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What seems to actually work is increasing market competitiveness. The open access rules that gave us MVNOs appear to have worked great. Texas electric customers

What seems to actually work is increasing market competitiveness. The open access rules that gave us MVNOs appear to have worked great. Texas electric customers have lots of choice and lower costs under similar rules. These broadband subsidies might be too good, or at least too well captured by too few players. They may be a good idea generally, but it looks like it's time to revisit the details.

Retric 3y ago
MVNOs share infrastructure. Nowhere has competitiveness in terms of the actual grid only on the energy production and billing sides. The Texas grid is a massive failure in terms of both cost and reliability. Somewhere between 246 and 702 people were killed in 2021 when operators had already seen similar issues in 2011. Similarly people received bills that more than wiped out any long term savings they had received from hourly rate charging.
dangus 3y ago
Is Texas electric a good example? It seems like a lot of people in Texas were swindled into buying variable rate plans that caused rate spikes resulting in $5,000 electric bills. https://www.businessinsider.com/why-texas-residents-hit-with-soaring-electric-bills-winter-storms-2021-2 https://www.businessinsider.com/why-texas-residents-hit-with... ERCOT is not a model that anyone should strive to emulate. https://99percentinvisible.org/episode/grid-locked/ https://99percentinvisible.org/episode/grid-locked/
- 9659 3y ago
  Not a swindle. One company offered a plan where all of the electricity was purchased on the spot market. All of it. Spot market purchases of electricity are very cheap. Except when they aren't. Most months my electricity bill was 1/2 of current.
  - dangus 3y ago
    It’s a swindle because of the marketing of the plans and the exorbitantly high maximum rate caps. Every person who has knocked on my door to sell variable rate plans emphasizes the upside of the deal: why pay more than the current rate? You’re wasting your money on paying for the fixed rate that’s mostly higher than the going rate. Like you said, most of the time you save a good amount of money. The salespeople and marketing pamphlets emphasize that. Do you really believe that the executives at these utilities are ignorant to the fact that most of their customers don’t fully understand the implications? I think they sell the plans specifically because customers don’t understand them. Worse for Texas, their system’s market pricing setup incentivizes power utilities to minimize their overhead capacity. The closer their supply is to demand, the higher the price they can get. But it leaves very little wiggle room for emergency situations (99% Invisible has a good episode about this). Therefore, their grid is more prone to spikes in variable rate pricing than other states. Like financial instruments such as options trading, financial games like this make sense for the wealthy who have a cushion of risk tolerance. I can make more money faster with options trading compared to an index fund! But for the median and below wage earner, sudden bill surprises shouldn’t be something that the government enables for basic necessities like utilities.
    - 9659 3y ago
      we agree on all the facts. i paid my $2,300.00 monthly electrical bill without complaint. (usual about $75) the upside and downside were understood.
      - dangus 3y ago
        Great. I am sure that you can understand why you’re probably the exception in: 1. Fully understanding the potential of the downside. and 2. Being able to financially cover the downside. The median transaction account balance in America is $5,300, which includes money in the accounts for things like paying mortgage and rent. https://www.bankrate.com/banking/savings/savings-account-average-balance/ https://www.bankrate.com/banking/savings/savings-account-ave... So the median person signing up for that plan has to be ready to liquidate half their cash on an electric bill. If you’re below the median you’re even more screwed. And I'm sure to all this you'll say "I made an informed choice and I should have that choice," but I think that's a highly debatable concept that depends a lot on the details – one of those critical details is the maximum rate.
  - arrosenberg 3y ago
    > Not a swindle. I'm going to assume, based on this statement, that you have an education that allows you to forecast and do cost-benefit analysis. Most people do not, and just hear "you will pay less". When you knowingly do this to people, it's a swindle. Yes, we do need to protect some people from bad choices, and yes, that will limit the economic freedom of the very well-educated to some small degree. That's society, baby.
9659 3y ago
As a resident of texas, allow me to describe / explain how electricity works. Consumers can select from maybe 50 "retail providers". They all have some kind of marketing deal, like "all green" or "free weekends" or "0.14 a kwh fixed for 3 years". You pick your deal and deal with this 'company'. All of the electricity comes from the same place. All of the wiring is maintained by one company. Your "choice" is deciding who sends your bill and collects the money. Seems like a monopoly would be a lot cheaper. Less employees, less infrastructure, less advertising.
- AaronM 3y ago
  A monopoly would be cheaper in a perfect world with no corruption, and no profit motive/incentive. Competition seems to be the only way in our current capitalist society to reduce the prices consumers pay.
- ssl-3 3y ago
  A corporation operates in their own self-interest. A corporation that is a monopoly has no motivation to keep pricing "fair" and, in fact, has an interest in making prices as high as possible. It is never cheaper this way. We, as a society, seek to work around the problems that naturally-occur with monopolies by regulating them. In Ohio, most of our residents have one provider (AEP). AEP owns the local infrastructure, and they also own the transmission infrastructure, and they are pretty tightly regulated. To help keep pricing in check, it is required by regulation that the rate at which AEP buys their electricity at is set periodically by a competitive bid process. (This is, in theory, a process that works well for consumers and provides a reasonably low price: If a supplier can buy and sell (or otherwise produce) electricity cheaper, then they can put their bid in and have an opportunity to do so.) The problem with regulation is that it is regulates. It is inflexible. And sometimes, this bid process goes wrong: Early in 2023, for instance, it resulted in a generation price that was set to approximately double in six months[1]. The solution to both monopolies and regulation is consumer choice in a competitive marketplace. Obviously, we in Ohio can't usually decide whose lines and infrastructure we use -- they're monopoly-owned. There's some exceptions to this like [2][3], but broadly speaking: Of course AEP is involved, because they have to be involved. But we do get to choose our generation supplier[4], which is probably similar in function to how folks in Texas can pick their "retail provider" (except we don't get time-dependent metering). And that very limited aspect of consumer choice does work for me, the consumer. I was able to completely bypass the 2023 price hike by selecting a different generation supplier. In fact, my total billed price per kWh of electricity used (inclusive of distribution, transmission, and fees) was actually slightly reduced compared to what I had been paying previously. It's not a perfect system, as there are no perfect systems. But this little sliver of competition is better than being completely beholden to either an unregulated absolute monopoly or an inflexibly-regulated absolute monopoly. [1]: https://puco.ohio.gov/utilities/electricity/resources/historical-ptc-chart-aep https://puco.ohio.gov/utilities/electricity/resources/histor... [2]: https://clydeohio.org/159/Clyde-Light-Power https://clydeohio.org/159/Clyde-Light-Power [3]: https://www.columbus.gov/utilities/about/The-Division-of-Power/ https://www.columbus.gov/utilities/about/The-Division-of-Pow... [4]: https://www.energychoice.ohio.gov/ https://www.energychoice.ohio.gov/
aetch 3y ago
You aren’t actually buying power from different people in states where you choose a “different” provider. Those are all middlemen offering a variety of more expensive rate plans and “benefits” that appear to be cheaper but actually are more expensive than buying directly from the main utility provider. (The middle man has to make money somehow after all) In reality the power travels over the main providers’ lines so the main provider is usually cheapest. It’s just an illusion of choice and I would rather not deal with the constant door to door utility MVNO salesmen.

Retric 3y ago

MVNOs share infrastructure. Nowhere has competitiveness in terms of the actual grid only on the energy production and billing sides. The Texas grid is a massive failure in terms of both cost and reliability. Somewhere between 246 and 702 people were killed in 2021 when operators had already seen similar issues in 2011. Similarly people received bills that more than wiped out any long term savings they had received from hourly rate charging.

dangus 3y ago

Is Texas electric a good example? It seems like a lot of people in Texas were swindled into buying variable rate plans that caused rate spikes resulting in $5,000 electric bills. https://www.businessinsider.com/why-texas-residents-hit-with-soaring-electric-bills-winter-storms-2021-2 https://www.businessinsider.com/why-texas-residents-hit-with... ERCOT is not a model that anyone should strive to emulate. https://99percentinvisible.org/episode/grid-locked/ https://99percentinvisible.org/episode/grid-locked/

9659 3y ago
Not a swindle. One company offered a plan where all of the electricity was purchased on the spot market. All of it. Spot market purchases of electricity are very cheap. Except when they aren't. Most months my electricity bill was 1/2 of current.
- dangus 3y ago
  It’s a swindle because of the marketing of the plans and the exorbitantly high maximum rate caps. Every person who has knocked on my door to sell variable rate plans emphasizes the upside of the deal: why pay more than the current rate? You’re wasting your money on paying for the fixed rate that’s mostly higher than the going rate. Like you said, most of the time you save a good amount of money. The salespeople and marketing pamphlets emphasize that. Do you really believe that the executives at these utilities are ignorant to the fact that most of their customers don’t fully understand the implications? I think they sell the plans specifically because customers don’t understand them. Worse for Texas, their system’s market pricing setup incentivizes power utilities to minimize their overhead capacity. The closer their supply is to demand, the higher the price they can get. But it leaves very little wiggle room for emergency situations (99% Invisible has a good episode about this). Therefore, their grid is more prone to spikes in variable rate pricing than other states. Like financial instruments such as options trading, financial games like this make sense for the wealthy who have a cushion of risk tolerance. I can make more money faster with options trading compared to an index fund! But for the median and below wage earner, sudden bill surprises shouldn’t be something that the government enables for basic necessities like utilities.
  - 9659 3y ago
    we agree on all the facts. i paid my $2,300.00 monthly electrical bill without complaint. (usual about $75) the upside and downside were understood.
    - dangus 3y ago
      Great. I am sure that you can understand why you’re probably the exception in: 1. Fully understanding the potential of the downside. and 2. Being able to financially cover the downside. The median transaction account balance in America is $5,300, which includes money in the accounts for things like paying mortgage and rent. https://www.bankrate.com/banking/savings/savings-account-average-balance/ https://www.bankrate.com/banking/savings/savings-account-ave... So the median person signing up for that plan has to be ready to liquidate half their cash on an electric bill. If you’re below the median you’re even more screwed. And I'm sure to all this you'll say "I made an informed choice and I should have that choice," but I think that's a highly debatable concept that depends a lot on the details – one of those critical details is the maximum rate.
- arrosenberg 3y ago
  > Not a swindle. I'm going to assume, based on this statement, that you have an education that allows you to forecast and do cost-benefit analysis. Most people do not, and just hear "you will pay less". When you knowingly do this to people, it's a swindle. Yes, we do need to protect some people from bad choices, and yes, that will limit the economic freedom of the very well-educated to some small degree. That's society, baby.

9659 3y ago

As a resident of texas, allow me to describe / explain how electricity works. Consumers can select from maybe 50 "retail providers". They all have some kind of marketing deal, like "all green" or "free weekends" or "0.14 a kwh fixed for 3 years". You pick your deal and deal with this 'company'. All of the electricity comes from the same place. All of the wiring is maintained by one company. Your "choice" is deciding who sends your bill and collects the money. Seems like a monopoly would be a lot cheaper. Less employees, less infrastructure, less advertising.

AaronM 3y ago
A monopoly would be cheaper in a perfect world with no corruption, and no profit motive/incentive. Competition seems to be the only way in our current capitalist society to reduce the prices consumers pay.
ssl-3 3y ago
A corporation operates in their own self-interest. A corporation that is a monopoly has no motivation to keep pricing "fair" and, in fact, has an interest in making prices as high as possible. It is never cheaper this way. We, as a society, seek to work around the problems that naturally-occur with monopolies by regulating them. In Ohio, most of our residents have one provider (AEP). AEP owns the local infrastructure, and they also own the transmission infrastructure, and they are pretty tightly regulated. To help keep pricing in check, it is required by regulation that the rate at which AEP buys their electricity at is set periodically by a competitive bid process. (This is, in theory, a process that works well for consumers and provides a reasonably low price: If a supplier can buy and sell (or otherwise produce) electricity cheaper, then they can put their bid in and have an opportunity to do so.) The problem with regulation is that it is regulates. It is inflexible. And sometimes, this bid process goes wrong: Early in 2023, for instance, it resulted in a generation price that was set to approximately double in six months[1]. The solution to both monopolies and regulation is consumer choice in a competitive marketplace. Obviously, we in Ohio can't usually decide whose lines and infrastructure we use -- they're monopoly-owned. There's some exceptions to this like [2][3], but broadly speaking: Of course AEP is involved, because they have to be involved. But we do get to choose our generation supplier[4], which is probably similar in function to how folks in Texas can pick their "retail provider" (except we don't get time-dependent metering). And that very limited aspect of consumer choice does work for me, the consumer. I was able to completely bypass the 2023 price hike by selecting a different generation supplier. In fact, my total billed price per kWh of electricity used (inclusive of distribution, transmission, and fees) was actually slightly reduced compared to what I had been paying previously. It's not a perfect system, as there are no perfect systems. But this little sliver of competition is better than being completely beholden to either an unregulated absolute monopoly or an inflexibly-regulated absolute monopoly. [1]: https://puco.ohio.gov/utilities/electricity/resources/historical-ptc-chart-aep https://puco.ohio.gov/utilities/electricity/resources/histor... [2]: https://clydeohio.org/159/Clyde-Light-Power https://clydeohio.org/159/Clyde-Light-Power [3]: https://www.columbus.gov/utilities/about/The-Division-of-Power/ https://www.columbus.gov/utilities/about/The-Division-of-Pow... [4]: https://www.energychoice.ohio.gov/ https://www.energychoice.ohio.gov/

aetch 3y ago

You aren’t actually buying power from different people in states where you choose a “different” provider. Those are all middlemen offering a variety of more expensive rate plans and “benefits” that appear to be cheaper but actually are more expensive than buying directly from the main utility provider. (The middle man has to make money somehow after all) In reality the power travels over the main providers’ lines so the main provider is usually cheapest. It’s just an illusion of choice and I would rather not deal with the constant door to door utility MVNO salesmen.