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> based on the actual costs to the electric provider They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the
by mike_d 3y ago
> based on the actual costs to the electric provider
They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.
- Night_Thastus 3y agoThat's a very extreme example not representative of day-to-day operation.
- tomcam 3y agoI’m not sure you would have such a cavalier answer if you had suffered the same consequences as those people in Texas. The situation has to be accounted for.
- Spivak 3y agoYes but there is no universe where I want to expose myself to capped upside and unbounded loss. Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.
- Dma54rhs 3y agoA fair amount of the EU market is also on it, it's not a special Texas company thing.
- deadmutex 3y ago> They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills. That's not necessarily because grid costs + generation costs were separate. If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).
- Kirby64 3y agoIt sounds like you’re literally describing what companies already do. They charge you a fixed rate or sometimes variable rate that isolates you from the volatility of the actual real time pricing market. What is different here? The power companies are essentially self insuring. Which generally is cheaper than buying a third party insurance product, all else equal.
- move-on-by 3y agoNo, what they did in Texas was to price it on demand, like a marketplace. That is very different then pricing based on cost.
- jjeaff 3y agowhen supply is limited, there isn't really a difference between demand and cost. when supply went low, demand, and thus cost to the middlemen went way, way up. the middleman was just applying a markup and passing their cost on to consumers.