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The article explained why - even with the forced blackouts, demand kept rising regardless. They were this close to needing to shut down the entire grid to avoid

The article explained why - even with the forced blackouts, demand kept rising regardless. They were this close to needing to shut down the entire grid to avoid catastrophic damage that would've taken weeks or months to recover from. Increasing costs exponentially is basically a form of exponential backoff [1]. As horrible as $7,000/day electricity is, it would be worse if the whole grid was down for a month to recover from catastrophic failure. [1] https://en.wikipedia.org/wiki/Exponential_backoff https://en.wikipedia.org/wiki/Exponential_backoff

labawi 5y ago
While I appreciate the free trade view, could you point to the part where they say setting the price high helped in a considerable way? ERCOT has authority to load-shed, regardless of price. From the article: > For the entirety of 2020, Texans paid $9.8 billion to keep the juice flowing. On February 16 alone, they spent roughly $10.3 billion. Costs for the month of February totaled more than $50 billion. The price reaction time is generally too slow, and judging by the bills incurred, ineffective as a control mechanism - hence the massive outrage on incurred costs. Do the costs seem appropriate? While I haven't read the whole article, blackouts mentioned were the effect of load shedding and the principal action that prevented grid failure. The price was fixed only after the critical period, by an unknown criteria and questionable need. Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days?
- solatic 5y ago
  > Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days? Look, the simple answer to your question is no, of course. But, given that we understand the reason why controllers acted the way they did, these criticisms are taking advantage of hindsight, and hindsight is 20/20. The controllers needed to not just shed load, but to keep demand down until the storm passed. They weren't thinking about price/demand elasticity and how much Grandma's electric bill was likely to be. And furthermore, it's not correct to expect every public operator to second-guess every move they make, because it slows down the public sector, increases public sector bloat, increases cover-your-ass behavior, etc. If you're going to apply hindsight to arrive at a moral judgement, then it's better to apply that hindsight not at the people who were time-stressed to prevent complete grid collapse, but to the gas industry that refused cold-weatherization for short-term profit. I'm not unsympathetic to the people who got screwed with five figure electric bills. If a state employee screwed up on the pricing, the state should pay the bills. But I wouldn't throw the controller under the bus for it.
  - deleted 5y ago
    [deleted]
  - labawi 5y ago
    >> do you need it maxed and do you need it for days? > the simple answer to your question is no The answer is no and no. IMO, if they did only one of those things, it wouldn't be a big deal. When you set a fixed price at 100-200x normal price and hold it like that for days, you'd better have a very, very good reason and think through the consequences. What you're saying does make sense, but I wouldn't give them a free pass, unless they can explain their reasoning. I don't know - maybe they did. If you're doing things with such implications, you'd better be able to explain your choices and reasoning. Not just to cover you ass, but to really consider the implications and possible alternatives. And we're not talking about a few critical minutes or hours, they kept the price for days.
jrs235 5y ago
But regular consumers weren't aware of the increased astronomical prices. Joe plumber wasn't aware that running his lights would cost so much money. The prices weren't dissuading or decreasing demand.
- iso1631 5y ago
  The free market only works when everyone has full information and a realistic alternative. When the alternative is "freeze to death" and the information is "you'll get a bill next month between $500 and $500,000", it doesn't work, and something needs to step in and protect people.
  - sixothree 5y ago
    I feel like this thread is brigaded to death. The fact of the failure is clear. But the one constant in all of these arguments is to introduce uncertainty and attempt to shift blame. I think it is an odd choice to blame the consumer in this scenario since customers just one state over did just fine throughout this ordeal.
- tristor 5y ago
  Joe Plumber didn't have to pay any more... and the fact people continue to not understand this makes /every/ thread about the Texas incident last February pointless.
  - jrs235 5y ago
    I don't know who's telling the truth: https://news.yahoo.com/5-152-power-bill-texas-192316981.html https://news.yahoo.com/5-152-power-bill-texas-192316981.html Edit: Perhaps in the end consumers didn't have to pay. I haven't found anything saying they didn't.
    - tristor 5y ago
      The very article you link is talking about exactly one small provider that has an entire business focused on consumers signing up to pay wholesale rates live (which are generally much lower than the contract rates) called Griddy. Griddy customers are the ONLY individuals in the entire state who had their power bill go up last February during the storm. According to Griddy they had around 29000 customers in Texas last year and there are roughly 29 Million people in Texas, so that means less than 1/10th of 1% (0.001) of the Texas population had to pay an increased power bill last February. There are different systems in different municipalities. Houston and Dallas both have systems where multiple providers can offer service which are distinct from the providers responsible for the actual utility infrastructure (power lines to your house). Austin and San Antonio both have municipally owned utilities (CPS Energy in San Antonio, Austin Energy in Austin). For the majority of households they either have a contracted rate based on their agreement when they signed up for service (just like a cell phone contract), or they have a legally set rate which requires a ballot issue. This is WELL established. There's no dispute here, and if you can't "tell who's telling the truth", it just means you haven't bothered doing any research before deciding. The national media used the snowstorm in February as a political tool to kick Texas while it was down because they see it as a Republican bastion (even though the majority of the population lives in reliably blue cities in national elections and Texas is purple now), and used something truthful for less than 1/10th of 1% of the population to act like it was that way for everyone to make the issue seem larger than it was. Also from your article "Despite the astronomical prices, Scott-Amos is considered one of the lucky ones, as millions of people across Texas are still without power while temperatures remain perilously low." Griddy customers pay the live wholesale price, they were also immune from forced load-shedding meaning they didn't go without power during freezing weather like most other Texans did, so true to their contract they paid the live wholesale price and in return received guaranteed service. Sounds like they got exactly what they signed up for at the risk they decided to take which 99.999% of Texans opted not to take for the safer (but generally more expensive) financial bet.
aqme28 5y ago
It's only a form of exponential backoff if the end-users are aware of the prices and can adjust behavior according to the prices. Otherwise it's just another way to stiff the consumer.
Johnny555 5y ago
The article said that their automated systems priced power too low since it thought there was an oversupply, but it doesn't say that any providers came online at $9000/MWh that wouldn't have also come online at $2000/MWh. There's an artificial pollution cap that loosens supply at $1500/Mwh.

labawi 5y ago

While I appreciate the free trade view, could you point to the part where they say setting the price high helped in a considerable way? ERCOT has authority to load-shed, regardless of price. From the article: > For the entirety of 2020, Texans paid $9.8 billion to keep the juice flowing. On February 16 alone, they spent roughly $10.3 billion. Costs for the month of February totaled more than $50 billion. The price reaction time is generally too slow, and judging by the bills incurred, ineffective as a control mechanism - hence the massive outrage on incurred costs. Do the costs seem appropriate? While I haven't read the whole article, blackouts mentioned were the effect of load shedding and the principal action that prevented grid failure. The price was fixed only after the critical period, by an unknown criteria and questionable need. Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days?

solatic 5y ago
> Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days? Look, the simple answer to your question is no, of course. But, given that we understand the reason why controllers acted the way they did, these criticisms are taking advantage of hindsight, and hindsight is 20/20. The controllers needed to not just shed load, but to keep demand down until the storm passed. They weren't thinking about price/demand elasticity and how much Grandma's electric bill was likely to be. And furthermore, it's not correct to expect every public operator to second-guess every move they make, because it slows down the public sector, increases public sector bloat, increases cover-your-ass behavior, etc. If you're going to apply hindsight to arrive at a moral judgement, then it's better to apply that hindsight not at the people who were time-stressed to prevent complete grid collapse, but to the gas industry that refused cold-weatherization for short-term profit. I'm not unsympathetic to the people who got screwed with five figure electric bills. If a state employee screwed up on the pricing, the state should pay the bills. But I wouldn't throw the controller under the bus for it.
- deleted 5y ago
  [deleted]
- labawi 5y ago
  >> do you need it maxed and do you need it for days? > the simple answer to your question is no The answer is no and no. IMO, if they did only one of those things, it wouldn't be a big deal. When you set a fixed price at 100-200x normal price and hold it like that for days, you'd better have a very, very good reason and think through the consequences. What you're saying does make sense, but I wouldn't give them a free pass, unless they can explain their reasoning. I don't know - maybe they did. If you're doing things with such implications, you'd better be able to explain your choices and reasoning. Not just to cover you ass, but to really consider the implications and possible alternatives. And we're not talking about a few critical minutes or hours, they kept the price for days.

jrs235 5y ago

But regular consumers weren't aware of the increased astronomical prices. Joe plumber wasn't aware that running his lights would cost so much money. The prices weren't dissuading or decreasing demand.

iso1631 5y ago
The free market only works when everyone has full information and a realistic alternative. When the alternative is "freeze to death" and the information is "you'll get a bill next month between $500 and $500,000", it doesn't work, and something needs to step in and protect people.
- sixothree 5y ago
  I feel like this thread is brigaded to death. The fact of the failure is clear. But the one constant in all of these arguments is to introduce uncertainty and attempt to shift blame. I think it is an odd choice to blame the consumer in this scenario since customers just one state over did just fine throughout this ordeal.
tristor 5y ago
Joe Plumber didn't have to pay any more... and the fact people continue to not understand this makes /every/ thread about the Texas incident last February pointless.
- jrs235 5y ago
  I don't know who's telling the truth: https://news.yahoo.com/5-152-power-bill-texas-192316981.html https://news.yahoo.com/5-152-power-bill-texas-192316981.html Edit: Perhaps in the end consumers didn't have to pay. I haven't found anything saying they didn't.
  - tristor 5y ago
    The very article you link is talking about exactly one small provider that has an entire business focused on consumers signing up to pay wholesale rates live (which are generally much lower than the contract rates) called Griddy. Griddy customers are the ONLY individuals in the entire state who had their power bill go up last February during the storm. According to Griddy they had around 29000 customers in Texas last year and there are roughly 29 Million people in Texas, so that means less than 1/10th of 1% (0.001) of the Texas population had to pay an increased power bill last February. There are different systems in different municipalities. Houston and Dallas both have systems where multiple providers can offer service which are distinct from the providers responsible for the actual utility infrastructure (power lines to your house). Austin and San Antonio both have municipally owned utilities (CPS Energy in San Antonio, Austin Energy in Austin). For the majority of households they either have a contracted rate based on their agreement when they signed up for service (just like a cell phone contract), or they have a legally set rate which requires a ballot issue. This is WELL established. There's no dispute here, and if you can't "tell who's telling the truth", it just means you haven't bothered doing any research before deciding. The national media used the snowstorm in February as a political tool to kick Texas while it was down because they see it as a Republican bastion (even though the majority of the population lives in reliably blue cities in national elections and Texas is purple now), and used something truthful for less than 1/10th of 1% of the population to act like it was that way for everyone to make the issue seem larger than it was. Also from your article "Despite the astronomical prices, Scott-Amos is considered one of the lucky ones, as millions of people across Texas are still without power while temperatures remain perilously low." Griddy customers pay the live wholesale price, they were also immune from forced load-shedding meaning they didn't go without power during freezing weather like most other Texans did, so true to their contract they paid the live wholesale price and in return received guaranteed service. Sounds like they got exactly what they signed up for at the risk they decided to take which 99.999% of Texans opted not to take for the safer (but generally more expensive) financial bet.

aqme28 5y ago

It's only a form of exponential backoff if the end-users are aware of the prices and can adjust behavior according to the prices. Otherwise it's just another way to stiff the consumer.

Johnny555 5y ago

The article said that their automated systems priced power too low since it thought there was an oversupply, but it doesn't say that any providers came online at $9000/MWh that wouldn't have also come online at $2000/MWh. There's an artificial pollution cap that loosens supply at $1500/Mwh.