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Finnish officials now ask people to moderate their electricity use "for the common good". Officials never asked for electricity companies to lower their profit

Finnish officials now ask people to moderate their electricity use "for the common good". Officials never asked for electricity companies to lower their profit margins during last year's high prices. Actually they were lauded for harnessing the market power by making poor people sit in cold in the middle of winter by raking in hundreds of percents in profit. Heads they win, tails you loose. This is how markets work.

krisoft 3y ago
> Finnish officials now ask people not to moderate their electricity use "for the common good". How would moderating electricity use help in this situation? > Heads they win, tails you loose. This is how markets work. Look, i don’t know enough about the system to think through all the consequences. But it sounds like if they don’t intervene the company who filled the wrong bid might default on it. And not just financially in the “they are bankrupt” sense, but also in the “not enough power will be generated to balance the grid” sense. That can in extremis push their whole country into literal blackout. (I assume there are stabilising functions, and secondary effects which would prevent this, but don’t know about how reliably we can count on them.) I understand that a faceless corporation suffering massive losses gives you the warm and fuzzy feelings. But if the grid happens to go down because of this, is that a preferable outcome? Do you hate the company so much to risk hurting and risking many many people in the whole country?
- orwin 3y ago
  One solution, nationalize the company. If they are only a financial company, seize the totality of their asset and transfer their clients to a true company that really create value.
  - jampekka 3y ago
    Why a financial company couldn't be nationalized?
    - orwin 3y ago
      There is no point to nationalize a financial company. They serve a purpose, to chase and 'fix' market inefficiencies (not sure how useful it is in the modern world), but they do not have much, if any, effect on production.
      - jampekka 3y ago
        Not sure what the scope here, but e.g. banks and funds have huge effect in capital allocation. I.e. what is produced, where, how and by who. As for something like insurance and brokering of commodities not so much.
  - jltsiren 3y ago
    It's a Norwegian subsidiary of an American company. The market itself is operated by a Norwegian company, which no longer has any Finnish shareholders, as Fingrid sold its shares to Litgrid about a year ago.
  - robertlagrant 3y ago
    > If they are only a financial company, seize the totality of their asset and transfer their clients to a true company that really create value. Financial companies create value. People generally pay for things they want, unless the government have messed up and allowed a monopoly position to arise.
    - orwin 3y ago
      OK, there is 4 types of values. Value here meant productive value. I'm sorry I should have been more explicit. Financial companies create exchange value (that's their main goal) and sometimes incidentally sign-value (for notation agencies it's not incidental, but I try to generalize here). They do not have any effect on productive value or use value (well, in theory). You're right and I wasn't precise enough, I should have been, thank you.
      - robertlagrant 3y ago
        I don't think this is a very useful way to look at things, as those categories I think are either too imprecise to describe reality, or they need to be distorted to describe reality. But we can try. As an example: say I'm a farmer. I have a load of crop I'll be producing, but I won't know how much I can sell it for. I can sell it on a futures market, where a financial firm buys the crop for a price fixed now. I the farmer get certainty of money, and the financial firm takes the risk of the market in the future. But they think they've modelled things well enough that they will at least break even, and hopefully make a profit. In that example, the value added by the futures trader is removal of risk. Nothing additional is produced. What type of value is that, in your conception of value?
        orwin 3y ago
        A future, or an insurance, are typically commodities with great exchange values and low (or rather, unknown) use value. The opposite of the food the farmer sells. [edit] > those categories I think are either too imprecise to describe reality[...] I agree signal/sign value and exchange value are imprecise and would benefit being more divided (I really like the notion of sign value as I think it is useful to explain 90% of modern western society). I disagree on their uselessness. Value can mean a lot of things and having more words to describe those things is always useful. A reverse 1984 if you will.
- closewith 3y ago
  > Do you hate the company so much to risk hurting and risking many many people in the whole country? If it's that important, the players should be nationalised.
  - robertlagrant 3y ago
    Everything is important. Companies that lease vehicles for fuel to be transported are incredibly important. So are their drivers. So are cleaners in hopsitals. So are cell phone tower operators. So are shipping companies. So are computer monitor manufacturers. Do we nationalise everything?
    - jampekka 3y ago
      Why not?
      - psd1 3y ago
        My country has had national assets sold to the private sector by neoliberal ideologues: I feel viscerally that energy generation should be in the public sector. The truth is that their needs to be a balance. All political opinions are wrong and harmful, as a fact of human linings on complex systems with enormous numbers of unknowable factors. So we should instead consider complex systems. A complex system needs to have capacity to change, and contain variation within itself. If it is too chaotic, it will dissipate; if it is too stable, its effectiveness will plummet when the environment changes. This demonstrates why communists and libertarians are both full of shit. It suggests that a nation should have a mix of private and nationalised industry. When new categories emerge, besides private and national, then nations should have some of that in the mix, too: in order to maintain internal heterogeneity, to provide a reserve of dynamism.
        jampekka 3y ago
        This is quite close to at least nordic social democracy, in which the economy was actually called mixed economy (as opposed to e.g. capitalist or socialist). Until the rapid neoliberalization in late 80's and early 90's. Finland's national and third sector (e.g. co-operatives) were (and still are) plundered quite a bit too, although of course nothing like ex-socialist countries. There indeed needs to be a mix. The "mix" in mixed economy wasn't just about gov ownership vs capitalist ownership. It was also about co-ops, unions, worker ownership and non-profits.
- jampekka 3y ago
  > How would moderating electricity use help in this situation? From grid officials' perspective it's to avoid a peak in demand that couln't be produced. People can/could now literally make money by wasting electricity. And we are told that this is how it should be when companies profit from people's mistakes. > I understand that a faceless corporation suffering massive losses gives you the warm and fuzzy feelings. But if the grid happens to go down because of this, is that a preferable outcome? Companies clearly "hate" many many people so much to risk hurting and risking many many people in the whole country, and planet, all the time. Of course companies don't hate anything. They just don't care. A corporation can't care, nor suffer. Even if this one goes under, mostly the same people will run another. People in charge of these decisions will likely go on leading very priviliged lifes. It's the system, not the individuals or even individual companies. If a blackout is needed to change the system, so be it. Preferably would change without such crises but that doesn't tend to happen.
  - pmontra 3y ago
    > A corporation can't care, nor suffer. I really dislike the "limited responsibility" concept. If we remove it entrepreneurial people will still want to create stuff and they will but they'll have to care more about how they do it.
    - robertlagrant 3y ago
      It's extremely hard to make a company by any means, and there are already lots of regulations, and we need competition to make everything better. If you can think of a new regulation that would be a net benefit, propose it. But it's silly to annihilate the creation of new companies.
      - jampekka 3y ago
        We don't need competition to make everything better. Our (and literally our) schools, hospitals, police, road network, water and sewage system and military among others don't have competition and seem to work just fine.
- RandomLensman 3y ago
  If a lack of controls cannot be bring a company down, then there is a fundamental flaw in the ecosystem it operates in. You can sort out the electricity issue separately from letting a company fail.
- j1elo 3y ago
  What about the faceless corporation should default, all their possessions and assets sold, giving the country an opportunity to buy them and this nationalizing its own utility service? I think what's being said here is that the private ownership of the company shouldn't have to keep existing. The utility, as it is, can keep operating and providing a service while it changes hands.
henryaj 3y ago
> Officials never asked for electricity companies to lower their profit margins during last year's high prices. Presumably they also didn't offer to subsidise them during periods when demand was much lower, such as during the pandemic?
- tialaramex 3y ago
  For the fossil fuel plants, fuel costs money so you spend most of your revenue on buying fuel. Less power usage => Less fuel used => Lowers costs. That doesn't mean the pandemic wasn't painful for them, but they were likely a long way down the list. For a solar or wind plant, construction costs are almost the entire cost, there's no fuel and low maintenance, but almost nowhere has saturation, so outside of freak situations you're always selling into a willing market anyway.
  - robertlagrant 3y ago
    Also, depending on the market solar and wind get priority, so any energy generated is always sold.
    - tialaramex 3y ago
      Are you aware of examples with a formal priority? My understanding was that solar and wind are just necessarily the low bids so that's why they always sell into basically any market until they saturate all demand. They're the low bids because if your power plant needs fuel, you must bid high enough to pay for the fuel, at least on average and at least most of the time, or else you go bankrupt when you can't pay your fuel bills. But wind and solar don't need fuel. While you're not going to make a profit selling wind electricity for $5 per MWh because of your enormous capital costs - you make more money doing that than if you bid $50 per MWh and lost the auction to a gas plant. These auctions actually pay everybody the same price, so even though your bid was $5, if some $45 per MWh gas plants were needed to hit the target capacity, you're getting $45 per MWh for your wind power. But because your bid was low, you always sell at whatever the price is.
datadeft 3y ago
It is kind of funny how "free market" (not really free due to heavy regulation) ruined energy networks and we are trying to punish the end users for it.

krisoft 3y ago

> Finnish officials now ask people not to moderate their electricity use "for the common good". How would moderating electricity use help in this situation? > Heads they win, tails you loose. This is how markets work. Look, i don’t know enough about the system to think through all the consequences. But it sounds like if they don’t intervene the company who filled the wrong bid might default on it. And not just financially in the “they are bankrupt” sense, but also in the “not enough power will be generated to balance the grid” sense. That can in extremis push their whole country into literal blackout. (I assume there are stabilising functions, and secondary effects which would prevent this, but don’t know about how reliably we can count on them.) I understand that a faceless corporation suffering massive losses gives you the warm and fuzzy feelings. But if the grid happens to go down because of this, is that a preferable outcome? Do you hate the company so much to risk hurting and risking many many people in the whole country?

orwin 3y ago
One solution, nationalize the company. If they are only a financial company, seize the totality of their asset and transfer their clients to a true company that really create value.
- jampekka 3y ago
  Why a financial company couldn't be nationalized?
  - orwin 3y ago
    There is no point to nationalize a financial company. They serve a purpose, to chase and 'fix' market inefficiencies (not sure how useful it is in the modern world), but they do not have much, if any, effect on production.
    - jampekka 3y ago
      Not sure what the scope here, but e.g. banks and funds have huge effect in capital allocation. I.e. what is produced, where, how and by who. As for something like insurance and brokering of commodities not so much.
- jltsiren 3y ago
  It's a Norwegian subsidiary of an American company. The market itself is operated by a Norwegian company, which no longer has any Finnish shareholders, as Fingrid sold its shares to Litgrid about a year ago.
- robertlagrant 3y ago
  > If they are only a financial company, seize the totality of their asset and transfer their clients to a true company that really create value. Financial companies create value. People generally pay for things they want, unless the government have messed up and allowed a monopoly position to arise.
  - orwin 3y ago
    OK, there is 4 types of values. Value here meant productive value. I'm sorry I should have been more explicit. Financial companies create exchange value (that's their main goal) and sometimes incidentally sign-value (for notation agencies it's not incidental, but I try to generalize here). They do not have any effect on productive value or use value (well, in theory). You're right and I wasn't precise enough, I should have been, thank you.
    - robertlagrant 3y ago
      I don't think this is a very useful way to look at things, as those categories I think are either too imprecise to describe reality, or they need to be distorted to describe reality. But we can try. As an example: say I'm a farmer. I have a load of crop I'll be producing, but I won't know how much I can sell it for. I can sell it on a futures market, where a financial firm buys the crop for a price fixed now. I the farmer get certainty of money, and the financial firm takes the risk of the market in the future. But they think they've modelled things well enough that they will at least break even, and hopefully make a profit. In that example, the value added by the futures trader is removal of risk. Nothing additional is produced. What type of value is that, in your conception of value?
      - orwin 3y ago
        A future, or an insurance, are typically commodities with great exchange values and low (or rather, unknown) use value. The opposite of the food the farmer sells. [edit] > those categories I think are either too imprecise to describe reality[...] I agree signal/sign value and exchange value are imprecise and would benefit being more divided (I really like the notion of sign value as I think it is useful to explain 90% of modern western society). I disagree on their uselessness. Value can mean a lot of things and having more words to describe those things is always useful. A reverse 1984 if you will.
closewith 3y ago
> Do you hate the company so much to risk hurting and risking many many people in the whole country? If it's that important, the players should be nationalised.
- robertlagrant 3y ago
  Everything is important. Companies that lease vehicles for fuel to be transported are incredibly important. So are their drivers. So are cleaners in hopsitals. So are cell phone tower operators. So are shipping companies. So are computer monitor manufacturers. Do we nationalise everything?
  - jampekka 3y ago
    Why not?
    - psd1 3y ago
      My country has had national assets sold to the private sector by neoliberal ideologues: I feel viscerally that energy generation should be in the public sector. The truth is that their needs to be a balance. All political opinions are wrong and harmful, as a fact of human linings on complex systems with enormous numbers of unknowable factors. So we should instead consider complex systems. A complex system needs to have capacity to change, and contain variation within itself. If it is too chaotic, it will dissipate; if it is too stable, its effectiveness will plummet when the environment changes. This demonstrates why communists and libertarians are both full of shit. It suggests that a nation should have a mix of private and nationalised industry. When new categories emerge, besides private and national, then nations should have some of that in the mix, too: in order to maintain internal heterogeneity, to provide a reserve of dynamism.
      - jampekka 3y ago
        This is quite close to at least nordic social democracy, in which the economy was actually called mixed economy (as opposed to e.g. capitalist or socialist). Until the rapid neoliberalization in late 80's and early 90's. Finland's national and third sector (e.g. co-operatives) were (and still are) plundered quite a bit too, although of course nothing like ex-socialist countries. There indeed needs to be a mix. The "mix" in mixed economy wasn't just about gov ownership vs capitalist ownership. It was also about co-ops, unions, worker ownership and non-profits.
jampekka 3y ago
> How would moderating electricity use help in this situation? From grid officials' perspective it's to avoid a peak in demand that couln't be produced. People can/could now literally make money by wasting electricity. And we are told that this is how it should be when companies profit from people's mistakes. > I understand that a faceless corporation suffering massive losses gives you the warm and fuzzy feelings. But if the grid happens to go down because of this, is that a preferable outcome? Companies clearly "hate" many many people so much to risk hurting and risking many many people in the whole country, and planet, all the time. Of course companies don't hate anything. They just don't care. A corporation can't care, nor suffer. Even if this one goes under, mostly the same people will run another. People in charge of these decisions will likely go on leading very priviliged lifes. It's the system, not the individuals or even individual companies. If a blackout is needed to change the system, so be it. Preferably would change without such crises but that doesn't tend to happen.
- pmontra 3y ago
  > A corporation can't care, nor suffer. I really dislike the "limited responsibility" concept. If we remove it entrepreneurial people will still want to create stuff and they will but they'll have to care more about how they do it.
  - robertlagrant 3y ago
    It's extremely hard to make a company by any means, and there are already lots of regulations, and we need competition to make everything better. If you can think of a new regulation that would be a net benefit, propose it. But it's silly to annihilate the creation of new companies.
    - jampekka 3y ago
      We don't need competition to make everything better. Our (and literally our) schools, hospitals, police, road network, water and sewage system and military among others don't have competition and seem to work just fine.
RandomLensman 3y ago
If a lack of controls cannot be bring a company down, then there is a fundamental flaw in the ecosystem it operates in. You can sort out the electricity issue separately from letting a company fail.
j1elo 3y ago
What about the faceless corporation should default, all their possessions and assets sold, giving the country an opportunity to buy them and this nationalizing its own utility service? I think what's being said here is that the private ownership of the company shouldn't have to keep existing. The utility, as it is, can keep operating and providing a service while it changes hands.

henryaj 3y ago

> Officials never asked for electricity companies to lower their profit margins during last year's high prices. Presumably they also didn't offer to subsidise them during periods when demand was much lower, such as during the pandemic?

tialaramex 3y ago
For the fossil fuel plants, fuel costs money so you spend most of your revenue on buying fuel. Less power usage => Less fuel used => Lowers costs. That doesn't mean the pandemic wasn't painful for them, but they were likely a long way down the list. For a solar or wind plant, construction costs are almost the entire cost, there's no fuel and low maintenance, but almost nowhere has saturation, so outside of freak situations you're always selling into a willing market anyway.
- robertlagrant 3y ago
  Also, depending on the market solar and wind get priority, so any energy generated is always sold.
  - tialaramex 3y ago
    Are you aware of examples with a formal priority? My understanding was that solar and wind are just necessarily the low bids so that's why they always sell into basically any market until they saturate all demand. They're the low bids because if your power plant needs fuel, you must bid high enough to pay for the fuel, at least on average and at least most of the time, or else you go bankrupt when you can't pay your fuel bills. But wind and solar don't need fuel. While you're not going to make a profit selling wind electricity for $5 per MWh because of your enormous capital costs - you make more money doing that than if you bid $50 per MWh and lost the auction to a gas plant. These auctions actually pay everybody the same price, so even though your bid was $5, if some $45 per MWh gas plants were needed to hit the target capacity, you're getting $45 per MWh for your wind power. But because your bid was low, you always sell at whatever the price is.

datadeft 3y ago

It is kind of funny how "free market" (not really free due to heavy regulation) ruined energy networks and we are trying to punish the end users for it.