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Consumers do not buy the power on the market, they buy it from their utility at the rate they've negotiated beforehand. E.g. I've paid ~$0.05/KWh in February 20
by pandaman 5y ago
Consumers do not buy the power on the market, they buy it from their utility at the rate they've negotiated beforehand. E.g. I've paid ~$0.05/KWh in February 2021 as same as I pay at any other time. It's the utility's problem to acquire power on the wholesale market and make arrangements for the price spikes. It's charging more than the wholesale on average, just as you suggested.
The consumers who had been hit by this were the ones who opted in to receive power at the market rate from a handful of shady businesses. They explicitly had to change their service to this model because the TikTok ads told them that the current market rate is $0.02/KWh so they are "overpaying" if they are buying at the utility's price.
- sangnoir 5y ago> Consumers do not buy the power on the market, they buy it from their utility at the rate they've negotiated beforehand. The utility rate was not always fixed/negotiated: there's at least one utility company (Griddy) had an arrangement to pass-through market rate + small premium. Before the storm, this mostly meant getting rates modestly lower than the competition. The same customers were exposed to the power market spikes and received bills over $10,000. IIRC, Griddy has since filed for bankruptcy as the Texas legislature was generally supportive of individual customers not paying their bills. Paradoxically, Texas's political leadership allowed the utility companies to recover their losses by billing customers over years, which seems mostly performative/hiding expense from customers, but still decoupled from market forces.
- pandaman 5y agoYeah, that is one of the shady companies I've mentioned. If, for the sake of argument, we call that a "utility" then in that case every single customer had a choice to go with a capped rate of a regular utility anyways.