5 ms·

It was never cool. Popular and profitable no doubt today, but literally every consumer there is hates the dynamic pricing model.

by asdff 3y ago

kelnos 3y ago
I think the GP was referring to "cancelling people" when he said "before it was cool". But I do agree with your point ;)
7thaccount 3y ago
Speaking of dynamic pricing, there are a lot of people foaming at the mouth to get this to replace the fixed rate electric utility bill. There are pro/cons to both sides (i.e. efficiency versus safety and simplicity for the end customer). In this case, I don't mean dynamic pricing to mean paying a little more during peak hours, but being directly exposed to the wholesale prices. It would certainly help get people to consume less during major events and many assume it to be a necessity to make a fully renewable grid work. On the other hand, I struggle with the relentless need to complicate daily life (e.g. being prodded to have an app for everything that doesn't need one).
- floatrock 3y ago
  Where are people foaming at the mouth for this? Time-of-use rates (peak vs off peak hours) have been around forever. Power users (huh, pun…) like ev owners do it, or new construction sometimes isn’t given an option, but that’s hardly foaming at the mouth. I heard it tossed around in places like Texas, but most people realize it’s risky AF cause one high-demand day, eg from a polar vortex gone unusually far south, could easily wipe you right out. Is it like a group of off-grid enthusiasts who can go a day or two off generators or batteries that make all this foam?
  - 7thaccount 3y ago
    I wasn't referring to TOU pricing, but actually exposing residential customers to the wholesale market prices that a commenter below pointed out typically run every 5 minutes in most parts of the US. The utilities and actual generator owners bid into this ultra-complex auction and get an instruction on where to go every 5 minutes that minimizes operating costs and determines prices at every node. These prices are extremely volatile (pretty much the most volatile major commodity) and change rapidly in short periods of time (example: from $25/MWh to $5000/MWh within a few minutes). The bigger players deal with these prices by hedging in various forward markets and through other contracts. There is a big push from academia and a lot of the big names in the industry to have the residential customers exposed to that so the demand side of the auction finally starts working which solves a lot of the pre-existing problems coming from running a market where demand is almost entirely inelastic. I shouldn't have used "foaming at the mouth" as the connotation is pretty negative. I should have said extremely committed or something like that. These are all smart and good people trying to solve a major problem that's been ongoing for decades. The economist in me agrees with them, but part of me also has an aversion to the constant complexity creep in our lives as well as risk.
  - patmorgan23 3y ago
    I live in Texas. Lots of states in the use have dynamically priced whole sale electric markets, usually the price changes every 5 to 15 minutes. Residential users ussally don't have direct access to the wholesale market and will contract with a provider for a fixed rate plan or a variable rate plan where the rate only changes every month or so. (Their can be other plan structures like, peak vs off peak rates or 'free nights', etc) Commercial/Large industrial users will buy on the wholesale market, some manufacturers will get a subsidized rate for having remote controlled breakers installed so the grid operator can shed lead when demand is high. Texas definitely went too far with this model. It encourages the development of natural gas peaker plants that sit ideal all day and only spin up for a few hours when the price isn he highest. (There's also a whole corrupt saga with the natural gas monopoly in the state from the early 00's when the GOP finally got hegemonic control of the state)
scoofy 3y ago
Dynamic pricing destroys the consumer surplus. The reason why people don’t like it is because the consumer surplus is the only reason why capitalism really provides value to most people. The reason why less-well-off folks are more likely to support a command economy is exactly because they are at the bottom of the demand curve, thus, receive almost no consumer surplus ever… it’s like they have dynamic pricing for almost every item they buy. It big data is allowed to defeat the consumer surplus, don’t be surprised when the political winds quickly move toward price controls.
- ryanwaggoner 3y ago
  This is a great comment. Taking this further, if big data can eradicate the consumer surplus, then maybe big data could make price controls more feasible. Maybe big data actually could make a command economy kinda work.
  - satvikpendem 3y ago
    There is a book called The People's Republic of Walmart about how "command economies" work in corporations, and why we couldn't have something similar in the general economy. I remain unconvinced, however, because the difference is that the amount of data you need is vast and often uncapturable, uncollectable. You basically have to know everything about everything, so markets are a better bottom up emergent simulation of supply and demand, hence why they work so well, at least in the aggregate.
- satvikpendem 3y ago
  > The reason why less-well-off folks are more likely to support a command economy Yep, but ironically it would destroy even more of their surplus, so, at least for now, they're still benefiting. But also, why shouldn't surplus be destroyed? You don't see people complaining when business surplus is destroyed, and it is because it benefits one party (ours) over the other (theirs), it's simply hypocrisy to think so. For a truly efficient market, surplus on either side should not exist.
  - 3y ago

It was never cool. Popular and profitable no doubt today, but literally every consumer there is hates the dynamic pricing model.

by asdff 3y ago

It was never cool. Popular and profitable no doubt today, but literally every consumer there is hates the dynamic pricing model.

kelnos 3y ago

I think the GP was referring to "cancelling people" when he said "before it was cool". But I do agree with your point ;)

7thaccount 3y ago

Speaking of dynamic pricing, there are a lot of people foaming at the mouth to get this to replace the fixed rate electric utility bill. There are pro/cons to both sides (i.e. efficiency versus safety and simplicity for the end customer). In this case, I don't mean dynamic pricing to mean paying a little more during peak hours, but being directly exposed to the wholesale prices. It would certainly help get people to consume less during major events and many assume it to be a necessity to make a fully renewable grid work. On the other hand, I struggle with the relentless need to complicate daily life (e.g. being prodded to have an app for everything that doesn't need one).

floatrock 3y ago
Where are people foaming at the mouth for this? Time-of-use rates (peak vs off peak hours) have been around forever. Power users (huh, pun…) like ev owners do it, or new construction sometimes isn’t given an option, but that’s hardly foaming at the mouth. I heard it tossed around in places like Texas, but most people realize it’s risky AF cause one high-demand day, eg from a polar vortex gone unusually far south, could easily wipe you right out. Is it like a group of off-grid enthusiasts who can go a day or two off generators or batteries that make all this foam?
- 7thaccount 3y ago
  I wasn't referring to TOU pricing, but actually exposing residential customers to the wholesale market prices that a commenter below pointed out typically run every 5 minutes in most parts of the US. The utilities and actual generator owners bid into this ultra-complex auction and get an instruction on where to go every 5 minutes that minimizes operating costs and determines prices at every node. These prices are extremely volatile (pretty much the most volatile major commodity) and change rapidly in short periods of time (example: from $25/MWh to $5000/MWh within a few minutes). The bigger players deal with these prices by hedging in various forward markets and through other contracts. There is a big push from academia and a lot of the big names in the industry to have the residential customers exposed to that so the demand side of the auction finally starts working which solves a lot of the pre-existing problems coming from running a market where demand is almost entirely inelastic. I shouldn't have used "foaming at the mouth" as the connotation is pretty negative. I should have said extremely committed or something like that. These are all smart and good people trying to solve a major problem that's been ongoing for decades. The economist in me agrees with them, but part of me also has an aversion to the constant complexity creep in our lives as well as risk.
- patmorgan23 3y ago
  I live in Texas. Lots of states in the use have dynamically priced whole sale electric markets, usually the price changes every 5 to 15 minutes. Residential users ussally don't have direct access to the wholesale market and will contract with a provider for a fixed rate plan or a variable rate plan where the rate only changes every month or so. (Their can be other plan structures like, peak vs off peak rates or 'free nights', etc) Commercial/Large industrial users will buy on the wholesale market, some manufacturers will get a subsidized rate for having remote controlled breakers installed so the grid operator can shed lead when demand is high. Texas definitely went too far with this model. It encourages the development of natural gas peaker plants that sit ideal all day and only spin up for a few hours when the price isn he highest. (There's also a whole corrupt saga with the natural gas monopoly in the state from the early 00's when the GOP finally got hegemonic control of the state)

scoofy 3y ago

Dynamic pricing destroys the consumer surplus. The reason why people don’t like it is because the consumer surplus is the only reason why capitalism really provides value to most people. The reason why less-well-off folks are more likely to support a command economy is exactly because they are at the bottom of the demand curve, thus, receive almost no consumer surplus ever… it’s like they have dynamic pricing for almost every item they buy. It big data is allowed to defeat the consumer surplus, don’t be surprised when the political winds quickly move toward price controls.

ryanwaggoner 3y ago
This is a great comment. Taking this further, if big data can eradicate the consumer surplus, then maybe big data could make price controls more feasible. Maybe big data actually could make a command economy kinda work.
- satvikpendem 3y ago
  There is a book called The People's Republic of Walmart about how "command economies" work in corporations, and why we couldn't have something similar in the general economy. I remain unconvinced, however, because the difference is that the amount of data you need is vast and often uncapturable, uncollectable. You basically have to know everything about everything, so markets are a better bottom up emergent simulation of supply and demand, hence why they work so well, at least in the aggregate.
satvikpendem 3y ago
> The reason why less-well-off folks are more likely to support a command economy Yep, but ironically it would destroy even more of their surplus, so, at least for now, they're still benefiting. But also, why shouldn't surplus be destroyed? You don't see people complaining when business surplus is destroyed, and it is because it benefits one party (ours) over the other (theirs), it's simply hypocrisy to think so. For a truly efficient market, surplus on either side should not exist.
- 3y ago