
  Except during events like this, that people are not and cannot be prepared for. Griddy going out of business is nothing -- if someone else wants to take up the business model, they can tomorrow. Individual people being charged thousands for debts difficult to discharge is the real harm.
  - nrmitchi 6y ago
    That's an interesting point actually. For one, I suspect that ERCOT wouldn't allow a new company with this model access to the grid immediately, at least until this blows over a bit. But regarding "thousands in debts"; I'm curious how that will be handled. It seems that these are debts to Griddy, but Griddy no longer exists, apparently for non-payment, which implies that ERCOT does not expect to be paid. Do these customers now owe this debt to ERCOT directly?
    - dragonwriter 6y ago
      > Griddy no longer exists Griddy is shutting down. They exist for the moment, the debt they are owed is an asset, and even if they are dissolved their assets will be sold off to pay their creditors, so someone will be owed the money.
      - nrmitchi 6y ago
        The customer debt from this can be sold off, but you might be lucky to get a penny-on-the-dollar for it.
        6y ago
myself248 6y ago
I would love the opportunity to sign up for this, if and only if they could send me some test messages so I could make sure my load-shedding scripts work. The opportunity to engage more directly with the market would be cool and useful for folks with the technical chops to participate appropriately. And if everyone's smart appliances and bitcoin miners could actually cut themselves off with price spikes, _the grid would be healthier for it_. I think of it like self-insurance. If you have the financial resources to weather the foreseeable eventualities, you can forego many traditional types of insurance. However, you have to prove that you have the money in the bank. In this case, there was nobody checking that these wholesale customers had the technical chops to meaningfully participate in the wholesale market. THAT is the problem. The market should exist, but just like you can't register a car without either normal insurance or proving your self-insurability, you shouldn't get electrical service without either paying normal consumer rates or proving your ability to play the wholesale game.
- deleted 6y ago
  [deleted]
austhrow743 6y ago
Almost fully self driving cars are physically dangerous to others. Whether or not you think people should be allowed to bankrupt themselves speculating on wholesale energy prices; it’s an entirely different situation.
- salawat 6y ago
  Not really. You're just gambling/risk taking in a different way. It's like a waterbed. Push down the risk in one place, pops up in another.
  - fastball 6y ago
    How am I impacted if some random person can't pay their energy bills because they used a lot of power when the prices were high? Meanwhile getting run over by a semi-autonomous vehicle is a fairly direct consequence of such things.

teeray 6y ago

It’s surprising there isn’t some insurance product to defend against the surprise bills.

myself248 6y ago
Like, oh, say, "regular consumer electric rates" that everyone ordinarily pays?
Analemma_ 6y ago
How would that differ from just paying retail price for electricity?
- dnautics 6y ago
  Well for starters you're adding a third party into the mix. I guess that sounds sarcastic, because probably for most people it's not worth it, but there's probably a point where the added overhead of the third party is worth the savings. Maybe then the third party insurer would be motivated to build active cost monitoring device that will cut the power to your house when the price gets too high. Do you trust your power provider to build un-backdooered logic, that they won't use for other purposes, for such a thing? It being a third party also affords other opportunities, like, not buying the insurance and building your own power/price monitoring kit/algorithm. Suppose you are willing to pay a high premium to keep your freezer running but not the wall warts on all of your voltage-transformed devices?
robbiep 6y ago
It would be called having a fixed cost contract
nrmitchi 6y ago
I assume you're being sarcastic, but if not, that "insurance product" is "use a fixed-rate pricing provider", like pretty much everyone in the state.
- Schiendelman 6y ago

bpodgursky 6y ago

The problem here as I understand it is that ERCOT stepped in and artificially set an absurdly high wholesale price, to try to stimulate production. And then Griddy was forced to pass this price straight down to their customers. The narrative about this being a "market failure" seems really wrong. Really seems like it should be on TX to make the customers whole here, given that they ordered Griddy to pass along huge amounts of money to producers for days.

Afforess 6y ago
>The problem here as I understand it is that ERCOT stepped in and artificially set an absurdly high wholesale price Incorrect. ERCOT set a price ceiling, not a price. The wholesale price without the ERCOT price ceiling would have been far, far higher than $9000 kwh. That ERCOT is at blame for the price ceiling is absurd. * ERCOT is to blame for a lot of other things though.
- coryrc 6y ago
  https://news.ycombinator.com/item?id=26282576 https://news.ycombinator.com/item?id=26282576 disagrees with you
  - creato 6y ago
    I don't think it does. I think you are misreading it.
    - nrmitchi 6y ago
      > On February 15, during the power crisis, the state's Public Utility Commission required ERCOT to set the price to the $9,000 maximum. Which part do you think they're mis-reading?
- bpodgursky 6y ago
  I don't think you are correct. Here's another source: https://thetexan.news/texas-utility-regulator-increased-electricity-prices-during-blackouts-to-accurately-reflect-market-conditions/ https://thetexan.news/texas-utility-regulator-increased-elec... > “Because energy prices should reflect scarcity of the supply, the market price for the energy needed to serve load being shed in the face of scarcity should also be at its highest,” the PUC’s news release stated. > The PUC added, “The decision was spurred by ERCOT’s discovery that energy prices across the system were clearing at less than the current system-wide offer cap of $9,000 established by Commission rule.” > In addition, the PUC ordered wholesale prices be backdated to February 15 when the storm escalated circumstances in the state.

deleted 6y ago

[deleted]

freeone3000 6y ago

It is, but then people couldn't pay -- and since they couldn't pay, neither can Griddy, since it ran cash-lean and didn't extract enough profit during low rate periods to cover this amount of delinquency. The $2.1B shortfall is being assessed equally among resellers, so Griddy acting like they're some victim instead of just another participant is a bit silly. You don't see Encor complaining about the shortfall makeup assessment, despite all of their customers being on fixed-rate.

stefan_ 6y ago
Griddy is obviously insolvent since its members are, so far with you. But many other providers are also defaulting. Why are they forcing only Griddy to shut down? Conspiracy theory: putting them into bankruptcy with no hope of recovery has a good chance of making all those huge bills you have read about in the press go away. This strikes to me as a typical American solution to peoples crass financial ignorance: socialize the debts. Here is what happens next: > If buyers are not able to cover their bills, Ercot will pay the generator and the charges will ultimately be spread out to other market participants, including other generators and traders, as permitted by regulations.
- freeone3000 6y ago
  To be clear, today's decision actually is your quoted statement -- there was a $2.1B shortfall, so ERCOT is requiring payments from its transmitters to cover the payments it already made to the producers. Griddy is unable to cover its portion of this payment, so is exiting the business instead. There are other resellers in deficit, but none that I know of in default -- Green Mountain, Reliant, Encor, Vital, NEC and so on will simply pay their portion of the assessed shortfall and continue business as usual.
- salawat 6y ago
  Further I don't think Griddy was actually a generator. I believe they fundamentally operated as broker/transmitters at best. I.e. futures trading. Everyone else had the capacity to meet demand, and Griddy served as the buyer to connect client demand to supplier generation capacity. Most of the other utilities have privately owned electrical infrastructure in play. That's part of the reason why Griddy got away for so long running as cash lean as they were. No infra upkeep, no maintenance to coordinate or hedge, just price discovery and arbitrage. When all their customers were in a position, however, where they needed electricity from Griddy, but no one had any to sell... Well... That's why spot buying can leave you with your arse out in the cold. I do feel sympathy for those caught out, but I also understand what Griddy's intent was, even if I think the position and business model they chose was unwise. It goes good when its all good, but when things go bad, you have a responsibility to have been planning for that eventuality. It sucks. It feels wrong that it should end up happening that way. That's kinda jow life rolls though. At least, has been for me.

Lammy 6y ago

> People buying electricity at wholesale prices is on them. This feels too much like victim blaming for me to agree with. In general, people are lead to believe "wholesale" just means something like "cheaper in bulk" à la Costco. I am sympathetic to anyone who was ignorant of the fact that it meant their personal rates could be much much higher too.

fastball 6y ago
You're not a victim if: 1. You're directly in this position due to choices you made. 2. The "perpetrator" is mother nature.

gpm 6y ago

This being wholesale doesn't somehow make it not price gouging. Raising prices on a product (electricity) that you were already selling during an emergency is widely considered to be highly immoral, and is illegal almost everywhere, including Texas [1]. There does not appear to be any exception for "wholesale" goods, or b2b transactions, nor should there be morally since that would defeat the whole purpose of keeping necessities flowing. The fact that ERCOT sets the prices makes this whole situation complicated, I have no clue if anyone actually broke the law here. But certainly setting the price this high was immoral, useless, and just a transfer of money from people buying electricity to the people who were already producing as much electricity as they could at 1/10th the price. The fact that these people participated in the wholesale market assuming that that market operated under the normal norms of western civilization is not particularly their fault, but an entirely reasonable thing for them to have done. The solution to this problem is not to not let people participate in markets, but to make markets actually follow the normal norms of civilization and not engage in unethical price gouging during emergencies. [1] https://www.texasattorneygeneral.gov/consumer-protection/disaster-and-emergency-scams/how-spot-and-report-price-gouging https://www.texasattorneygeneral.gov/consumer-protection/dis...

nrmitchi 6y ago
I believe there is an exception to price gouging laws if the cost of producing the direct item/product/service is impacted. In this case Griddy's cost went way up as well, which makes them not-clearly-in-the-wrong. For the power producers on the other hand, it seems exceptionally clear (to me anyways) that this was just state-sponsored price gouging: https://theintercept.com/2021/02/23/texas-winter-storm-gas-prices-executives/ https://theintercept.com/2021/02/23/texas-winter-storm-gas-p...
- gpm 6y ago
  Yes, definitely wasn't trying to accuse Griddy of price gouging here, they're just a middle man. I am accusing the people who set the price of doing so (at least morally), and perhaps even the producers of the electricity who didn't set the price (as well as those who were involved in setting it) since they are going along with selling it at that exorbitant price.