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> -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation) It's telling they regulate the price and won't allow it to g

by grecy 3y ago

> -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation) It's telling they regulate the price and won't allow it to go "too low", just like they halt trading on the stock exchange if things go down too much. Free market my backside - can't let those profits dip!

zie 3y ago
On the stock exchanges in the USA, they do that because we didn't use to and trading bots that were mis-configured went nuts and broke the markets for a while. Now they stop trading for (15?) minutes to let everyone make sure it's real and not their trading algorithms being stupid. It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. The Federal Reserve however is a different story. :)
- grecy 3y ago
  > It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. If that were true, they would do the same thing if it was going up "too quickly". To the surprise of nobody, they don't.
  - astrange 3y ago
    Yes there are, it's called LULD. https://www.nasdaq.com/articles/all-about-lulds https://www.nasdaq.com/articles/all-about-lulds Don't think the entire market has ever gotten unreasonably high due to a trading error.
upsuper 3y ago
The regulation applies in the opposite side as well. I think the highest bid allowed is like A$16.8/kWh or something like that. It's not fully clear to me how the market work as a whole. I learnt that generators may have swap contracts with retailers and big users, which, based on my understanding, can distort the price to arbitrarily low, because generators get paid for the difference from the other side regardless of spot price, so they can set the lowest possible to ensure they can dump their power to the grid. Also when it's predicted to be this low (or that high), there is likely some operations (market or not) behind the scenes to level the price. Usually when it gets to the time, the actual spot price has been in a reasonable range.
astrange 3y ago
Price floors don't mandate high profits because you can just not purchase if you don't want to. Subsidies would.
- grecy 3y ago
  They mandate the price will never go so low they will loose money. Imagined you could buy gas wholesale for a dollar a gallon and the price floor retail was two…. Guranteed to make money
  - astrange 3y ago
    They're losing money if nobody buys from them, because they have overhead to stay open.
    - grecy 3y ago
      If you are guaranteed by law to buy it for less than you can sell it, you can price it mighty low to attract customers and still make money. It's funny, your comment reads like a business has some kind of right to make a profit, rather than letting the free market figure out if it should exist or not.
      - astrange 3y ago
        > If you are guaranteed by law to buy it for less than you can sell it, you can price it mighty low to attract customers and still make money. That's not a price floor, it would be a price ceiling on the second level supplier, and they could just choose not to sell. There's no way this scenario could happen except for subsidies and mandated production like the Defense Production Act. > It's funny, your comment reads like a business has some kind of right to make a profit, rather than letting the free market figure out if it should exist or not. You seem very confused.

by grecy 3y ago

zie 3y ago

On the stock exchanges in the USA, they do that because we didn't use to and trading bots that were mis-configured went nuts and broke the markets for a while. Now they stop trading for (15?) minutes to let everyone make sure it's real and not their trading algorithms being stupid. It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. The Federal Reserve however is a different story. :)

grecy 3y ago
> It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. If that were true, they would do the same thing if it was going up "too quickly". To the surprise of nobody, they don't.
- astrange 3y ago
  Yes there are, it's called LULD. https://www.nasdaq.com/articles/all-about-lulds https://www.nasdaq.com/articles/all-about-lulds Don't think the entire market has ever gotten unreasonably high due to a trading error.

upsuper 3y ago

The regulation applies in the opposite side as well. I think the highest bid allowed is like A$16.8/kWh or something like that. It's not fully clear to me how the market work as a whole. I learnt that generators may have swap contracts with retailers and big users, which, based on my understanding, can distort the price to arbitrarily low, because generators get paid for the difference from the other side regardless of spot price, so they can set the lowest possible to ensure they can dump their power to the grid. Also when it's predicted to be this low (or that high), there is likely some operations (market or not) behind the scenes to level the price. Usually when it gets to the time, the actual spot price has been in a reasonable range.

astrange 3y ago

Price floors don't mandate high profits because you can just not purchase if you don't want to. Subsidies would.

grecy 3y ago
They mandate the price will never go so low they will loose money. Imagined you could buy gas wholesale for a dollar a gallon and the price floor retail was two…. Guranteed to make money
- astrange 3y ago
  They're losing money if nobody buys from them, because they have overhead to stay open.
  - grecy 3y ago
    If you are guaranteed by law to buy it for less than you can sell it, you can price it mighty low to attract customers and still make money. It's funny, your comment reads like a business has some kind of right to make a profit, rather than letting the free market figure out if it should exist or not.
    - astrange 3y ago
      > If you are guaranteed by law to buy it for less than you can sell it, you can price it mighty low to attract customers and still make money. That's not a price floor, it would be a price ceiling on the second level supplier, and they could just choose not to sell. There's no way this scenario could happen except for subsidies and mandated production like the Defense Production Act. > It's funny, your comment reads like a business has some kind of right to make a profit, rather than letting the free market figure out if it should exist or not. You seem very confused.