6 ms·

Isn’t it mind-boggling that under the stress of winter, the same infrastructure that they had yesterday suddenly costs billions of dollars more to operate? Prof

by jiofih 6y ago

Isn’t it mind-boggling that under the stress of winter, the same infrastructure that they had yesterday suddenly costs billions of dollars more to operate? Profiting from calamity. The exact opposite of how public utilities should operate.

madsbuch 6y ago
I think I read somewhere that prices are capped at USD 9000 per MWh. That is still USD 9 per KWh which is insane pricing.
- deleted 6y ago
  [deleted]
- Lazare 6y ago
  It's worse than that, at the peak of the crisis not only were the capped at $9k/MWh, they were also floored at that price. As in, prices were administratively set to be $9k for a few days. ERCOT can just set prices to whatever they like, and their regulator (the PUCT) directed them to set it to $9k. It's...not entirely obvious to me that was a good choice. Or even that it was a better outcome than what a deregulated market in wholesale electricity might have done, although we'll never know, since Texas doesn't have one. :) > The PUC met Feb. 15 to address the pricing issue and decided to order ERCOT to set prices administratively at the $9,000/MWh systemwide offer cap during the emergency. > "At various times today (Feb. 15), energy prices across the system have been as low as approximately $1,200[/MWh]," the order states. "The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest." (Source: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/021621-texas-regulators-keep-prices-near-9000mwh-cap-during-rotating-outages https://www.spglobal.com/platts/en/market-insights/latest-ne...) Interesting logic. I suppose the idea is that if there's any shortage at all, then it must be because generators don't have enough money, so government should mandate that money be transferred from, in this case, coops like Brazos to the generating companies who failed to weatherise their plants? Nice for the generators, rough on the people forced to buy power at those prices.
- maxerickson 6y ago
  The regulator set prices at $9000 with the idea that the high price would reduce the shortage.
  - CydeWeys 6y ago
    And it did. Plenty of Texans were reducing their power usage to the absolute bare minimum once they got word of how expensive power had just become.
    - maxerickson 6y ago
      Why would retail customers (with fixed rates) worry about it?
      - throwaway3699 6y ago
        Commercial customers like factories and empty offices cutting usage can still make a serious impact.
        maxerickson 6y ago
        I expect they would have mostly been shut down at $1200. Really it looks like retail electric providers in Texas are structurally disadvantaged vs generators, carrying an unlimited obligation of service vs getting the spot price set to the regulatory maximum.
      - abathur 6y ago
        https://news.ycombinator.com/item?id=26282500 https://news.ycombinator.com/item?id=26282500
        maxerickson 6y ago
        25000 people.
        6y ago
anthony_r 6y ago
It's not the infrastructure that (temporarily) costs this much. It's the power that runs through it. There was simply no power. > Unusually frigid temperatures knocked out nearly half of the state’s power plants in mid-February They were short on the futures/forward contracts, i.e. they had to provide electricity, but there was none. When shit hits the fan someone has to foot the bill, and here it is them (among other such players).
- jiofih 6y ago
  I mean that the power that is still online doesn’t suddenly cost 500x more to produce. The plants are paid extra for.. not being prepared? This is why regulations exist.
  - anthony_r 6y ago
    Yes, it did in fact cost 500x more to buy, temporarily. Price is not determined by the cost of production but by supply and demand. Haven't you seen the extent of damage in Texas? What do you think people were willing to pay for electricity to not have this damage? Otherwise you can have a command-and-control economy, like the Soviet Union had (I'm not being sarcastic). Then a person/group in charge would decide who gets the remaining supply, rather than the price-driven market. Energy has always been a very delicate piece of engineering, sensitive to short term disruptions. Whether or not that energy is distributed via capitalist markets or not, whether it's electrical energy, gas or oil or whatever else.
    - jiofih 6y ago
      Again, this is why regulation exists, in many markets. It’s nothing new and as far as I know how the majority of states operate. As a society we don’t want the vulnerable to be looted in times of need. Equating that to communism, is well, plain stupid, so I’ll refrain from commenting further.
      - deleted 6y ago
        [deleted]

by jiofih 6y ago

madsbuch 6y ago

I think I read somewhere that prices are capped at USD 9000 per MWh. That is still USD 9 per KWh which is insane pricing.

deleted 6y ago
[deleted]
Lazare 6y ago
It's worse than that, at the peak of the crisis not only were the capped at $9k/MWh, they were also floored at that price. As in, prices were administratively set to be $9k for a few days. ERCOT can just set prices to whatever they like, and their regulator (the PUCT) directed them to set it to $9k. It's...not entirely obvious to me that was a good choice. Or even that it was a better outcome than what a deregulated market in wholesale electricity might have done, although we'll never know, since Texas doesn't have one. :) > The PUC met Feb. 15 to address the pricing issue and decided to order ERCOT to set prices administratively at the $9,000/MWh systemwide offer cap during the emergency. > "At various times today (Feb. 15), energy prices across the system have been as low as approximately $1,200[/MWh]," the order states. "The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest." (Source: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/021621-texas-regulators-keep-prices-near-9000mwh-cap-during-rotating-outages https://www.spglobal.com/platts/en/market-insights/latest-ne...) Interesting logic. I suppose the idea is that if there's any shortage at all, then it must be because generators don't have enough money, so government should mandate that money be transferred from, in this case, coops like Brazos to the generating companies who failed to weatherise their plants? Nice for the generators, rough on the people forced to buy power at those prices.
maxerickson 6y ago
The regulator set prices at $9000 with the idea that the high price would reduce the shortage.
- CydeWeys 6y ago
  And it did. Plenty of Texans were reducing their power usage to the absolute bare minimum once they got word of how expensive power had just become.
  - maxerickson 6y ago
    Why would retail customers (with fixed rates) worry about it?
    - throwaway3699 6y ago
      Commercial customers like factories and empty offices cutting usage can still make a serious impact.
      - maxerickson 6y ago
        I expect they would have mostly been shut down at $1200. Really it looks like retail electric providers in Texas are structurally disadvantaged vs generators, carrying an unlimited obligation of service vs getting the spot price set to the regulatory maximum.
    - abathur 6y ago
      https://news.ycombinator.com/item?id=26282500 https://news.ycombinator.com/item?id=26282500
      - maxerickson 6y ago
        25000 people.
        6y ago

anthony_r 6y ago

It's not the infrastructure that (temporarily) costs this much. It's the power that runs through it. There was simply no power. > Unusually frigid temperatures knocked out nearly half of the state’s power plants in mid-February They were short on the futures/forward contracts, i.e. they had to provide electricity, but there was none. When shit hits the fan someone has to foot the bill, and here it is them (among other such players).

jiofih 6y ago
I mean that the power that is still online doesn’t suddenly cost 500x more to produce. The plants are paid extra for.. not being prepared? This is why regulations exist.
- anthony_r 6y ago
  Yes, it did in fact cost 500x more to buy, temporarily. Price is not determined by the cost of production but by supply and demand. Haven't you seen the extent of damage in Texas? What do you think people were willing to pay for electricity to not have this damage? Otherwise you can have a command-and-control economy, like the Soviet Union had (I'm not being sarcastic). Then a person/group in charge would decide who gets the remaining supply, rather than the price-driven market. Energy has always been a very delicate piece of engineering, sensitive to short term disruptions. Whether or not that energy is distributed via capitalist markets or not, whether it's electrical energy, gas or oil or whatever else.
  - jiofih 6y ago
    Again, this is why regulation exists, in many markets. It’s nothing new and as far as I know how the majority of states operate. As a society we don’t want the vulnerable to be looted in times of need. Equating that to communism, is well, plain stupid, so I’ll refrain from commenting further.
    - deleted 6y ago
      [deleted]