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Renewables do make electricity cheaper. Here is a highly simplified version of how rates are set: Fixed price = (unit cost + a profit margin) * number of unit

Renewables do make electricity cheaper. Here is a highly simplified version of how rates are set: Fixed price = (unit cost + a profit margin) * number of units The fixed price is set for a period of time based on historical and forecasted costs. Which costs are allowed and the profit margin for regulated utilities serving fixed price load is determined by the public service commissions. When their costs go down the regulators will say you can’t charge as much during the next period. Utilities are a natural monopoly and their prices are controlled.

WalterBright 4y ago
That formula denies how markets work, and gets us high priced electricity and rolling blackouts. Like it or not, supply of electricity with renewables is highly variable. Fixed price electric rates are simply incompatible with that. P.S. Back in the 70's when the DOE allocated gas and set prices, it was simply unable to react to varying gas supplies and demand. The result was gas lines for years until Reagan repealed all that nonsense.
- dpierce9 4y ago
  This is in fact how regulated utilities work for fixed rate customers (simplified). The utility charges a customer a rate of x for some period. If the cost during that period is below x the utility may have to lower the price in the next period. If the cost is greater than x they may be able to raise the price in the next period. The exact mechanism for cost-recovery is state-specific and subject to a lot of considerations [0]. Utilities act as wholesale price buffers for retail customers (not commercial users) but the costs are eventually paid. None of this denies how economics works or that solar and wind are variable. [0] https://emp.lbl.gov/sites/all/files/lbnl-1005742_1.pdf https://emp.lbl.gov/sites/all/files/lbnl-1005742_1.pdf
  - WalterBright 4y ago
    It denies economics because it does not shape demand during the day due to price signalling.
    - dpierce9 4y ago
      Most goods and services don’t fluctuate minute to minute despite input prices varying minute to minute. If I go to a car dealer the price of the car doesn’t change while I am there even when the real time price of commodity inputs are moving that quickly. Is that denying economics?

WalterBright 4y ago

That formula denies how markets work, and gets us high priced electricity and rolling blackouts. Like it or not, supply of electricity with renewables is highly variable. Fixed price electric rates are simply incompatible with that. P.S. Back in the 70's when the DOE allocated gas and set prices, it was simply unable to react to varying gas supplies and demand. The result was gas lines for years until Reagan repealed all that nonsense.

dpierce9 4y ago
This is in fact how regulated utilities work for fixed rate customers (simplified). The utility charges a customer a rate of x for some period. If the cost during that period is below x the utility may have to lower the price in the next period. If the cost is greater than x they may be able to raise the price in the next period. The exact mechanism for cost-recovery is state-specific and subject to a lot of considerations [0]. Utilities act as wholesale price buffers for retail customers (not commercial users) but the costs are eventually paid. None of this denies how economics works or that solar and wind are variable. [0] https://emp.lbl.gov/sites/all/files/lbnl-1005742_1.pdf https://emp.lbl.gov/sites/all/files/lbnl-1005742_1.pdf
- WalterBright 4y ago
  It denies economics because it does not shape demand during the day due to price signalling.
  - dpierce9 4y ago
    Most goods and services don’t fluctuate minute to minute despite input prices varying minute to minute. If I go to a car dealer the price of the car doesn’t change while I am there even when the real time price of commodity inputs are moving that quickly. Is that denying economics?