On power markets, snow storms, and $16k power bills(astanway.medium.com)
astanway.medium.com
On power markets, snow storms, and $16k power bills
https://astanway.medium.com/on-power-markets-snow-storms-and-16-000-power-bills-cc41a73941f0
222 comments
> the idea of consumers responding to energy prices is nice, but has some pretty glaring issues
I am a high-income New Yorker. If this were available to me, and if I could (a) set a cap past which I lose power or, preferably, (b) hedge by buying power call options, I’d take it. (Depending on the cost of (b).)
That said, it’s a complicated financial product. We don’t sell derivatives, structured products and alternative assets to the poor. (Robinhood et al aside.) Power shouldn’t be an exception.
I am a high-income New Yorker. If this were available to me, and if I could (a) set a cap past which I lose power or, preferably, (b) hedge by buying power call options, I’d take it. (Depending on the cost of (b).)
That said, it’s a complicated financial product. We don’t sell derivatives, structured products and alternative assets to the poor. (Robinhood et al aside.) Power shouldn’t be an exception.
It’s high risk, low reward too. The upside is a small reduction in my monthly power bill. The downside is ...this. If you want griddy+calls, you can get that already in the form of a traditional electricity service.
Phrased that way, it sounds like it is exactly the opposite of insurance. Pay a little less when times are normal, in favor of a spectacular lack of protection when times are hard.
The phrase I’ve heard for this style of bet is “picking up nickels in front of a steamroller.”
My mental image of a steamroller is slow, so they're dodgeable. I don't think I've ever seen one in real life, come to think of it, so maybe that's just me.
I would have called it "Russian roulette". High reward, high chance of an unavoidable catastrophic loss.
I would have called it "Russian roulette". High reward, high chance of an unavoidable catastrophic loss.
Yep, that is the point. Usually, there is no problem picking up the nickles. Every once in a while, you trip, bonk your head, pass out, then do your best impression of a sheet of paper.
Except that there are ways to get the protection somewhere else, in ways that are potentially advantageous.
The most obvious one would be to just disconnect your house from the grid whenever prices exceed some threshold that only actually happens once a decade.
Even if that means you go stay in a hotel, doing that once every ten years for thousands of dollars in savings over the same period could be totally worth it. And there are also even less inconvenient alternatives, like buying a generator for less than you save in electricity and using it during price spikes, which means you also get a "free" generator to use during ordinary power outages.
Meanwhile it helps the grid because people who are willing to do this voluntarily remove load during crunch time and prevent the need to do rolling blackouts that unexpectedly freeze people's pipes.
The most obvious one would be to just disconnect your house from the grid whenever prices exceed some threshold that only actually happens once a decade.
Even if that means you go stay in a hotel, doing that once every ten years for thousands of dollars in savings over the same period could be totally worth it. And there are also even less inconvenient alternatives, like buying a generator for less than you save in electricity and using it during price spikes, which means you also get a "free" generator to use during ordinary power outages.
Meanwhile it helps the grid because people who are willing to do this voluntarily remove load during crunch time and prevent the need to do rolling blackouts that unexpectedly freeze people's pipes.
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I think there's one other aspect though which is similar to insurance - you can't time the "bad times" and they can come at the most inconvenient times, including when you do not have the wherewithal to trigger your various backup plans.
Generators automatically notice when the regular power goes off, but I don't know if they can automatically notice when prices rise above a certain threshold.
Generators automatically notice when the regular power goes off, but I don't know if they can automatically notice when prices rise above a certain threshold.
I'm also a reasonably well-off New Yorker, and I made the switch.
My apartment does not rely on electricity for heating; it's steam-based. Were it electricity-based, I won't switch.
But in the summer the price of electricity is like 50% of what plain Con Edison used to offer, and it's the time when power consumption peaks because of the running of air conditioning all day.
The reported generation mix is low-carbon, about half of it comes from nuclear plants, some from hydro and solar, about 1/3 from gas-fired stations, apparently zero from coal-firing stations.
So, for me it's a win-win so far.
My apartment does not rely on electricity for heating; it's steam-based. Were it electricity-based, I won't switch.
But in the summer the price of electricity is like 50% of what plain Con Edison used to offer, and it's the time when power consumption peaks because of the running of air conditioning all day.
The reported generation mix is low-carbon, about half of it comes from nuclear plants, some from hydro and solar, about 1/3 from gas-fired stations, apparently zero from coal-firing stations.
So, for me it's a win-win so far.
You can hedge power spikes, it’s the normal fixed cost pricing. Costs a bit more per kWh until it doesn’t.
I’m assuming Griddy didn’t allow users to set a cap. That should have been illegal even in an unregulated market.
TX is __slightly__ different in that its fully deregulated and there's simply more knowledge about REPs/ESCOs and their pricing (because they customers HAVE to choose a REP). Also in what other state do you see billboard ads for REPs?
What is genuinely sad is that Griddy has a "price-lock" (ie a fixed rate) for the summer, which is exactly what you're talking about regarding tail risk. They just don't have it for the winter, which is normally the cheapest time in TX and clearly couldn't set up a decent fixed rate quickly after they understood the implications of the polar vortex. What they should have done is sent an email to their customers offering a fixed rate for the month even if it was expensive.
What is genuinely sad is that Griddy has a "price-lock" (ie a fixed rate) for the summer, which is exactly what you're talking about regarding tail risk. They just don't have it for the winter, which is normally the cheapest time in TX and clearly couldn't set up a decent fixed rate quickly after they understood the implications of the polar vortex. What they should have done is sent an email to their customers offering a fixed rate for the month even if it was expensive.
I'm not sure they could have offered a reasonable fixed rate for the available power. When the federal DOE authorized the supply of emergency power that didn't meet the usual regulations, they required the price to be at least 10x the normal price ("no lower than $1,500/MWh"). I haven't been able to find out how much of the power supply that applied to, but at least some of the power during the disaster was legally required to be sold at outrageous prices.
> ERCOT shall ensure that such Specified Resource is only allowed to exceed any such limit during a period for which ERCOT has declared an Energy Emergency Alert (EEA) Level 2 or Level 3. This incremental amount of restricted capacity would be offered at a price no lower than $1,500/MWh.
https://www.energy.gov/sites/prod/files/2021/02/f82/DOE%2020...
> ERCOT shall ensure that such Specified Resource is only allowed to exceed any such limit during a period for which ERCOT has declared an Energy Emergency Alert (EEA) Level 2 or Level 3. This incremental amount of restricted capacity would be offered at a price no lower than $1,500/MWh.
https://www.energy.gov/sites/prod/files/2021/02/f82/DOE%2020...
It's ok... the Texas Public Utilities Commission decided to set the max rate to $9,000/MWh making the polluting power seem cheap by comparison.
I've read the Dept of Energy doc, and I think they were trying to make sure that power companies could pay for the pollution offset credits after the fact. Also, since Texas has a soldi market based power system, they wanted to make polluting power the least desired. Little did they know.....
I've read the Dept of Energy doc, and I think they were trying to make sure that power companies could pay for the pollution offset credits after the fact. Also, since Texas has a soldi market based power system, they wanted to make polluting power the least desired. Little did they know.....
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My understanding is that the energy markets started reacting to the polar vortex with days or weeks worth of warning, meaning that Griddy shouldn't have been that surprised that something was coming. Therefore it appears like Griddy was asleep at the helm, uninterested in doing anything about it, couldn't negotiate/hedge in time, or just internally confused.
Can't you say this for most things, though? People talked about the likelihood of a new contagious respiratory viral pandemic for years. Plans were drawn up, warnings were made, and the response was mostly "uh huh, that would suck for sure". Same could be said about anyone who's ever had their data lost to malware or hardware failure and didn't have a proper backup in place.
On some level I think it's human nature to underestimate some types of risk (and the nature of businesses to optimize for profit based on an understanding of this nature).
On some level I think it's human nature to underestimate some types of risk (and the nature of businesses to optimize for profit based on an understanding of this nature).
There’s a big difference between “there might be a pandemic at some point in the indeterminate future” and “the price of 7 day gas futures is rising rapidly”. There’s also a difference between “Texas’ grid might fail in a future freeze” and “there will be a bad freeze next week”.
It doesn’t make sense to try and draw a parallel between a bad hypothetical that might happen in some indeterminate future and a negative possibility that will either come to pass or fizzle within a very short time horizon.
It doesn’t make sense to try and draw a parallel between a bad hypothetical that might happen in some indeterminate future and a negative possibility that will either come to pass or fizzle within a very short time horizon.
The article says they told their customers to switch away. What it doesn't mention is that this was over a weekend, and many people couldn't manage the switch before the weather hit.
I was thankful my elderly father lived in a town with a municipal electric company, so all of the spam calls he got about "lowering his bill" could never go anywhere. Obviously there's some hidden catch, otherwise they wouldn't be spamming!
I think the Griddy scheme is in the process of destroying itself, as it becomes apparent how many people won't be paying their bills, either through bankruptcy or populist legislation. Despite not seeming so on paper, Griddy itself has significant long tail risk.
A great way to hedge while having Griddy would be to make a deal with your neighbor to run an extension cord when the spot price gets too high. Sleazy, but what isn't these days.
Of course such arbitrage just pushes the market as a whole towards time of use pricing, which isn't a bad thing as long as the unreasonable pathologies get worked out.
I think the Griddy scheme is in the process of destroying itself, as it becomes apparent how many people won't be paying their bills, either through bankruptcy or populist legislation. Despite not seeming so on paper, Griddy itself has significant long tail risk.
A great way to hedge while having Griddy would be to make a deal with your neighbor to run an extension cord when the spot price gets too high. Sleazy, but what isn't these days.
Of course such arbitrage just pushes the market as a whole towards time of use pricing, which isn't a bad thing as long as the unreasonable pathologies get worked out.
Now this is the best comment I’ve seen in all the treads about the power outages.
As far as I'm aware Griddy's product could only be sold in Texas. Plenty of other states have deregulated residential electricity markets, all of the ones I am familiar with would not allow residential customers to sign up for totally unconstrained rates.
I'd suggest Texas jettison its market fundamentalist politicians and instead elect ones that advocated for proper regulations prior to this event.
I'd suggest Texas jettison its market fundamentalist politicians and instead elect ones that advocated for proper regulations prior to this event.
> This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley.
It's not the answer yet. But I'd be very surprised if it wasn't the norm in developed nations in 10-20 years. It's an obvious response to inconsistent generation from renewables, and the technology itself is straightforward.
It's not the answer yet. But I'd be very surprised if it wasn't the norm in developed nations in 10-20 years. It's an obvious response to inconsistent generation from renewables, and the technology itself is straightforward.
I don't see how that would work. Suppose there is no wind for a couple of days, do you expect homes to shutdown everything and wait for wind to return?
Solar in a desert is easier, if you only have to cover the night then install a big enough battery. But a battry in every home is probably less efficient than a huge battery next to the solar panels.
So most likely, renewables come with storage. And the smart grid idea with mostly fade. Possibly with the exception of car chargers that charge faster or slower depending on conditions.
Solar in a desert is easier, if you only have to cover the night then install a big enough battery. But a battry in every home is probably less efficient than a huge battery next to the solar panels.
So most likely, renewables come with storage. And the smart grid idea with mostly fade. Possibly with the exception of car chargers that charge faster or slower depending on conditions.
The solution for things like this is a multi-facet power grid, with renewables, nuclear, and (small ammounts of) fossil fuels, paired with grid-scale energy storage.
For example, the pumped hydro station in Wales [0] can store up to 9.1GWh and can push 1.8GW peak, with a spin up time under a minute.
Systems like these can serve both as buffers until fossil fuel or nuclear reactors can spin up to peak in the even of wind/solar shortage, and can even serve as overnight generation to replace solar if large enough (given the usually much lower demand at night).
If each state was required to implement their own (presumably smaller) grid-scale storage this would have the benefit of removing a single point of failure and spread the cost. A construction project of this scale would also serve to create hundreds or thousands of jobs in various areas, stimulating the economy.
Having grid-scale storage would be drastically improved with a smart grid, since it would have much more real-time data on power demands and allow more seamless management of capacity.
[0]: https://www.youtube.com/watch?v=6Jx_bJgIFhI
For example, the pumped hydro station in Wales [0] can store up to 9.1GWh and can push 1.8GW peak, with a spin up time under a minute.
Systems like these can serve both as buffers until fossil fuel or nuclear reactors can spin up to peak in the even of wind/solar shortage, and can even serve as overnight generation to replace solar if large enough (given the usually much lower demand at night).
If each state was required to implement their own (presumably smaller) grid-scale storage this would have the benefit of removing a single point of failure and spread the cost. A construction project of this scale would also serve to create hundreds or thousands of jobs in various areas, stimulating the economy.
Having grid-scale storage would be drastically improved with a smart grid, since it would have much more real-time data on power demands and allow more seamless management of capacity.
[0]: https://www.youtube.com/watch?v=6Jx_bJgIFhI
Also, how is this going to be cost effective? I just had an offer to include smart home capabilities in my new home. Some 16k EUR for a very basic installation, with only a tiny part of the home being fully automated. My electricity bill is less than 1k/a on a fully renewable energy contract. using AI smart home technology seems to be far from an economical solution as of today. Prices for smart homes would need to fall 1-2 orders of magnitude for his to start making sense.
> Prices for smart homes would need to fall 1-2 orders of magnitude for his to start making sense.
I mean, this seems pretty likely to me over a timescale of a few decades. Smart homes are currently a niche product for the rich. They've barely started on their journey to being mass-market products. That will look like the products you are already buying being smart-home capable because that's considered standard.
I mean, this seems pretty likely to me over a timescale of a few decades. Smart homes are currently a niche product for the rich. They've barely started on their journey to being mass-market products. That will look like the products you are already buying being smart-home capable because that's considered standard.
> I suspect you could get 99% of the effect by only passing a small price window to consumers.
I've been thinking about this problem for some years now, since I first became involved in microgrid controls. Rather than change the dynamics by limiting amplitude, I would change the dynamics by adjusting information latency.
Schedule customer pricing based on the day-ahead market clearing price instead of the spot price. End-customers are still exposed to price fluctuations for both good and ill. But now they can make decisions based on them well in advance. Momentary interruptions in communication no longer render the customer blind to the market price. Similarly, low-latency communications are not required for smart devices to take advantage of price changes. The most volatile portion of the market risk is also still borne by the utility.
I've been thinking about this problem for some years now, since I first became involved in microgrid controls. Rather than change the dynamics by limiting amplitude, I would change the dynamics by adjusting information latency.
Schedule customer pricing based on the day-ahead market clearing price instead of the spot price. End-customers are still exposed to price fluctuations for both good and ill. But now they can make decisions based on them well in advance. Momentary interruptions in communication no longer render the customer blind to the market price. Similarly, low-latency communications are not required for smart devices to take advantage of price changes. The most volatile portion of the market risk is also still borne by the utility.
I'm on the "Agile Octopus" tariff in the UK and this is broadly how it works - the next days prices are available around 4pm the day before, giving you time to plan. There is also a cap of 35p/kWh (the standard fixed rate tariff is 15p/kWh for comparison) which limits the downside risk somewhat. In peak hours during the winter it regularly hits the cap. Bit of a halfway house between pure time of use and fixed tariffs.
"This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley."
I actually worked on a system like this https://powerley.com it's based in the Detroit area. The energy grid is going to face growing demand / supply issues over the next decade and I do believe systems like this will become more important to manage load.
I actually worked on a system like this https://powerley.com it's based in the Detroit area. The energy grid is going to face growing demand / supply issues over the next decade and I do believe systems like this will become more important to manage load.
> This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley.
It also sounds awful. It would objectively be a regression from reliable electricity to unreliable electricity, like in an undeveloped country.
The only thing such a technology would do is give the power companies a BS way to shift the blame for their planning fuck ups onto consumers, because technically it would be the consumer's equipment that killed the power.
It also sounds awful. It would objectively be a regression from reliable electricity to unreliable electricity, like in an undeveloped country.
The only thing such a technology would do is give the power companies a BS way to shift the blame for their planning fuck ups onto consumers, because technically it would be the consumer's equipment that killed the power.
> This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley.
This is shockingly myopic.
This is shockingly myopic.
Not myopic, just overly complicated. Huge strides in availability could be made by simply having smart meters that allow the power company to adjust the maximum draw before the breaker kicks.
Rather than cutting off all the power for half the city, cut off half the power for the whole city. That way people could still have a small space heater and some lights but not run their dryers and who knows what else.
Rather than cutting off all the power for half the city, cut off half the power for the whole city. That way people could still have a small space heater and some lights but not run their dryers and who knows what else.
The existence of Griddy is unrelated to energy deregulation. I keep seeing that term thrown around but no one using it seems to know what it means.
Griddy is simply an energy provider you can choose to hedge your bets and save money if you are smart. Plenty of people using it shut off their power or switched providers when they were informed of the incoming price surge. That some households ignoring the warnings shouldn't be a reason a service like Griddy can't exist.
Griddy is simply an energy provider you can choose to hedge your bets and save money if you are smart. Plenty of people using it shut off their power or switched providers when they were informed of the incoming price surge. That some households ignoring the warnings shouldn't be a reason a service like Griddy can't exist.
> Griddy is simply an energy provider you can choose to hedge your bets and save money if you are smart. Plenty of people using it shut off their power or switched providers when they were informed of the incoming price surge. That some households ignoring the warnings shouldn't be a reason a service like Griddy can't exist.
It's not reasonable to expect households to monitor their electricity rates or alert emails that closely nor be prepared to drop everything to switch providers at a moment's notice for an entirely unexpected reason. I know I don't immediately read every email I get.
An even if someone was monitoring that closely, or was ready to jump, there's no guarantee they'll be able to switch:
https://6abc.com/griddy-gridy-texas-power-bills-what-is-ener...:
> In a rare move Sunday night, Griddy sent out an email to all 29,000 of its customers, urging them to switch to a different provider. Thigpen says she tried Monday morning, but no one was taking new customers....
> We reached out to a few providers here in Texas. They are not taking customers. Some say they may accept new customers by next Wednesday, when they say the weather has improved. That was the earliest 'maybe' answer we could get.
It's not reasonable to expect households to monitor their electricity rates or alert emails that closely nor be prepared to drop everything to switch providers at a moment's notice for an entirely unexpected reason. I know I don't immediately read every email I get.
An even if someone was monitoring that closely, or was ready to jump, there's no guarantee they'll be able to switch:
https://6abc.com/griddy-gridy-texas-power-bills-what-is-ener...:
> In a rare move Sunday night, Griddy sent out an email to all 29,000 of its customers, urging them to switch to a different provider. Thigpen says she tried Monday morning, but no one was taking new customers....
> We reached out to a few providers here in Texas. They are not taking customers. Some say they may accept new customers by next Wednesday, when they say the weather has improved. That was the earliest 'maybe' answer we could get.
Griddy didn't have to beat the bricks like most REP's in Texas. Smart consumers aware of the risk beat a path to their door. Unfortunately, as with anything like this, the followers and fools soon showed up (reminiscent of $GME) and a good thing somehow suddenly became "a scam".
I'm not sure we can really say "smart consumers aware of the risk." Isn't it more like "Opportunistic customers who hoped the risks were immaterial beat a path . . . "
Out of morbid curiosity, during a long drive this weekend, I listened to 20 minutes of an AM radio guy's pitch for some retirement annuity system that sounded quite sweet at first. As he kept talking, though, I realized that he was being very evasive about what happens if you die early. Connecting the dots - he keeps all your assets. No survivor benefits at all.
I used to do financial investigative reporting. I was looking for the catch. And it nearly glided past me. Ditto for disclosing the full details about the maximum caps on your electricity charges.
These promoters are masters at smooth, low-candor discussions of risk. They're what make the pendulum keep swinging back and forth between deregulation and re-regulation.
Out of morbid curiosity, during a long drive this weekend, I listened to 20 minutes of an AM radio guy's pitch for some retirement annuity system that sounded quite sweet at first. As he kept talking, though, I realized that he was being very evasive about what happens if you die early. Connecting the dots - he keeps all your assets. No survivor benefits at all.
I used to do financial investigative reporting. I was looking for the catch. And it nearly glided past me. Ditto for disclosing the full details about the maximum caps on your electricity charges.
These promoters are masters at smooth, low-candor discussions of risk. They're what make the pendulum keep swinging back and forth between deregulation and re-regulation.
I consulted for a large existing REP to help analyze the market and suggest strategies for launching their own Griddy competitor brand. So when I say "smart consumers aware of the risk" that is exactly who the research showed the customer was. The initial customers were people perfectly capable of the arbitrage. They even had customers using IFTTT to turn up the thermostat (summer months) when prices would spike (in 15 min increments).
I literally built a prototype competitor product to Griddy and I'm downvoted for explaining exactly how this shit works.
I literally built a prototype competitor product to Griddy and I'm downvoted for explaining exactly how this shit works.
I didn't downvote you, but comparing this situation to what happened with GME (as in your previous comment) is, at best, a stretch. At least with GME one could argue that people signing up for margin accounts to buy stock options should know what they're doing ... which is maybe a different subject ... but as others have indicated in this thread, a lot of providers like these employ some fairly aggressive/shady strategies to get consumers to sign on, and don't candidly discuss worst-case scenarios like these.
Can you elaborate on how the research was conducted and specifically how the risk was measured by consumers?
There’s an awful lot of research that implies humans are very poor estimators of low probability / high severity events
There’s an awful lot of research that implies humans are very poor estimators of low probability / high severity events
Research was normal UX/cust research... interviews, polls, etc.
Customers were intelligent and motivated by a desire to do their own hedging rather than have an REP in the middle with an opaque profits. There’s a lot of profit in there and customers wanted to keep it. Customer ultimately knows his own demand and tolerances better than any REP. When I say “he” I mean men. Overwhelmingly male market. Lots of small business owners, day traders, cognizant their investment performance. This was very early. Few had even heard of Griddy at this point. I think it’s a fantastic addition to the market. What’s missing is the ability to hold futures. That would really level the playing field for sophisticated customers.
Customers were intelligent and motivated by a desire to do their own hedging rather than have an REP in the middle with an opaque profits. There’s a lot of profit in there and customers wanted to keep it. Customer ultimately knows his own demand and tolerances better than any REP. When I say “he” I mean men. Overwhelmingly male market. Lots of small business owners, day traders, cognizant their investment performance. This was very early. Few had even heard of Griddy at this point. I think it’s a fantastic addition to the market. What’s missing is the ability to hold futures. That would really level the playing field for sophisticated customers.
Sounds like a fun filled hobby. How many people are interested in actually spending 30 to 40 hours spooling up to understand what they're getting, and 5 to 10 hours a month tracking it? I'm sure there's a population, but I'd rather spend another $20/month and do something fun with my time.
Thanks for responding. I’ll just say it’s important to distinguish between a desire to make a profit and the ability to accurately gauge risk. Behavioral economics has a lot to say about this
IFTTT doesn’t seem like the best solution to something that costs you an enormous amount of money if it fails. especially in a situation with potential power outages killing the box you were using at an inopportune moment.
I think that it is called an immediate annuity. It is a standard insurance product that offers protection against outliving your assets. You pay a lump sum in return for a guaranteed income as long as you live. Yes, if you die early, the insurance company wins, if you live longer than expected, the insurance company looses.
I think these are more common in Europe where people will often take a lump sum pension payout at retirement, and buy an immediate annuity.
I think these are more common in Europe where people will often take a lump sum pension payout at retirement, and buy an immediate annuity.
Isnt a pension already designed to be a payout until you die? What's the advantage?
Given that neither the power companies nor the regulatory bodies correctly anticipated this risk I think it’s a huge stretch to say that consumers did.
" a good thing somehow suddenly became "a scam"."
Does Griddy push real-time cost information to consumers to enable them to react to situations like this? "Scam" might be harsh, but their model clearly failed.
Does Griddy push real-time cost information to consumers to enable them to react to situations like this? "Scam" might be harsh, but their model clearly failed.
I'm not a customer - but I've seen screenshots of their app for doing just that, along with alerting.
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Nice victim blaming.
Stop using this term for people who were not victims of anyone other than themselves, it hurts actual victims.
The reason why we have things like regulations and consumer protection laws is exactly to prevent people from, as you put it, becoming victims of themselves.
If everyone had this kind of attitude, we'd still be driving cars with no seatbelts.
If everyone had this kind of attitude, we'd still be driving cars with no seatbelts.
Yeah, except that car manufacturers started to put seatbelts into cars before regulation. Similarly with all other protection systems. Regulation made it ubiquitous and that's great, but don't mislead like this.
It's very easy to become a "victim" of yourself even in a regulated world and I assure you the number of people who do will not go down, only the means of doing so will change. Perhaps we should focus on education instead of regulation.
It's very easy to become a "victim" of yourself even in a regulated world and I assure you the number of people who do will not go down, only the means of doing so will change. Perhaps we should focus on education instead of regulation.
There's a reason that we term things like power and water "public" utilities, and that decent, well run governments regulate them. One, it's to ensure safe, reliable supplies. And two, to make sure that they're fairly priced. What happened in Texas shows the complete and utter failure in this regard. Sure the citizens of Texas voted for this complete clusterfsck, but not everyone, and those who end up with the short end of the stick shouldn't be blamed because the majority were a bunch of idiots fed lies for decades.
> Unfortunately, as with anything like this, the followers and fools soon showed up (reminiscent of $GME) and a good thing somehow suddenly became "a scam".
Haha, isn't this just the thing? It's the same thing as with Kickstarter, Bountysource, numerous Google betas, etc. The risks are just sitting there visible as all heck, and fools will jump in blind and then scream when the scary event happens.
It has been the best argument for paternalism I've ever seen: not to keep people safe from themselves, but to keep fools away from the rest of us so that we can make intelligent risky decisions.
In fact, I've shifted my view of the accredited investor thing. I am so glad a bunch of blind followers can't just do something dumb and then ruin everything for the rest of us.
Haha, isn't this just the thing? It's the same thing as with Kickstarter, Bountysource, numerous Google betas, etc. The risks are just sitting there visible as all heck, and fools will jump in blind and then scream when the scary event happens.
It has been the best argument for paternalism I've ever seen: not to keep people safe from themselves, but to keep fools away from the rest of us so that we can make intelligent risky decisions.
In fact, I've shifted my view of the accredited investor thing. I am so glad a bunch of blind followers can't just do something dumb and then ruin everything for the rest of us.
There are some interesting details here but let's be suuuper clear, nobody in the residential sector consented to a 12,000% increase in power costs or a $5,000 - $16,000 power bill this month. I think the article tries extremely hard to forgive everyone involved aside from the residents who have now been completely devastated by this.
The only real acknowledgement that residents have truly suffered something they didn't deserve is sandwiched between statements completely clearing Griddy & ERCOT of wrongdoing:
> The point is that while Griddy customers should definitely be entitled to relief, Griddy is not evil. Nor is ERCOT.
The only real acknowledgement that residents have truly suffered something they didn't deserve is sandwiched between statements completely clearing Griddy & ERCOT of wrongdoing:
> The point is that while Griddy customers should definitely be entitled to relief, Griddy is not evil. Nor is ERCOT.
Exactly.
In my experience, there are exactly two types of customers on the kinds of plans like Griddy offers: a) people who are heavily into cost-optimization and have spent the cash to automate their living quarters to take advantage of wholesale price swings; and b) people who are trying to stretch a dollar because a single dollar is all they have left.
For people in that second category, the dollar broke and smacked them in the face.
I am by no means calling people stupid for doing this; they believed the sales pitch and either did not understand (because the wholesale pricing model is actually complex) or were not told the massive potential downsides. And when the cost of keeping where you live at a livable temperature runs into the mid-three-digits per month during the summer, you're going to jump at the idea of slashing that by two-thirds.
This is consent in the same way that clicking "agree" on a 15,000-word EULA is consent. It isn't.
In my experience, there are exactly two types of customers on the kinds of plans like Griddy offers: a) people who are heavily into cost-optimization and have spent the cash to automate their living quarters to take advantage of wholesale price swings; and b) people who are trying to stretch a dollar because a single dollar is all they have left.
For people in that second category, the dollar broke and smacked them in the face.
I am by no means calling people stupid for doing this; they believed the sales pitch and either did not understand (because the wholesale pricing model is actually complex) or were not told the massive potential downsides. And when the cost of keeping where you live at a livable temperature runs into the mid-three-digits per month during the summer, you're going to jump at the idea of slashing that by two-thirds.
This is consent in the same way that clicking "agree" on a 15,000-word EULA is consent. It isn't.
I used to have these guys (EDIT: energy dereg companies, not griddy specifically) knocking on my door regularly with a pen, asking me to sign a contract for real time pricing literally on the spot, because I could save a bunch of money on my bill
I would be shocked if there is any energy deregulation company that doesn't resort to this, because it's the basic result of hiring contractors and paying them on commission
I would be shocked if there is any energy deregulation company that doesn't resort to this, because it's the basic result of hiring contractors and paying them on commission
In NYC, back when movie theaters were open, all of the Regals and AMC had these variable rate energy companies setup tables near the machines where you buy tickets. Usually they were manned by 2 young people in their early 20s, possibly college students.
These promoters would aggressively advertise "Free $10 Regal Gift Cards" or "Free $10 AMC Gift Cards", on the spot. They would say there is no catch. All you need is to be a ConEd Customer.
Every household in NYC is a ConEd customer because it is the only electric company.
Then they give you a tablet, and have you sign into your ConEd account. What they don't tell you is that you are switching your ConEd bill to a variable rate energy provider. On average, your bill is actually higher per month.
Every time I went to the movies I saw dozens of people get conned into higher monthly bills in exchange for a $10 gift card. I highly doubt anyone that signed up knew what they were really signing up for.
In upstate New York, I recall door to door salesmen doing the same thing. In NYC, too many residents live in buildings so they setup in movie theaters instead.
I wonder what their deal was with the theater venues. Does Regal/AMC rent out floor space to these promoters, or is there a revenue sharing deal?
These promoters would aggressively advertise "Free $10 Regal Gift Cards" or "Free $10 AMC Gift Cards", on the spot. They would say there is no catch. All you need is to be a ConEd Customer.
Every household in NYC is a ConEd customer because it is the only electric company.
Then they give you a tablet, and have you sign into your ConEd account. What they don't tell you is that you are switching your ConEd bill to a variable rate energy provider. On average, your bill is actually higher per month.
Every time I went to the movies I saw dozens of people get conned into higher monthly bills in exchange for a $10 gift card. I highly doubt anyone that signed up knew what they were really signing up for.
In upstate New York, I recall door to door salesmen doing the same thing. In NYC, too many residents live in buildings so they setup in movie theaters instead.
I wonder what their deal was with the theater venues. Does Regal/AMC rent out floor space to these promoters, or is there a revenue sharing deal?
> knocking on my door regularly with a pen
How delightful! Here in New York we just have CleanChoice Power doing it via mail fraud.
(By "mail fraud" I mean that they do their best to dress it up as a something like power bill, except demanding a signature, to trick the unwary into signing it without reading.)
How delightful! Here in New York we just have CleanChoice Power doing it via mail fraud.
(By "mail fraud" I mean that they do their best to dress it up as a something like power bill, except demanding a signature, to trick the unwary into signing it without reading.)
Unfortunately energy deregulation seems to disproportionately attract hucksters. I had never heard of Griddy until recently but in NY we have our share of pushy firms with questionable sales.
Question for those in TX: was your perception of Griddy that they were sketchy, or just a get-what-you-pay-for sort of basic service? Did they aggressively sell door-to-door?
Question for those in TX: was your perception of Griddy that they were sketchy, or just a get-what-you-pay-for sort of basic service? Did they aggressively sell door-to-door?
> Unfortunately energy deregulation seems to disproportionately attract hucksters.
Deregulation does that in lots of markets, if not all of them. Paying via commissions does the same.
Deregulation does that in lots of markets, if not all of them. Paying via commissions does the same.
Yes, I think especially so in industries the average person doesn’t understand well, like electricity spot markets.
The existence of hucksters is a big part of why regulation is created in the first place.
If you have to "de"regulation something, ask why it was regulated in the first place!
If you have to "de"regulation something, ask why it was regulated in the first place!
I’m not an anti-regulation guy by any means, but I do think there are cases where too much regulation is bad for customers. I don’t know enough about Texas energy markets to say if it’s the case here, but for example the deregulation of airline markets in the US was almost certainly good for customers on net.
It's mostly not been great. Higher prices than national DOE prices, less prepared for extreme events, and notably, no power-sharing agreement possible with the national grid since they've explicitly opted-out, and vehemently defended that choice. The Texas grid is less reliable and more expensive than either US East or US West.
We have energy privatisation in the UK and I've never experienced any hucksters. Indeed, I've had a very good experience with the small start-up energy providers compared to the big pre-privatisation firms.
I would guess there are different types of deregulation. We still have a regulatory body that ensures the market and new private entrants are operating effectively.
I would guess there are different types of deregulation. We still have a regulatory body that ensures the market and new private entrants are operating effectively.
I'm guessing you're not the target market. The UK energy market has a huge huckster problem - sleazy door-to-door salesmen and cold callers tricking people who don't know better into switching their energy plans without realizing that's what they're signing up for, even outright faking signatures in some cases.
"Consented" in the sense of "agreed to a legal contract that permitted that outcome" or in the sense of "anticipated at the time they signed up to the contract that this was an outcome they would experience"?
I mean "consented" as far as a human being ever consents. If you ask me to give you a "high five" every day, but then suddenly one day you coat your hand with JB Weld before the high five without telling me and we have to be surgically separated that wasn't consent in any meaningful sense.
It’s always someone else’s fault. If you signed up for Griddy and didn’t know what you were getting into, that’s your fault. If you signed up for Griddy and knew the risks, that’s your fault. Either way, it’s your fault.
Griddy wasn’t some shady operation that hid the downside risks. Their customers were encouraged to monitor the real time rates and use electricity when it was cheap. The week before the storm Griddy was frantically trying to terminate accounts.
Is this entire country allergic to personal responsibility?
Griddy wasn’t some shady operation that hid the downside risks. Their customers were encouraged to monitor the real time rates and use electricity when it was cheap. The week before the storm Griddy was frantically trying to terminate accounts.
Is this entire country allergic to personal responsibility?
When people consent to variable rates, absent a cap they're making at least implicit assumptions about the likelihood and magnitude of rate spikes. By and large, people don't hedge variable rate loans, fuel oil prices (although some do), power rates, etc. But people (reasonably) assume that variable rate loan isn't going to spike to 50% interest some night. But as you say, I'm pretty sure that no one signing up for one of these plans imagined a 100x spike in their monthly electrical bill was a possibility.
They chose to risk the possibility of unlimited prices. They chose to abandon agents that would hedge against price spikes. They pocketed the money they "saved" and chose not to insure themselves against this possibility.
We have been subjected to sneering lectures from Texans and libertarians about the nanny state, socialist bureaucrats, freedom killing regulation, Venezuela, the Great Leap Forward and on and on. I'd suggest Texans kick such politicians out of government and replace them with ones that have advocated for sane policies PRIOR to this event.
We have been subjected to sneering lectures from Texans and libertarians about the nanny state, socialist bureaucrats, freedom killing regulation, Venezuela, the Great Leap Forward and on and on. I'd suggest Texans kick such politicians out of government and replace them with ones that have advocated for sane policies PRIOR to this event.
Serious question, how many of them even knew what the hell they signed up for?
My experience with these companies is that they'll just walk door to door with a pen telling you to sign on the dotted line to save a bunch of money.
I doubt most of the people hurt by this are true believers, or even had a basic understanding of the arrangement.
My experience with these companies is that they'll just walk door to door with a pen telling you to sign on the dotted line to save a bunch of money.
I doubt most of the people hurt by this are true believers, or even had a basic understanding of the arrangement.
Where do they think that the money is coming from to enable them to come out so far ahead and pay people to walk around with clipboards too?
If they were deceived they have recourse.
It strikes me that Texas is suffering the same sort of problems that companies that switch to just-in-time delivery do. When everything is working they're more efficient and can out-compete their neighbors, but since they're running with little to no safety margin it only takes one incident to cause immediate disruption to the line. Of course when the consequence of a disruption is you miss your production targets for the week it's not so bad. When the consequence is thousands of people freezing to death maybe you should step back and ask if this is really what you want. Is it worth saving a fraction of a penny per kWh if it means the system can't budget for extreme events or even long term maintenance?
Markets are extremely good at optimizing for the lowest cost (most efficiently) solution, but they're no good for planning for unusual events or for handling externalities. At some point a government needs to step in and set some (unpopular) ground rules so the players in the market don't have to race all the way to the bottom to stay competitive.
Markets are extremely good at optimizing for the lowest cost (most efficiently) solution, but they're no good for planning for unusual events or for handling externalities. At some point a government needs to step in and set some (unpopular) ground rules so the players in the market don't have to race all the way to the bottom to stay competitive.
The problem wasn't really the just-in-time nature of power generation--nearly all power grids operate this way, usually with little more than a flywheel on the generator to smooth out fluctuations. Sometimes you get a stored water battery, but that doesn't last more than a few hours at peak consumption. We don't really have the ability to store power in a way that's efficient enough to not rely on JIT generation.
No, the problem here was that the grid wasn't winterized, and the hardware couldn't handle the cold. The problem came from hardware operating way outside its specs, which caused a cascading failure.
To be clear: I'm not saying it wasn't a lack of foresight on the companies involved, it completely was. Just not because of just in time generation.
No, the problem here was that the grid wasn't winterized, and the hardware couldn't handle the cold. The problem came from hardware operating way outside its specs, which caused a cascading failure.
To be clear: I'm not saying it wasn't a lack of foresight on the companies involved, it completely was. Just not because of just in time generation.
I don't think the parent was talking about JIT power generation but rather using JIT (in other industries) as a comparison to to talk about the efficiency-reliability tradeoff. The analogy here is cost savings of avoiding
winterization make the power companies more competitive (more efficient) but less reliable.
You are, of course, right in the all specific details you've brought up vis-a-vis the winterizing and the nature of the power grid. I just think you missed the parent's point slightly.
You are, of course, right in the all specific details you've brought up vis-a-vis the winterizing and the nature of the power grid. I just think you missed the parent's point slightly.
Companies that do just in time in fact are careful to manage their supply chain for this. I know my company orders steel 3-6 months in advance, in part because this eventually reaches all the way back to the miners digging the ore. They now can plan their work to ensure they don't have to pay overtime to meet our orders (compare to when we figured out the best price of the year and ordered a 1 year supply for delivery next week) which keeps costs down.
Insurance is a major part of any market, and insurance is very good to managing unusual events or externalities that matter.
Insurance is a major part of any market, and insurance is very good to managing unusual events or externalities that matter.
I wonder what the insurance payouts are like for power companies that let people freeze to death? Probably nothing because they'll claim they weren't to blame.
There are laws in place to prevent the utility companies from cutting off heat in situations like this.
From: https://www.needhelppayingbills.com/html/utility_and_heating...
> Texas - State law requires that utility and gas companies are required to offer a deferred payment plan to families and individuals in the state. No disconnect can occur if customer agrees and adheres to payment plan for past utility or heating bills. No shut off is allowed if temperature is to go below 32 degrees, or in extreme heat. Also disconnection will be delayed if detrimental to the health of a state resident, but the customer must have physician certification to get this plan.
From: https://www.needhelppayingbills.com/html/utility_and_heating...
> Texas - State law requires that utility and gas companies are required to offer a deferred payment plan to families and individuals in the state. No disconnect can occur if customer agrees and adheres to payment plan for past utility or heating bills. No shut off is allowed if temperature is to go below 32 degrees, or in extreme heat. Also disconnection will be delayed if detrimental to the health of a state resident, but the customer must have physician certification to get this plan.
They aren't getting disconnected, the power is going out because the operator didn't add enough margin into their system to handle abnormal events. In the race to offer the lowest possible price per kWh they made the system unsafe for sensitive groups.
Right, but I guess many of the people who died chose to risk rather than be stuck with a bill they cannot afford. Being allowed deferred payment is not enough.
Most, probably all, of the people who died didn't have a choice, their power was cut off for the entire neighborhood. The bill they can't afford for the most part hasn't even been mailed yet (bills are generally monthly, this event wasn't that long ago).
The issue was rolling blackouts caused by insufficient capacity and lack of winterization in generation stations. I know people who lost power for 48 hours in 14F weather. We have at least 21 dead.
Let's say you're a cloud operator placing long-lead just-in-time orders for hard drives with three different suppliers. Thailand floods and your carefully planned-in-advance delivery schedule is hosed. Your competitor with some inventory runway now has an advantage.
In many ways inventory is better than insurance because you're going to use it and so the cost is limited to storage.
In many ways inventory is better than insurance because you're going to use it and so the cost is limited to storage.
No matter how much inventory you have on hand it can eventually run out so you haven't actually prevented any problems, just delayed them a little longer.
Don't forget that we still have the 3-4 month pipeline to do something. That means we have time to put effort into the Thailand recovery plans into place. We often encourage recovery efforts to focus on the parts that we can only get from Thailand, while other parts that can be gotten elsewhere get sourced elsewhere. Our supply management systems have a check for is this a single source component because those are riskier. It isn't hard to read the news and look into our database and figure out where we need to put pressure. (We are a fortunate 100 company so there is some weight to throw around, plus we have several peer companies that are doing the same thing and will put their pressure on the same bottlenecks)
We have our supply chain mapped 6 levels down (this is mostly because we want to ensure the mines our ores come from down use child/slave labor, but there are side benefits) so when a disaster happens anywhere in the world we know how we could be affected and have months to prepare.
Inventory isn't better. Did you miss my comment about avoiding rust? Parts in storage degrade, can be stolen, cost rent to store, go obsolete, and otherwise have issues. Also it is better for the whole world if they have consistent work for their employees instead of nothing some weeks and overtime others, and the inventory systems tend to make that worse. Some inventory is useful anyway (and we have some), but it comes with costs as well.
Don't forget that we still have the 3-4 month pipeline to do something. That means we have time to put effort into the Thailand recovery plans into place. We often encourage recovery efforts to focus on the parts that we can only get from Thailand, while other parts that can be gotten elsewhere get sourced elsewhere. Our supply management systems have a check for is this a single source component because those are riskier. It isn't hard to read the news and look into our database and figure out where we need to put pressure. (We are a fortunate 100 company so there is some weight to throw around, plus we have several peer companies that are doing the same thing and will put their pressure on the same bottlenecks)
We have our supply chain mapped 6 levels down (this is mostly because we want to ensure the mines our ores come from down use child/slave labor, but there are side benefits) so when a disaster happens anywhere in the world we know how we could be affected and have months to prepare.
Inventory isn't better. Did you miss my comment about avoiding rust? Parts in storage degrade, can be stolen, cost rent to store, go obsolete, and otherwise have issues. Also it is better for the whole world if they have consistent work for their employees instead of nothing some weeks and overtime others, and the inventory systems tend to make that worse. Some inventory is useful anyway (and we have some), but it comes with costs as well.
See also: hospitals running at close full capacity in a normal year[1], and then a pandemic comes along.
[1]: https://www.usnews.com/news/health-news/articles/2020-03-26/...
[1]: https://www.usnews.com/news/health-news/articles/2020-03-26/...
Perhaps, but health care is so heavily managed nobody can call it a market. Most communities have a limit on how many hospital beds that are allowed which means that there isn't even an opportunity to do much better.
That's kind of the core of the problem with healthcare in the US. We treat it like a market where you can't see the prices and where customer are forced to buy the product or die. Then we wonder why it's so expensive.
Perhaps if we call everyone in healthcare heroes and let them control the supply of healthcare things will get better.
It seems more likely we'll call them heroes while laying them off.
So long as we can then claim there aren't enough heroes and it would take two decades to train more, I'm happy. It's the only possible thing we could try.
I didn't see this mentioned in the article, but there are many time-of-use plans that offer variable rates without exposing the consumer to additional risk.
For example, my electric plan has different rates for "peak" (4pm - 9pm), "super off-peak" (12am - 6am), and "off-peak" (everything else). But these rates are fixed, so I know in advance how much I'll need to pay.
This still incentivizes me to shift my usage to lower-demand times, flattening the demand curve under typical conditions. But it doesn't expose me to tail risk.
For example, my electric plan has different rates for "peak" (4pm - 9pm), "super off-peak" (12am - 6am), and "off-peak" (everything else). But these rates are fixed, so I know in advance how much I'll need to pay.
This still incentivizes me to shift my usage to lower-demand times, flattening the demand curve under typical conditions. But it doesn't expose me to tail risk.
I also don't understand why the article excludes the possibility of variable time of use based fixed rate plans, which are already common in California.
It seems to want to paint the picture as an either/or decision between fully variable real-time rates and completely flat rate plans. There are a whole set of possibilities in between, including but not limited to putting dispatchable appliances like smart electric water heaters and electric cars on more aggressively variable rate plans.
It seems to want to paint the picture as an either/or decision between fully variable real-time rates and completely flat rate plans. There are a whole set of possibilities in between, including but not limited to putting dispatchable appliances like smart electric water heaters and electric cars on more aggressively variable rate plans.
> I didn't see this mentioned in the article, but there are many time-of-use plans that offer variable rates without exposing the consumer to additional risk.
That is essentially a fixed-rate contract. It provides different incentivisation from a flat-rate contract, but… all the rates are still fixed.
That is essentially a fixed-rate contract. It provides different incentivisation from a flat-rate contract, but… all the rates are still fixed.
That means you're not on the market. You just have a more complicated fixed rate plan.
I understand that -- but it seems like the main point of the article is:
> I believe we ultimately need some degree of real time price exposure for consumers if we are to induce these kinds of widespread energy efficiency investments, because it can and does encourage significant reductions in individual electricity consumption during times of peak grid demand, which is good for the grid and good for the planet.
And I'm just pointing out that you can get most of the benefit without exposing consumers to additional risk, and that such plans are already widely available, at least where I live.
> I believe we ultimately need some degree of real time price exposure for consumers if we are to induce these kinds of widespread energy efficiency investments, because it can and does encourage significant reductions in individual electricity consumption during times of peak grid demand, which is good for the grid and good for the planet.
And I'm just pointing out that you can get most of the benefit without exposing consumers to additional risk, and that such plans are already widely available, at least where I live.
This is an important point, because the author of the post is essentially trying to argue that letting Texans either freeze to death or be price gouged is somehow necessary to fight climate change.
Regulations would have solved this. Why does the word "regulation" only appear in this article once? Make winterization standards a requirement of participating in the market.
Regulations would have solved this. Why does the word "regulation" only appear in this article once? Make winterization standards a requirement of participating in the market.
You are right. The problem with the article is that the author is confusing two separate somewhat independent failures here:
1) Variable rate plans based on wholesale market resulting in customers getting massive electricity bills during the wholesale market price spike.
2) Due to lack of regulation, little to no spending on winterization of generating capacity, with the purpose of ensuring lower prices for consumers and higher margins for generators. Both of those objectives were accomplished by the system, but the tail risk/cost management was not, and therefore it was effectively socialized.
If the tail risk (at least the risks we can see) were addressed through regulation (the only way to do so), prices would rise for all plan types to pay for the winterization, irrespective of whether they are variable or flat rate.
That regulation and associated price rise has been up to the moment unpalatable to Texas voters.
1) Variable rate plans based on wholesale market resulting in customers getting massive electricity bills during the wholesale market price spike.
2) Due to lack of regulation, little to no spending on winterization of generating capacity, with the purpose of ensuring lower prices for consumers and higher margins for generators. Both of those objectives were accomplished by the system, but the tail risk/cost management was not, and therefore it was effectively socialized.
If the tail risk (at least the risks we can see) were addressed through regulation (the only way to do so), prices would rise for all plan types to pay for the winterization, irrespective of whether they are variable or flat rate.
That regulation and associated price rise has been up to the moment unpalatable to Texas voters.
Their point is that Texans have no exposure to the spot price of electricity. If demand exceeds supply, we get rolling blackouts. We could reduce demand if people shut off appliances not critical to life (the fridge for one, everything will spoil during blackouts anyways).
Some part of electricity demand is inelastic, and required to live. Much of the electricity demand is elastic, and will respond to price signals. TVs, computers, clothes washers and dryers.
We do need winterization regulation as well, but once we're up the creek, price signals can be useful. Smaller price signals with more reasonable caps though. Just enough to convince you to turn your PC off so we can avoid blackouts.
Some part of electricity demand is inelastic, and required to live. Much of the electricity demand is elastic, and will respond to price signals. TVs, computers, clothes washers and dryers.
We do need winterization regulation as well, but once we're up the creek, price signals can be useful. Smaller price signals with more reasonable caps though. Just enough to convince you to turn your PC off so we can avoid blackouts.
Regulation only appears in the article once because it's an article about the Texas grid, which is nearly fully deregulated internally, and is absolutely exempt from all federal regulations. Reliability is formed by adjusting spot prices and ERCOT's unique-in-the-nation capacity contracts, rather than specifying any individual generator comply to any individual standards.
(Here's what 'nearly fully' means: This is the section of what oversight ERCOT has over individual producers. https://www.puc.texas.gov/agency/rulesnlaws/subrules/electri... . It's a quick read, nine pages.)
(Here's what 'nearly fully' means: This is the section of what oversight ERCOT has over individual producers. https://www.puc.texas.gov/agency/rulesnlaws/subrules/electri... . It's a quick read, nine pages.)
But also as you pointed out that doesn't really help in cases like last week because you're not being directly affected by this market shift.
In fact your plan was probably counterproductive since the cheapest power to you came when it was most expensive to the operator--over night.
In fact your plan was probably counterproductive since the cheapest power to you came when it was most expensive to the operator--over night.
From the article: "Consumers who aren’t exposed to price risk have no fundamental incentives to conserve energy in times of need."
But, at the same time, consumers that have no visibility into their current electricity prices are unable to alter their behaviour. Until there's extremely high-resolution, real-time price transparency, this system is destined to fail.
Also consumers have base loads just like generators have base loads: you might defer doing laundry, but no one is going to unplug their refrigerator during a electricity price surge. Again, this simplistic spot pricing scheme is destined to fail if it doesn't meet consumer's need to have predictable baseline consumption rates.
I weakly agree with the author here that demand-based pricing is in everyone's interest, but that said, last week in Taxas was a systemic failure of immense proportions and everyone involved in planning Texas' electricity grid should be ashamed.
But, at the same time, consumers that have no visibility into their current electricity prices are unable to alter their behaviour. Until there's extremely high-resolution, real-time price transparency, this system is destined to fail.
Also consumers have base loads just like generators have base loads: you might defer doing laundry, but no one is going to unplug their refrigerator during a electricity price surge. Again, this simplistic spot pricing scheme is destined to fail if it doesn't meet consumer's need to have predictable baseline consumption rates.
I weakly agree with the author here that demand-based pricing is in everyone's interest, but that said, last week in Taxas was a systemic failure of immense proportions and everyone involved in planning Texas' electricity grid should be ashamed.
Is there a reason why time-of-use systems can’t have a customer-defined price limit, beyond which they opt into a blackout? The sense I got from the stories of people suddenly facing five-figure power bills is that most would have gladly spent a night or two with propane and candles rather than cleaning out their savings.
There's no fundamental technical reason. It costs money to install the smart meters. It would cost more money to install control systems and automatic transfer switches, but even the smallest generator-backed (or multi-feed) datacenter has all the equipment technically needed to implement what you describe. Many large UPS units have everything as well.
It's probably an additional $3-6K on top of the smart meter to build in such switching (an ATS and a control system to understand the current/projected rate and switch based on it). For this event, going down to your main panel and flipping the main breaker for a few days would have accomplished the same thing for no cost.
I suspect the same people who bought Griddy's save money almost all the time plan are not the ones likely to install $5K of extra switching equipment at their house to protect themselves from a multi-day deep freeze event in Texas. Certainly no landlord is going to install that where they bear the costs and maintenance so their tenants can buy cheaper electricity.
It's probably an additional $3-6K on top of the smart meter to build in such switching (an ATS and a control system to understand the current/projected rate and switch based on it). For this event, going down to your main panel and flipping the main breaker for a few days would have accomplished the same thing for no cost.
I suspect the same people who bought Griddy's save money almost all the time plan are not the ones likely to install $5K of extra switching equipment at their house to protect themselves from a multi-day deep freeze event in Texas. Certainly no landlord is going to install that where they bear the costs and maintenance so their tenants can buy cheaper electricity.
The smart meter can already be disabled remotely. I have one in NY that will alternate between its reading and "CLOSED" meaning that the circuit is connected. As a parent poster pointed out, the power company, however, cannot disconnect you without proper notice.
Every second appliance has Wifi nowadays - but we need an industry standard that allows consumers to control usage based on price, perhaps by assigning specific appliances in your house to your energy retailer web account, and then allowing the retailer/grid operator to control when they are turned off and on (or to adjust their energy intensity) in return for a monthly discount.
For example just by heating and cooling houses a few hours before people get home, we can shift a lot of demand towards the middle of the day when solar power is abundant, and away from evening peaks.
We're definitely going to need something like this for widespread EV usage, where cars can potentially upload power to the grid.
Government has a role here in setting standards. They are the ones who get blamed for high energy prices or outages, anyway.
For example just by heating and cooling houses a few hours before people get home, we can shift a lot of demand towards the middle of the day when solar power is abundant, and away from evening peaks.
We're definitely going to need something like this for widespread EV usage, where cars can potentially upload power to the grid.
Government has a role here in setting standards. They are the ones who get blamed for high energy prices or outages, anyway.
That's awesome. Now I have to buy all new appliances, with poorly implemented WiFi stacks, trash all my older, fully functional appliances (Oh, how environmentally friendly will that be?) to let my local power company save me $20/month. Sounds like a fantastic deal.
http://www.thinkecoinc.com/
These guys used to do this in NYC.... would let ConEd turn off your AC in the middle of the summer
(Under the hood it's an IOT zigbee hub)
These guys used to do this in NYC.... would let ConEd turn off your AC in the middle of the summer
(Under the hood it's an IOT zigbee hub)
They're not grid-reactive, but for $20 you can get a programmable T-stat already. That's a huge part of the peak demand in cooling-dominated climates. (Heating demand peaks tend to hit overnight, of course.)
Or, is there a way for these customer facing companies to hedge against this risk via options, and utilize this to set a price cap (passing on a small monthly fee to the customer)?
Yep - this is what 99% of electricity retailers do.
Which is why Griddy exists in the first place. Those financial instruments aren't free and add a cost to the service.
I think the right regulatory approach this case would be to require the purchaser to manage their risk so that you can shop around like we do with other insurances. So if you go with a retail electric company you don't have to worry since you're not the purchaser.
I think the right regulatory approach this case would be to require the purchaser to manage their risk so that you can shop around like we do with other insurances. So if you go with a retail electric company you don't have to worry since you're not the purchaser.
But most electricity retailers just set a fixed price for electricity completely disconnected from the actual costs. I'm specifically wondering if it's possible to allow for wholesale purchasing, but set a cap at something like $10 or $100/kwhr - still crazy high, but keeping obscene rates away. Maybe let the customer choose what level of cap they want.
Texas's rates were capped at $9/kwhr, so "$10 or $100/kwhr" certainly wouldn't keep the obscene rates away.
Why would anyone agree to sell you power at cost, unless the cost goes too high, and then sell it below cost?
There's another post that used a term I'm going to appropriate for other conversations: homo economicus. We aren't that species. We don't have perfect information. We don't have infinite capacity or attention span to continuously micro-optimize everything.
It's why people buy products and services rather than vertically integrate everything in their lives. I don't want to live Texan Power Simulator any more than I want to be mining my own bauxite or replacing my driveway. Buying a product or service is granting the supplier a profit in exchange for them worrying about and executing the business. But you don't buy power any more. You buy access to a dynamic marketplace in which you probably didn't really want to participate.
What if there were real time pricing per byte coming down from your ISP and you had to sit and stare at your screen waiting for an affordable moment to check your email? Or what if you had to stop mid-shower to avoid spending five figures to rinse the soap off? I can't imagine being happy in those cases, I don't know why I should be happy about it for electricity.
It's why people buy products and services rather than vertically integrate everything in their lives. I don't want to live Texan Power Simulator any more than I want to be mining my own bauxite or replacing my driveway. Buying a product or service is granting the supplier a profit in exchange for them worrying about and executing the business. But you don't buy power any more. You buy access to a dynamic marketplace in which you probably didn't really want to participate.
What if there were real time pricing per byte coming down from your ISP and you had to sit and stare at your screen waiting for an affordable moment to check your email? Or what if you had to stop mid-shower to avoid spending five figures to rinse the soap off? I can't imagine being happy in those cases, I don't know why I should be happy about it for electricity.
I can't speak for Texas, but in many states a contract that allowed a utility provider to shut off service without adequate notification and other paperwork would be illegal.
You're on to an idea that the article doesn't cover: If you want consumers to constrain their utilization during periods of high demand without using price shifts, you might require they install suitably "smart" thermostats and appliances along with their smart meter. These could allow the utility to forcibly curtail power use without rolling blackouts. Some utilities already offer a softer version of this, with your Nest offering to tweak your schedule to marginally lower your bill.
Of course that kind of invasive control would likely not go over much better than $16,000 power bills.
You're on to an idea that the article doesn't cover: If you want consumers to constrain their utilization during periods of high demand without using price shifts, you might require they install suitably "smart" thermostats and appliances along with their smart meter. These could allow the utility to forcibly curtail power use without rolling blackouts. Some utilities already offer a softer version of this, with your Nest offering to tweak your schedule to marginally lower your bill.
Of course that kind of invasive control would likely not go over much better than $16,000 power bills.
It's an avenue that should be pursued if a state truly wants to have market-based pricing. For that to work there definitely needs to be transparency and ways for customers to easily automatically adjust in response to pricing signals. Though it could be pricy, there is plenty of promising tech approaches and it could definitely be part of an overall more efficient grid.
For example, Tesla Powerwalls (disclaimer: I've got a few) already allow custom time-based controls precisely for the purpose of saving money when on a utility plan that is split into peak/shoulder/off-peak pricing. That's one of the ways they can offer some direct financial return (benefits from generator replacement and on-site production aside). That's not granular enough or automated enough to react to a situation like this one, but on the face of it doesn't seem like any reason it couldn't be. If Tesla had an API that someone like Griddy could talk to, an interface in the app for something like "price-based control" seems like it'd be doable and an interesting value-add and a relatively low lift. Powerwalls already have remote control functionality for grid-operator/customer deals. And it'd give a lot more buffer.
However those of course are $6.5k a pop right now. Long term it might be more fruitful for many people to lean on future electric vehicles for this. Those have humongous batteries and alternate ROI so a lot of people may ultimately have them anyway, vs being a dedicated expense. Hopefully the next decade, along with more fundamental grid investment period, will also see the natural spread of more and smarter buffering options.
For example, Tesla Powerwalls (disclaimer: I've got a few) already allow custom time-based controls precisely for the purpose of saving money when on a utility plan that is split into peak/shoulder/off-peak pricing. That's one of the ways they can offer some direct financial return (benefits from generator replacement and on-site production aside). That's not granular enough or automated enough to react to a situation like this one, but on the face of it doesn't seem like any reason it couldn't be. If Tesla had an API that someone like Griddy could talk to, an interface in the app for something like "price-based control" seems like it'd be doable and an interesting value-add and a relatively low lift. Powerwalls already have remote control functionality for grid-operator/customer deals. And it'd give a lot more buffer.
However those of course are $6.5k a pop right now. Long term it might be more fruitful for many people to lean on future electric vehicles for this. Those have humongous batteries and alternate ROI so a lot of people may ultimately have them anyway, vs being a dedicated expense. Hopefully the next decade, along with more fundamental grid investment period, will also see the natural spread of more and smarter buffering options.
They can always pull the main at the breaker.
Unfortunately, that's a terrible option too. The cold is survivable with some gear, but your pipes will freeze and burst unless you drain them (which I have no idea how to do, if it can be done).
We also had several deaths due to people using gas heaters indoors. I think it releases carbon monoxide? Not entirely sure, but those outdoor heaters are meant to be outdoors.
Unfortunately, that's a terrible option too. The cold is survivable with some gear, but your pipes will freeze and burst unless you drain them (which I have no idea how to do, if it can be done).
We also had several deaths due to people using gas heaters indoors. I think it releases carbon monoxide? Not entirely sure, but those outdoor heaters are meant to be outdoors.
Laws generally prevent this (generally a customer's supply can only be cut off with a long and precise legal procedure).
It's possible it might be doable with a user override.
It's possible it might be doable with a user override.
I think you have this backwards. This isn't the power company shutting off your power. This is telling your agent (in this case Griddy) to stop buying power under some conditions that you define.
I understand... But in the eyes of the law, Griddy is your power company, and their equipment shutting off your supply might break a lot of laws about disconnecting people without giving the requisite notice, legal procedure, etc.
Where do you draw the line? "Griddy, please turn my power off if the price goes above $1/kwh"... "Griddy, please turn the power off if I forget to pay the bill.", "Griddy, I'll take a $10/month discount if the power gets turned off when my bill is paid late?", "Griddy, I want to use non-ripoff plan, so I'm happy for you to turn my power off the minute I pay late".
See how it isn't really feasible to stop power companies forcibly illegally disconnecting debtors if you allow a debtor to agree to be disconnected voluntarily?
Where do you draw the line? "Griddy, please turn my power off if the price goes above $1/kwh"... "Griddy, please turn the power off if I forget to pay the bill.", "Griddy, I'll take a $10/month discount if the power gets turned off when my bill is paid late?", "Griddy, I want to use non-ripoff plan, so I'm happy for you to turn my power off the minute I pay late".
See how it isn't really feasible to stop power companies forcibly illegally disconnecting debtors if you allow a debtor to agree to be disconnected voluntarily?
If the property owner has a button to override the cut-off and turn the power back on then that should satisfy any legal requirements related to unilateral disconnection of power. The disconnect should happen on the customer's side anyway. The power company just needs to provide accurate information about the current price in a form that can be used by an automated switch. Important circuits could be placed on a separate panel with a higher cut-off point.
My impression is that laws also generally prevent extreme increases in the cost of electricity without a great deal of advanced warning.
Adding a 100+ amp contactor and two way communication to every existing meter will add a lot to the cost of the equipment required at a user site.
In New Zealand (and many other countries I believe) there are regulations that prevent disconnection when a household needs power for heating in winter. There are also complexities associated with whether a household has critical medical equipment that has a dependency on electricity, which can’t be safely disconnected.
I think these regulations came into place after people died due to the cold, or died because they needed their oxygen generator and power was cut. Possibly the regulations were proactive.
I worked with a company that built prepay power systems that communicated by modem, and cut the power when the money ran out... except when the regulations (mostly sensible rules) kicked in to prevent harm.
In New Zealand there is also a ripple control system to shed domestic loads during peak demand (mostly hot water cylinders).
I think these regulations came into place after people died due to the cold, or died because they needed their oxygen generator and power was cut. Possibly the regulations were proactive.
I worked with a company that built prepay power systems that communicated by modem, and cut the power when the money ran out... except when the regulations (mostly sensible rules) kicked in to prevent harm.
In New Zealand there is also a ripple control system to shed domestic loads during peak demand (mostly hot water cylinders).
Why do you have to do this on the meter side? Cant your power company shut off your power from their end?
No, I suspect power companies cannot generally shut off your power from their end. There's not a separate cable from the power plant to each individual home. There are really big cables that go most of the way from the power plant, then at each neighbhorhood or block they split off into smaller cables for individual homes. That's where the meter for each home is installed, and that's where the power company can turn off your electricity.
Traditionally they sent a technician out to read each meter and turn off the electricity if necessary, but there are newer "smart meters" that communicate your usage to the power company (although I'm not sure if those can also be remotely triggered to turn off your power, I would suspect not).
Where I grew up in a small town in the Midwestern US in the 1990s, the meters were usually installed on an external wall at the back of the house. My part of town had underground power lines (good during thunderstorms, bad during road/building construction) and I suspect the meter was right where the buried cable came into the house. Every month a uniformed person from the power company would walk through everyone's backyards taking the reading from each meter.
Fun fact: most utilities and similar services have historically worked this way. I think the cable television company would just send someone to the cable box on the back of your house and flip switches to enable the channels you were paying for. There was always some kid who claimed to get HBO for free because his older cousin worked for the cable company.
Now that I think about it, I recently got a car that's new enough to have Sirius XM satellite radio built in, and I've been wondering how their access control works. Surely the satellite doesn't beam down everyone's subscription status and make their receiver hardware respect that, right? Is my car using the built-in cell phone to check whether I'm subscribed to the satellite radio? Either way, where are the bootlegged satellite radio receivers?
Traditionally they sent a technician out to read each meter and turn off the electricity if necessary, but there are newer "smart meters" that communicate your usage to the power company (although I'm not sure if those can also be remotely triggered to turn off your power, I would suspect not).
Where I grew up in a small town in the Midwestern US in the 1990s, the meters were usually installed on an external wall at the back of the house. My part of town had underground power lines (good during thunderstorms, bad during road/building construction) and I suspect the meter was right where the buried cable came into the house. Every month a uniformed person from the power company would walk through everyone's backyards taking the reading from each meter.
Fun fact: most utilities and similar services have historically worked this way. I think the cable television company would just send someone to the cable box on the back of your house and flip switches to enable the channels you were paying for. There was always some kid who claimed to get HBO for free because his older cousin worked for the cable company.
Now that I think about it, I recently got a car that's new enough to have Sirius XM satellite radio built in, and I've been wondering how their access control works. Surely the satellite doesn't beam down everyone's subscription status and make their receiver hardware respect that, right? Is my car using the built-in cell phone to check whether I'm subscribed to the satellite radio? Either way, where are the bootlegged satellite radio receivers?
On the last thing, AIUI from some research (confirmed as plausible by experience with similar systems):
- The stream channels themselves are encrypted or scrambled in a way that is hard to unwind unless you have the keys (keeping non-SiriusXM radios from working)
- Each radio has two important pieces of information: a decryption key from SiriusXM and a UUID (I'd guess 64bit, as that's a pretty standard size for hardware-baked-in UUIDs. It might be 128bit instead). You can look up the UUID for your radio. Both of those things, by the way, are bog-standard now in consumer embedded systems exactly because they help prevent bootlegging.
- Channel 0 is an ID channel that constantly streams out a list of valid UUIDs and other configuration data. An un-activated radio can only tune that channel. When it sees its own ID, it enables the rest of the channels.
Quick sanity check: Assuming they have 40 million subscribers and can pass UUIDs at roughly audio rate (to make the math easy, 16-bit, 50kHz), that makes it about an hour to sync all the users. That can probably be watched by your radio in the background, so it's only an issue for initial activation.
- The stream channels themselves are encrypted or scrambled in a way that is hard to unwind unless you have the keys (keeping non-SiriusXM radios from working)
- Each radio has two important pieces of information: a decryption key from SiriusXM and a UUID (I'd guess 64bit, as that's a pretty standard size for hardware-baked-in UUIDs. It might be 128bit instead). You can look up the UUID for your radio. Both of those things, by the way, are bog-standard now in consumer embedded systems exactly because they help prevent bootlegging.
- Channel 0 is an ID channel that constantly streams out a list of valid UUIDs and other configuration data. An un-activated radio can only tune that channel. When it sees its own ID, it enables the rest of the channels.
Quick sanity check: Assuming they have 40 million subscribers and can pass UUIDs at roughly audio rate (to make the math easy, 16-bit, 50kHz), that makes it about an hour to sync all the users. That can probably be watched by your radio in the background, so it's only an issue for initial activation.
This may be the way SirusXM works, but it is far from optimal. The best scheme is to give the radios simple sequential (or near sequential) id's, and have the station transmit a bitmap of which id's are enabled/disabled. Then it's one bit per subscriber, and can be transmitted in a few seconds. That bitmap is authenticated by a public key stored in the radio. You might want to run length encode the bitmap if you assume that in 30 years there might still be a handful of ancient radios still alive you wish to service.
Satellite bandwidth is expensive... Activation time is annoying for customers... The above scheme saves either (or both).
Satellite bandwidth is expensive... Activation time is annoying for customers... The above scheme saves either (or both).
Just a random thought regarding activation: they could also have a channel broadcasting all new activations, so that you could put your radio into an activation mode while you're finalizing your subscription. Or they could give you an activation code that you could enter manually somehow (it could just be a simple message signed with Sirius' private key).
Yeah, TBH I just assumed it was a unique ID baked into hardware because sequential IDs are a pain to manage, but your idea would be more efficient in the base case. As far as I can tell they also transmit things like channel-specific activations, but the sequential concept still works if that is a bitmap.
Yeah, they definitely must do decryption on the device, which means they must have some tamper-proof chip that has never been broken (as far as I can tell, there's no leaked decryption key). That's actually pretty surprising to me.
Well, now I've got to get a radio and have a look.
Looking at teardowns of the current Onyx radio [0], the NXP LPC4078FET180 has both a unique ID and some mechanisms to make it very difficult to read the programmed code externally. One option would be to store the key there, and use that mcu to run all the audio decryption, processing, device activation, and protocol updates (under the control of the TMX570 running the UI etc).
[0] https://fccid.io/RS2SXPL1/Internal-Photos/Onyx-Plus-Internal...
Looking at teardowns of the current Onyx radio [0], the NXP LPC4078FET180 has both a unique ID and some mechanisms to make it very difficult to read the programmed code externally. One option would be to store the key there, and use that mcu to run all the audio decryption, processing, device activation, and protocol updates (under the control of the TMX570 running the UI etc).
[0] https://fccid.io/RS2SXPL1/Internal-Photos/Onyx-Plus-Internal...
Plenty of power companies can stop power remotely and I would assume the ones with smart meters are at the top of that list.
The same equipment would be required regardless of what end it's on. The pole transformer feeding your house and your neighbor's house is basically passive AFAIK; it's not remotely controllable.
If they could do that, they could also install the meter on their end.
They could if every house had a dedicated wire to the generator and there was a massive bank of switches in a giant building next to the generator that controlled power to every house. But no grid on Earth works that way.
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There’s a less drastic compromise: Power company sends a text one day ahead of expected stress, with news that tomorrow’s price will be 3x normal. Enough to focus customer attention, but without threat of financial ruin.
SDG&E, in California, offers such a plan (layered on top of conventional TOU terms).
SDG&E, in California, offers such a plan (layered on top of conventional TOU terms).
France's Linky has a built-in relay that the TSO can use to shed some power in the event of an emergency. I suppose that it could be used by a novel energy supplier to pay less in power reserve and they could shut off willing consumers in the event of a near blackout.
On the other hand, a lot of people would have been happy to have a 5 figure electric bill instead of having their pipes freeze from an involuntary blackout.
For thousands in Texas they're getting both.
Which is why the parent comment says "can have a limit", not "must require a limit".
That way, those who would rather get through a blackout without paying insane bills can have an option to do so, while those who care about their pipes freezing can pay to keep the electricity.
That way, those who would rather get through a blackout without paying insane bills can have an option to do so, while those who care about their pipes freezing can pay to keep the electricity.
I still think this is totally unfeasible. Then all the news stories would just be "Fine print in electric contract shut off power for many, now facing thousands in water damage bills."
Totally agreed with you, it is probably completely unfeasible. I was just assuming we were talking about this in terms of ideal wants.
...except the latter will (likely) be covered by insurance, whereas you are on your own for the former.
Basic goods should never be in unregulated markets. People are overwhelmed by these complex products. There is no reason why someone needs to spend a weekend trying to understand how much electricity will cost. US productivity is the real loser here as millions of people have to waste so much time.
1. The statement "it’s clear that those high prices weren’t doing their job" and subsequent disagreement with raising the price cap does not make sense to me. Any artificial price cap seems to limit the effectiveness of a market. From the producer's side, it limits the incentive to model and capture these tail events (e.g. winterize). From the consumer's side, it limits the incentive to reduce consumption. Is my perspective off here?
2. Is it possible to subscribe to two (or n) energy plans? Imagine subscribing to a wholesale plan (e.g. Griddy) and a fixed-rate plan and switching between them whenever wholesale prices rise above the fixed rate. Are there legal or practical reasons this can't happen?
2. Is it possible to subscribe to two (or n) energy plans? Imagine subscribing to a wholesale plan (e.g. Griddy) and a fixed-rate plan and switching between them whenever wholesale prices rise above the fixed rate. Are there legal or practical reasons this can't happen?
For #2, I bet that it would drastically cut into energy company profits and thus is not politically practical in TX.
Even a non-profit utility would not agree to be the fixed rate provider in this scenario. It would be a guaranteed money loser, for the same reason that I can’t buy auto insurance just after I crash my car, or health coverage just after I’m diagnosed with cancer.
I mean, except you can do the latter. The whole "must cover pre-existing conditions" thing. Market still manages to function, and even without the individual mandate. How exactly? ¯\_(ツ)_/¯
So, to start, this is why single-payer, or national coverage is needed in the US. The risks must be spread out.
> Market still manages to function, and even without the individual mandate. How exactly?
The ACA tried to address this question with the individual mandate. It also has an enrollment period. You can't sign up on a whim.
Those two features were meant to prevent opportunistic purchases of health plans. Only buying the second you need it, rather than paying in consistently over many years.
It doesn't seem to be working well, because our healthcare market is hardly "functional" from the user's perspective.
I'd say that's because healthcare is something that fundamentally cannot be subject to market forces. Your life is literally priceless, and your health is worth more than you own. It is not a good or a service or a commodity, so it cannot be priced according to basic market theory.
In the US, our healthcare market isn't functioning. In other countries, they've solved for this by eliminating the market aspect, and treating healthcare the same as roads, fire, police, etc.
> Market still manages to function, and even without the individual mandate. How exactly?
The ACA tried to address this question with the individual mandate. It also has an enrollment period. You can't sign up on a whim.
Those two features were meant to prevent opportunistic purchases of health plans. Only buying the second you need it, rather than paying in consistently over many years.
It doesn't seem to be working well, because our healthcare market is hardly "functional" from the user's perspective.
I'd say that's because healthcare is something that fundamentally cannot be subject to market forces. Your life is literally priceless, and your health is worth more than you own. It is not a good or a service or a commodity, so it cannot be priced according to basic market theory.
In the US, our healthcare market isn't functioning. In other countries, they've solved for this by eliminating the market aspect, and treating healthcare the same as roads, fire, police, etc.
Practical reason is that the fixed-rate provider would not want to do business with you. You would only use their service when they lose money.
So they’d require exclusivity as a condition for service.
So they’d require exclusivity as a condition for service.
For #1, you simply mandate it as a requirement. Many things are mandated to generator owners by regulatory bodies that the generator owners would never opt for otherwise. This is no different. The regulatory body should make the decision about what is necessary to deal with low-probability events, not market participants.
>2)...Are there legal or practical reasons this can't happen?
A) That would essentially be energy futures trading.
B) No sane power company is going to take on new customers when they can barely keep up with demand already.
A) That would essentially be energy futures trading.
B) No sane power company is going to take on new customers when they can barely keep up with demand already.
griddy customer here.
I entered into the contract of my own free will. $1/KW was in my mind as the highest it could go, and for me that was acceptable. So, about $100 a day is what I thought my downside was.
Saved a lot over the last 3 years.
On Sunday night, griddy was taking $100 payments from my bank account repeatedly. Given the forecast, I jumped on the web and moved to a different provider (I must stay with them for a month, if I leave earlier there is a $150 penalty).
Total cost for electricity during this time, just under $700. My usual bill was $70 to $100.
this consumer understood the risks. i knew what i was getting into. and i jumped when it became more expensive than i was willing to pay.
those that say "changing providers is cheating", i understand your point. ny action was in my own self interest.
There are a couple of important things to note here that I haven’t seen get much discussion.
First, assuming that residential customers can understand the pricing dynamics that are going on is a really bad assumption. It is very complex because there is an interplay between their natural gas service and their electric service, both of which are buying gas from the market on the customer’s behalf. The agents for each company are contractually obligated to supply energy to their customers at any cost - and this is a real problem in this type of situation. In effect, the customer is bidding against themselves via the gas & electric companies. Even in some ideal world where the consumers have full real-time price transparency, it would be extremely difficult for the customer to understand the costs of their actions and the best balance between the two services.
Second, it should be noted that the astronomical gas and electric prices in those markets did not really accomplish anything. They brought on very marginal amounts of additional energy (beyond about 10x average prices there is almost no meaningful additional capacity that can come online because nobody in their right mind would invest in infrastructure that could only operate at those prices). Those prices also did not provide useful information that residential customers could evaluate and act on on the demand side (price sensitive industrial and large commercial customers would shut down at far lower prices than was seen).
Ultimately, what occurred was an emergency situation and disaster. Pricing and consumption controls should have been initiated when energy emergency alerts were declared in the gas and electric markets, as the market structure is not setup to operate effectively during these situations. It was a total failure. The only things that worked were the reliability plans that grid operators have in place to disconnect customers in order to prevent complete failure of the electric grid.
Ultimately, in an emergency/disaster situation there should be a different set of rules that determines who gets the energy and caps the cost.
Note that the winterization discussions going on elsewhere are also extremely important, but those problems are already being covered well.
First, assuming that residential customers can understand the pricing dynamics that are going on is a really bad assumption. It is very complex because there is an interplay between their natural gas service and their electric service, both of which are buying gas from the market on the customer’s behalf. The agents for each company are contractually obligated to supply energy to their customers at any cost - and this is a real problem in this type of situation. In effect, the customer is bidding against themselves via the gas & electric companies. Even in some ideal world where the consumers have full real-time price transparency, it would be extremely difficult for the customer to understand the costs of their actions and the best balance between the two services.
Second, it should be noted that the astronomical gas and electric prices in those markets did not really accomplish anything. They brought on very marginal amounts of additional energy (beyond about 10x average prices there is almost no meaningful additional capacity that can come online because nobody in their right mind would invest in infrastructure that could only operate at those prices). Those prices also did not provide useful information that residential customers could evaluate and act on on the demand side (price sensitive industrial and large commercial customers would shut down at far lower prices than was seen).
Ultimately, what occurred was an emergency situation and disaster. Pricing and consumption controls should have been initiated when energy emergency alerts were declared in the gas and electric markets, as the market structure is not setup to operate effectively during these situations. It was a total failure. The only things that worked were the reliability plans that grid operators have in place to disconnect customers in order to prevent complete failure of the electric grid.
Ultimately, in an emergency/disaster situation there should be a different set of rules that determines who gets the energy and caps the cost.
Note that the winterization discussions going on elsewhere are also extremely important, but those problems are already being covered well.
The big takeaway from all of this should be the critical cyclic dependency of natural gas power plants. That is, if your primary source of power is natural gas, then you must have reliable power to the natural gas wells to produce natural gas. If the power becomes unreliable, then natural gas pressures in the pipelines drop to unsuitable levels to run large generators. As the generators trip due to adverse safety conditions, then your power generation decreases even further, thereby making the natural gas pipeline pressure even worse. It's entirely possible to foresee a cycle wherein a grid powered mostly or entirely by natural gas could end up unable to maintain any power generation under the right circumstances.
This is a very strong and compelling argument for maintaining some core baseload generation capacity that is completely independent of existing power generation. Batteries could be one solution. Nuclear is another. Geothermal could be a good solution to this problem.
This is a very strong and compelling argument for maintaining some core baseload generation capacity that is completely independent of existing power generation. Batteries could be one solution. Nuclear is another. Geothermal could be a good solution to this problem.
Nuclear is not: it needs grid power to be able to run.
> Nuclear is not: it needs grid power to be able to run.
But the "grid power" needed to run the reactor's control systems, etc., can almost surely be generated by the reactor itself while it's online, right?
A naval nuclear reactor needs external power only to get started; when the ship is in port, this will typically be shore power from the grid, and either in port or at sea the external power could come from the onboard emergency diesel generators. When the reactor is started up, it will eventually "go critical," i.e., achieve self-sustaining fission. After that happens, one or more in-plant, steam-turbine electrical generators will be started and brought online to provide electrical power for the ship, including the reactor control systems, etc. [0] A similar arrangement seems likely to be used for civilian power plants. [1]
[0] e.g., https://fas.org/man/dod-101/sys/ship/eng/reactor.html
[1] e.g., https://www.elprocus.com/what-is-a-nuclear-power-plant-worki...
But the "grid power" needed to run the reactor's control systems, etc., can almost surely be generated by the reactor itself while it's online, right?
A naval nuclear reactor needs external power only to get started; when the ship is in port, this will typically be shore power from the grid, and either in port or at sea the external power could come from the onboard emergency diesel generators. When the reactor is started up, it will eventually "go critical," i.e., achieve self-sustaining fission. After that happens, one or more in-plant, steam-turbine electrical generators will be started and brought online to provide electrical power for the ship, including the reactor control systems, etc. [0] A similar arrangement seems likely to be used for civilian power plants. [1]
[0] e.g., https://fas.org/man/dod-101/sys/ship/eng/reactor.html
[1] e.g., https://www.elprocus.com/what-is-a-nuclear-power-plant-worki...
> But the "grid power" needed to run the reactor's control systems, etc., can almost surely be generated by the reactor itself while it's online, right?
In theory, yes. But in practice, most nuclear power plants are required by law to trip offline if their local grid goes down or even experiences a minor disturbance [0]. Nuclear power plants always have onsite diesel generators to run pumps, operate control rods, and shut down the reactor if needed.
Nuclear plants are notoriously finicky about offsite power quality because they take a long time to ramp up and down and the consequences of e.g. losing cooling are potentially disastrous.
[0] http://large.stanford.edu/courses/2016/ph241/yang2/docs/bick...
In theory, yes. But in practice, most nuclear power plants are required by law to trip offline if their local grid goes down or even experiences a minor disturbance [0]. Nuclear power plants always have onsite diesel generators to run pumps, operate control rods, and shut down the reactor if needed.
Nuclear plants are notoriously finicky about offsite power quality because they take a long time to ramp up and down and the consequences of e.g. losing cooling are potentially disastrous.
[0] http://large.stanford.edu/courses/2016/ph241/yang2/docs/bick...
For me this model looks insane, so you can save a few hundreds of bucks per year in electricity costs, but when extreme events happen (and they certainly will), you will wipeout decades of "savings".
You either need some insurance or hard price cap. People are bad at estimating risks...
More like scammers, who are taking no risks because they're just taking a percentage off the top, are bad at communicating risks.
Combining real-time data, market with speculators and a product that demand immediate, real-time delivery is a recipe for disaster.
When demand exceed supply, given the real-time nature of the product speculators can come in a take you to the cleaner if they had any chance to beat you to foretelling this would happen.
As I understand it, ERCOT puts a $9000 per MWh to put a limit on speculation, but then what happens is you have to take people off the grid.
The desire to "maximize efficiency" by surfing the demand curve with real-time data is not worth worth the expense of smart meters and risks. Dumb demand curves have another advantage: the utility is forced to over-estimate demand, creating a built-in safety margin.
When demand exceed supply, given the real-time nature of the product speculators can come in a take you to the cleaner if they had any chance to beat you to foretelling this would happen.
As I understand it, ERCOT puts a $9000 per MWh to put a limit on speculation, but then what happens is you have to take people off the grid.
The desire to "maximize efficiency" by surfing the demand curve with real-time data is not worth worth the expense of smart meters and risks. Dumb demand curves have another advantage: the utility is forced to over-estimate demand, creating a built-in safety margin.
I am not in Texas, so a couple of questions for those who may be affected by this story, because I've been wondering about this:
1. If you are on this plan, what is your visibility into current prices for electricity? e.g., are there any alerts that you could have signed up, even if you hadn't before?
2. Have you been bitten by unexpected high prices before, perhaps in the summer?
3. Prior to this event, would you say you saved money overall with Gridly?
1. If you are on this plan, what is your visibility into current prices for electricity? e.g., are there any alerts that you could have signed up, even if you hadn't before?
2. Have you been bitten by unexpected high prices before, perhaps in the summer?
3. Prior to this event, would you say you saved money overall with Gridly?
1. Time-of-use plans have an app or web portal into which a customer can log into. (Actually, most providers in Texas these days have a real-time portal customers can use simply because smart metering enables it.)
2. Yep, my parents were, and they will never use a time-of-use plan ever again.
3. No. I made a spreadsheet and, based on my math their being bit by this in mid-2019 would have not paid off prior to this event.
Circling back to 2 for a moment, the problem is not so much with the plans, it is with all of the unmet caveats that the author lists in the article.
For my parents, they were pitched this plan on a visit to the State Fair of Texas where the salesperson told them they could "save thousands of dollars" every year by not "lining the pockets of big energy." Sure, they know how Griddy operates now, but what about some new clever scheme another provider comes up with that winds up biting them? That's why they're on fixed-rate plans forever.
Not a single person told them the downsides of this plan, the virtually-unlimited (sorry, but a $9/kWh cap when wholesale electricity is usually $0.02-$0.04/kWh and retail is around $0.115/kWh, is not a cap) cost exposure, and the near-impossibility of taking effective action (it is unreasonable to tell customers to go outside and hit the main breaker in a winter storm).
Texas came up with a system where retail electric customers are willingly offered plans in which they need to be near-experts in the price of natural gas derivatives and spot-generation electrical wholesale rates...and are not told in advance about this requirement.
2. Yep, my parents were, and they will never use a time-of-use plan ever again.
3. No. I made a spreadsheet and, based on my math their being bit by this in mid-2019 would have not paid off prior to this event.
Circling back to 2 for a moment, the problem is not so much with the plans, it is with all of the unmet caveats that the author lists in the article.
For my parents, they were pitched this plan on a visit to the State Fair of Texas where the salesperson told them they could "save thousands of dollars" every year by not "lining the pockets of big energy." Sure, they know how Griddy operates now, but what about some new clever scheme another provider comes up with that winds up biting them? That's why they're on fixed-rate plans forever.
Not a single person told them the downsides of this plan, the virtually-unlimited (sorry, but a $9/kWh cap when wholesale electricity is usually $0.02-$0.04/kWh and retail is around $0.115/kWh, is not a cap) cost exposure, and the near-impossibility of taking effective action (it is unreasonable to tell customers to go outside and hit the main breaker in a winter storm).
Texas came up with a system where retail electric customers are willingly offered plans in which they need to be near-experts in the price of natural gas derivatives and spot-generation electrical wholesale rates...and are not told in advance about this requirement.
Yeah, that's kind of ridiculous. Like picking pennies up in front of a steamroller.
Granted, if the cost savings were enough, a homeowner could install a battery/genset backup with the savings and have that automatically switch over when prices got nuts, but that's not within the abilities or even mindset of most people.
Granted, if the cost savings were enough, a homeowner could install a battery/genset backup with the savings and have that automatically switch over when prices got nuts, but that's not within the abilities or even mindset of most people.
> Granted, if the cost savings were enough
They probably are enough over long periods, or retailers wouldn't be profitable.
However that assumes you hedge properly. If you treat your savings from "good times" as extra cash to spend you're going to get burned to the ground by the bad times.
It also means you have to be extremely reactive, now you need a setup to quickly cutoff electricity if wholesale prices skyrocket, and you need to be on the ball checking wholesale prices like a whale checks their gasha.
They probably are enough over long periods, or retailers wouldn't be profitable.
However that assumes you hedge properly. If you treat your savings from "good times" as extra cash to spend you're going to get burned to the ground by the bad times.
It also means you have to be extremely reactive, now you need a setup to quickly cutoff electricity if wholesale prices skyrocket, and you need to be on the ball checking wholesale prices like a whale checks their gasha.
> If you treat your savings from "good times" as extra cash to spend you're going to get burned to the ground by the bad times.
Exactly, though to give a lot of customers of these plans credit, they don't have the extra cash. Griddy's own marketing says that "96% of the time," the wholesale rate is well under the average retail per-kWh rate.
This is yet another one of those hidden costs of how being lower-income is very expensive, both in actual money, and in time. Vanishingly few people have the time to be as on the ball as they'd need to for plans like this to work. And you can automate it, but that costs money many of these customers don't have.
I have no problems with plans like this existing; my issue is we set people up to fail by danging the large-print number being a very small value, while not warning people of how catastrophically it can go--and has gone--very wrong.
Exactly, though to give a lot of customers of these plans credit, they don't have the extra cash. Griddy's own marketing says that "96% of the time," the wholesale rate is well under the average retail per-kWh rate.
This is yet another one of those hidden costs of how being lower-income is very expensive, both in actual money, and in time. Vanishingly few people have the time to be as on the ball as they'd need to for plans like this to work. And you can automate it, but that costs money many of these customers don't have.
I have no problems with plans like this existing; my issue is we set people up to fail by danging the large-print number being a very small value, while not warning people of how catastrophically it can go--and has gone--very wrong.
I would agree with that. Griddy specifically marketing towards poorer populations by touting savings is really objectionable at the best of times.
Datapoint: I'm someone on the MISO grid, with fixed-rate electric billed at $0.15 for the first 300 kWh, $.11 for the next 700 kWh, and $.10 for the rest. Last month I used ~2500 kWh for a total of ~$267.
MISO's marginal cost to deliver a megawatt hour to my area is around ~$16-19 over the past hour or so[1]; with those prices, I'd save ~200. That's nothing to sneeze at.
During the blackouts ERCOT's prices[2] were around $7500 to deliver that mWh; at that cost I'd lose $18,483 by paying market rate.
I don't think the average person is equipped to properly price this risk. I don't think I'd know how to properly hedge it, either.
[1]: https://www.misoenergy.org/markets-and-operations/real-time-...
[2]: http://mis.ercot.com/misapp/GetReports.do?reportTypeId=12328...
MISO's marginal cost to deliver a megawatt hour to my area is around ~$16-19 over the past hour or so[1]; with those prices, I'd save ~200. That's nothing to sneeze at.
During the blackouts ERCOT's prices[2] were around $7500 to deliver that mWh; at that cost I'd lose $18,483 by paying market rate.
I don't think the average person is equipped to properly price this risk. I don't think I'd know how to properly hedge it, either.
[1]: https://www.misoenergy.org/markets-and-operations/real-time-...
[2]: http://mis.ercot.com/misapp/GetReports.do?reportTypeId=12328...
> I don't think the average person is equipped to properly price this risk. I don't think I'd know how to properly hedge it, either.
I would agree with that.
As a nerd-snipe for hyper-optimisers and misers, griddy would be a good if risky (to clients) business. Publicly advertised to the general population it's at best unethical and at worst unconscionable and insane.
I would agree with that.
As a nerd-snipe for hyper-optimisers and misers, griddy would be a good if risky (to clients) business. Publicly advertised to the general population it's at best unethical and at worst unconscionable and insane.
Former griddy customer, unaffected by recent events as I'm not in Texas anymore.
> what is your visibility into current prices for electricity?
Very good price visibility. Phone notifications are great. Not only will they notify when it's high and you need to reduce consumption, but also when it's low -- meaning you can consume cheaply, and often they'll send out forecast notifications a day in advance, saying that prices are projected to be high (or projected to be low) the following day. It allows you to plan consumption easily.
> Have you been bitten by unexpected high prices before, perhaps in the summer? Prior to this event, would you say you saved money overall with Griddy?
I definitely saved money with Griddy, and if I moved back to Texas I wouldn't hesitate to sign back up with Griddy again.
> what is your visibility into current prices for electricity?
Very good price visibility. Phone notifications are great. Not only will they notify when it's high and you need to reduce consumption, but also when it's low -- meaning you can consume cheaply, and often they'll send out forecast notifications a day in advance, saying that prices are projected to be high (or projected to be low) the following day. It allows you to plan consumption easily.
> Have you been bitten by unexpected high prices before, perhaps in the summer? Prior to this event, would you say you saved money overall with Griddy?
I definitely saved money with Griddy, and if I moved back to Texas I wouldn't hesitate to sign back up with Griddy again.
A coworker of mine used Griddy before this event for about a year, but left it 6-9 months ago.
To answer your question 2/3, when I tried to congratulate him on getting out of it before the storm, he was still pretty down on it. He's an analytical type but his conclusion was that he lost $600 by being on it and wished he'd left it sooner.
When I looked around in Texas for power, my findings were that A) pricing averaged about 11cents/kWh, but if you looked to find the best rates, you could get about 6 cents/kWh. Which, post-storm, seems not that different from the wholesale rates with no tail risk.
To answer your question 2/3, when I tried to congratulate him on getting out of it before the storm, he was still pretty down on it. He's an analytical type but his conclusion was that he lost $600 by being on it and wished he'd left it sooner.
When I looked around in Texas for power, my findings were that A) pricing averaged about 11cents/kWh, but if you looked to find the best rates, you could get about 6 cents/kWh. Which, post-storm, seems not that different from the wholesale rates with no tail risk.
I’m not in Texas and not on Gridly but am on a time of use plan.
I am subscribed to text messages when prices go up and they provide a website with the time of use pricing.
I am subscribed to text messages when prices go up and they provide a website with the time of use pricing.
What do you do if you're away from home one day, and you get a text message that electricity prices have increased 100x? Can you cut power to your house?
Step 1 would likely be to use your smartphone app to set your Internet enabled thermostat down to its lowest setting, probably 55F. High enough that the pipes don't freeze, but low enough to save energy. Probably not cooking anything either unless you have a gas grill. Definitely not plugging in the electric car. If this happens during the middle of summer then you turn the A/C off and hope the house can coast for the rest of the day without melting anything. At least in the summer you can grill outside.
But honestly, it boggles my mind that anybody would opt for these sorts of power plans with effectively unlimited downside and fairly marginal upside. Who wants this kind of stress in their life? Doesn't Texas already have pretty cheap power thanks to all of the wind and deregulation? Isn't that why they are in this mess in the first plate?
But honestly, it boggles my mind that anybody would opt for these sorts of power plans with effectively unlimited downside and fairly marginal upside. Who wants this kind of stress in their life? Doesn't Texas already have pretty cheap power thanks to all of the wind and deregulation? Isn't that why they are in this mess in the first plate?
I’ll note that I don’t have electric heat or central air. My electric is utilization is pretty low.
When I signed up I looked at the data for pricing and there wasn’t a time period in the data where I didn’t save. Now obviously that’s sort of the point of tail risk.
I’ve been looking for our regulators caps but haven’t found them yet.
When I signed up I looked at the data for pricing and there wasn’t a time period in the data where I didn’t save. Now obviously that’s sort of the point of tail risk.
I’ve been looking for our regulators caps but haven’t found them yet.
I suppose I’d have to call a neighbor. But the vast majority of my energy costs happen when I’m home in the form of ac & appliance use.
The text is triggered if retail rates go above 14c per kWh for more than 30 minutes. That’s about 7x our normal peak rate.
Last week saw the highest prices I’ve seen going up to 40c at one point.
I’ll also note that I’m on budget billing which normalizes monthly fluctuations. No idea what the agreement is in the case of one of these tail events but I suspect it involves lots of publicity and regulators.
The text is triggered if retail rates go above 14c per kWh for more than 30 minutes. That’s about 7x our normal peak rate.
Last week saw the highest prices I’ve seen going up to 40c at one point.
I’ll also note that I’m on budget billing which normalizes monthly fluctuations. No idea what the agreement is in the case of one of these tail events but I suspect it involves lots of publicity and regulators.
Some states allow fixed contract prices. Not sure if TX does or not.
Edit: Not sure why I'm downvoted. I'm just saying some places allow consumers to buy a fixed rate plan. The parent comment was asking about how the process has varied in the past and I was pointing out that some people might be protected via a fixed rate contract.
Edit: Not sure why I'm downvoted. I'm just saying some places allow consumers to buy a fixed rate plan. The parent comment was asking about how the process has varied in the past and I was pointing out that some people might be protected via a fixed rate contract.
The overwhelming majority of retail electric plans in Texas are fixed or nearly-fixed rate. By "nearly," I mean the rate changes by bands based on time (e.g. power you use after 10pm is $0.05/kWh where power you use between 12pm and 4pm is $0.21/kWh).
Some plans are so-called variable rate where the per-kWh rate you pay changes per month based on the price of natural gas.
But an increasing majority are these time-of-use, rates-can-move plans, of which Griddy's is the logical extreme.
Some plans are so-called variable rate where the per-kWh rate you pay changes per month based on the price of natural gas.
But an increasing majority are these time-of-use, rates-can-move plans, of which Griddy's is the logical extreme.
To 1.: didn't one provider email their client base to warn them of this?
Yes that was Griddy that emailed their client base.
Whether or not they did it and gave their customers sufficient time to do the switch is another matter (i.e. close of business day timing, normal delays involved in new account enrollment, and so on).
EDIT: To be clear I'm not throwing Griddy under the bus for sending email late or without more time. I think they were doing what they could for their customers upon seeing the wholesale prices skyrocket. But the reality is that it takes time to switch services even under normal conditions, without thousands of others trying to do the same.
Whether or not they did it and gave their customers sufficient time to do the switch is another matter (i.e. close of business day timing, normal delays involved in new account enrollment, and so on).
EDIT: To be clear I'm not throwing Griddy under the bus for sending email late or without more time. I think they were doing what they could for their customers upon seeing the wholesale prices skyrocket. But the reality is that it takes time to switch services even under normal conditions, without thousands of others trying to do the same.
I heard on the news here in Texas that reporters indicated it takes a few days to switch, so while Griddy sent the email, their customers were not able to really act on the advice amidst the crisis.
That said, I think it was bad advice from Griddy for a second reason.
I think they should have told their customers to just go to their house fuse box and shut off their power to avoid the inevitable huge bill.
I'm not sure why others haven't mentioned this but the customers did ultimately have that recourse. This is the unfortunate but logical thing to do when your 6c/kWh bill grows to $9/kWh. And at least you can intermittently turn it back on when needed to heat your house for a short bit, etc which is still better than being totally out for 3 days as many people here were.
That said, I think it was bad advice from Griddy for a second reason.
I think they should have told their customers to just go to their house fuse box and shut off their power to avoid the inevitable huge bill.
I'm not sure why others haven't mentioned this but the customers did ultimately have that recourse. This is the unfortunate but logical thing to do when your 6c/kWh bill grows to $9/kWh. And at least you can intermittently turn it back on when needed to heat your house for a short bit, etc which is still better than being totally out for 3 days as many people here were.
I think maybe they assumed people knew that. I would have assumed people knew that; have people never blown a fuse?
Also, several people froze to death. It's a massive liability to tell people to shut their power off when it's below freezing; you could face civil liabilities. And you can't disconnect someone during freezing temperatures. I don't know whether a provider telling you to disconnect yourself would go over super well.
Also, several people froze to death. It's a massive liability to tell people to shut their power off when it's below freezing; you could face civil liabilities. And you can't disconnect someone during freezing temperatures. I don't know whether a provider telling you to disconnect yourself would go over super well.
good point regarding liabilities
Griddy should have bought calls and passed along the premium cost and protection. I don’t know energy market options pricing, so maybe this is not viable.
> the amount of money they are due as a result of this market design ($50 billion!!!) is truly staggering and disproportionate to the value created
This is a screaming incentive for winterisation and energy storage. The premium is fine. It was mostly paid for by intermediaries.
> the amount of money they are due as a result of this market design ($50 billion!!!) is truly staggering and disproportionate to the value created
This is a screaming incentive for winterisation and energy storage. The premium is fine. It was mostly paid for by intermediaries.
Agreed on second point. The reward needs to be given today to incentivize future behavior. If market participants don't believe they will be rewarded they won't change their behavior.
In the UK energy supplier Octopus has an "agile" tariff which is similar to griddy (we are increasingly getting negative prices here).
However, it has a 35p/kWh price cap (2-3x average rates).
I don't understand why Griddy didn't do something similar. Even a $1/kWh price cap would have really helped them.
However, it has a 35p/kWh price cap (2-3x average rates).
I don't understand why Griddy didn't do something similar. Even a $1/kWh price cap would have really helped them.
In the UK, consumer and contract law mean that it is not possible, afaik, to have 'open-ended' contracts. I.e. a party to a contract must always be able to determine how much entering into the contract is going to cost them and/or they must be be able to leave with a capped and known worst-case. That's why there are always caps or capped increases.
Similar with my provider in Finland, capped at 0.085€/kWh (approx. 2x avg): https://www.sahkolaitos.fi/en/products/tuntisahko/
Wow, those are some great prices! How come Finnish electricity is so cheap?
Smart meters are an essential part of the technocratic control structure. It is imperative that technocrats (those best able to manage the populations) have all the information about individuals and household electric and water usage, so that they are able to finely control and manage these precious resources.
It can't be long until we start to see value judgements about usage - 'your electricity usage for a heating or some such, is too high or beyond your allocation, so that has been charged to you at the regulatory tariff rate. Do you want us to send you a tutorial about how to better manage your energy usage? Would you like to move to a premium energy rate?'
It can't be long until we start to see value judgements about usage - 'your electricity usage for a heating or some such, is too high or beyond your allocation, so that has been charged to you at the regulatory tariff rate. Do you want us to send you a tutorial about how to better manage your energy usage? Would you like to move to a premium energy rate?'
That's already exactly what tiered pricing is.
Tiered pricing doesn't make a judgement on what you are using. It doesn't say "you're using your oven or A/C too much".
What I would like to know, is are smart meter capable of refusing a demand for electricity for a device. So, say the company wants to use minimal electricity, will it allow energy for fridges and freezers, but not for A/C and TVs?
What I would like to know, is are smart meter capable of refusing a demand for electricity for a device. So, say the company wants to use minimal electricity, will it allow energy for fridges and freezers, but not for A/C and TVs?
> If you pair a retail energy provider like Griddy with an advanced suite of home efficiency technology, like programmable or price-responsive thermostats, you can have a building that automatically tailors its energy usage to the market environment
One major piece of this puzzle that is, IMO, missing, is the lack of any reasonable, standardized way for a hypothetical smart home to communicate with the grid. With a smart meter, a properly ZigBee certified (why? probably some silly reason involving “security”) end user device can get current usage data from a smart meter. (And this data is blatantly wrong in any nontrivial circumstance.)
But and end-user device has no way to negotiate pricing or load reduction with the grid short of going through some intermediary on the Internet. If I want to program my house to reduce consumption when prices are high, I can’t.
An an example, a car should be able to tell the grid that it wants to buy x kWh at a maximum power of y kW between now and 5 AM, and the grid should be able to tell the car when to buy it. I don’t mean Tesla negotiating this on behalf of itself or its customers - I mean the car or the house talking to the meter or the utility. No unnecessary or unavoidable intermediaries please.
It doesn’t help that PG&E does not accurately know the topology of its own grid. Oops.
One major piece of this puzzle that is, IMO, missing, is the lack of any reasonable, standardized way for a hypothetical smart home to communicate with the grid. With a smart meter, a properly ZigBee certified (why? probably some silly reason involving “security”) end user device can get current usage data from a smart meter. (And this data is blatantly wrong in any nontrivial circumstance.)
But and end-user device has no way to negotiate pricing or load reduction with the grid short of going through some intermediary on the Internet. If I want to program my house to reduce consumption when prices are high, I can’t.
An an example, a car should be able to tell the grid that it wants to buy x kWh at a maximum power of y kW between now and 5 AM, and the grid should be able to tell the car when to buy it. I don’t mean Tesla negotiating this on behalf of itself or its customers - I mean the car or the house talking to the meter or the utility. No unnecessary or unavoidable intermediaries please.
It doesn’t help that PG&E does not accurately know the topology of its own grid. Oops.
Can anyone tell me: Why is there no automatic stop-limit the customers can opt into?
Once the $/KWh passes some threshold, power either gets turned off, or they get some short grace period to figure out whether they want to continue or stop.
Price runs like these are things consumers will experience probably a handful of times in their lifetimes. If they run wild, they can financially ruin someone. In the grand scheme of things, these are black-swan events. There should be safety guards in place.
Once the $/KWh passes some threshold, power either gets turned off, or they get some short grace period to figure out whether they want to continue or stop.
Price runs like these are things consumers will experience probably a handful of times in their lifetimes. If they run wild, they can financially ruin someone. In the grand scheme of things, these are black-swan events. There should be safety guards in place.
Creating complicated pricing automation for home consumers for rare situations when they're exposed to brutal pricing in a life-or-death crisis is not the solution. If anything, you'll be causing more chaos, as people grapple with rules they don't remember setting up.
The safety guards tend to be laws saying, "you can't sell those". Consumer utilities should be boring and predictable, and need to be legally controlled to stay that way.
The safety guards tend to be laws saying, "you can't sell those". Consumer utilities should be boring and predictable, and need to be legally controlled to stay that way.
Because nobody thought they would need it until it was too late.
Note that everyone at risk of this even was told beforehand to switch providers now, so there was an "easy out" if you were paying attention (In theory easy, in practice, while it isn't never easy). Or you could have turned your own power off - When you get a time of use contract the point is you want to adjust your demand to fit the price, so anyone who got a large bill failed to do their end of the bargain.
Note that everyone at risk of this even was told beforehand to switch providers now, so there was an "easy out" if you were paying attention (In theory easy, in practice, while it isn't never easy). Or you could have turned your own power off - When you get a time of use contract the point is you want to adjust your demand to fit the price, so anyone who got a large bill failed to do their end of the bargain.
If you're feeding power back into the grid are you getting paid at these rates?
For wholesale players: yes. If you're a retailer and you buy an electricity future and then only use half of it across your customer base, you sell the remainder at real time prices. And for generator, selling real time power is the entire business model.
For consumers: no, not generally. Some markets have schemes to sell leftover solar power at real time prices, but I believe these are being phased out. Both grids and markets are by and large not set up yet for full two-way markets between consumers and producers.
For consumers: no, not generally. Some markets have schemes to sell leftover solar power at real time prices, but I believe these are being phased out. Both grids and markets are by and large not set up yet for full two-way markets between consumers and producers.
I believe Octopus Energy in the UK lets people both buy power and sell it back to the grid at time-dependent pricing, though I'm not sure how it works exactly and I'm pretty sure technically they're two separate contracts.
This is a good point. Markets sting when they skyrocket to high prices. But the sting is supposed to be matched bit for bit by the benefits-- incentivizing people to cut back when they should (something most people would only begrudgingly acknowledge as a benefit when it's happening to them, if acknowledge it at all), and incentivizing innovative behaviors to exploit it to make a quick buck.
I haven't heard much about that last part; like you said, it would be great if the market works such that on the margin a player can exploit that price to make a quick buck (by, e.g. rigging some kind of battery up before a storm that's coming and making bank off the arbitrage when the storm hits by emptying the battery back in to the grid). Now maybe the transaction costs or economies of scale or whatever make that infeasible-- if so too bad-- but it's worth remembering this is half the benefit of a market system.
I haven't heard much about that last part; like you said, it would be great if the market works such that on the margin a player can exploit that price to make a quick buck (by, e.g. rigging some kind of battery up before a storm that's coming and making bank off the arbitrage when the storm hits by emptying the battery back in to the grid). Now maybe the transaction costs or economies of scale or whatever make that infeasible-- if so too bad-- but it's worth remembering this is half the benefit of a market system.
I have solar on my house and in IL we get paid via "net metering": https://www.citizensutilityboard.org/illinois-net-metering/ . The idea is you size a system for your annual energy consumption, and then you don't pay for electricity for the year.
If you sold the power back for real-time pricing you'd need a much larger system than your annual consumption. Net metering basically lets you sell the power back at a retail price, not a wholesale price.
If you sold the power back for real-time pricing you'd need a much larger system than your annual consumption. Net metering basically lets you sell the power back at a retail price, not a wholesale price.
From what I understand there is a lot of variation in providers. As I understand SDGE's Net Metering policy(https://www.sdge.com/residential/solar/getting-started-with-...), you sell back power at retail prices only for the current month's billing cycle. Excess energy created within a billing cycle is "true-upped" at wholesale prices which can be applied to other month's billing cycles.
I would also be curious in how the Texas case works. Especially if the grid is down, would it be able to accept the energy you are producing?
I would also be curious in how the Texas case works. Especially if the grid is down, would it be able to accept the energy you are producing?
The rules in Illinois are you net meter for the year. If you make more than you use in a year that is free power for the utility. If you want a different deal you need a contract with the utility (In general you need to be in the millions of dollars/year range to be of interest). In Texas it is more complex as each provider can give you a different deal for residential systems.
When the grid is down you can't sell power back. The whole system shuts down. Though if you have a whole house battery backup you can use that instead of the grid (if it is built for it - solar gets weird if you aren't using exactly as much power as you make so you need something to use or make up the difference).
When the grid is down you can't sell power back. The whole system shuts down. Though if you have a whole house battery backup you can use that instead of the grid (if it is built for it - solar gets weird if you aren't using exactly as much power as you make so you need something to use or make up the difference).
I was reading about Griddy, and my understanding is that you can do exactly this with them [0].
[0] https://www.reddit.com/r/griddy/comments/lnrxn8/who_is_comin...
[0] https://www.reddit.com/r/griddy/comments/lnrxn8/who_is_comin...
Does this mean people with grid tie solar panels are going to get fat checks?
The original vision of the Smart Grid (by competent engineers at EPRI and elsewhere) was to ensure better reliability, resilience, and efficiency of the grid under a mix of new generation, transmission, and distribution technologies. Unfortunately--as often happens--managers took the buzzword and changed its meaning to "A Good Way for Us to Make More Money by Throwing Smart Meters on Every House." Any thought about increased reliability and resilience went out the window.
The Smart Grid can still deliver on its original promise of a dependable, bidirectional electricity generation and delivery system. But in order for it to do so we're going to have to get rid of all the decision makers who only care about squeezing short-term profit out of the idea. It's going to require thoughtful, long-term investment.
The Smart Grid can still deliver on its original promise of a dependable, bidirectional electricity generation and delivery system. But in order for it to do so we're going to have to get rid of all the decision makers who only care about squeezing short-term profit out of the idea. It's going to require thoughtful, long-term investment.
Most unexpected high costs like this are covered by some insurance product. Why is this an exception? For example: consumer bets that they will have an insane bill at some point, policy writer bets they won’t and a premium for this bet is established. Premiums can be adjusted by the $/KW threshold at which point the policy takes effect, and inevitably some deductible.
Looks like those who had power, could keep the heat going. Those that did not, had pipes burst from sub-zero temperatures. This flooded a lot of houses, even with water shut off.
But those who had power are getting dinged with a ridiculous bill. Cascading failures, with no escape!
Hope everyone can recover!
But those who had power are getting dinged with a ridiculous bill. Cascading failures, with no escape!
Hope everyone can recover!
This article reeks of the author (and author's customers who read this blog) trying to justify away their internal guilt. Author is trying to paint a picture that "there is so much complexity this isn't easy to fix and no clear party to blame".
Nonsense. There should be a price ceiling to consumers during natural disasters like this and regulations powerful enough to mitigate them more effectively.
People are not able to make rational financial decisions when reducing power consumption means your 11 year old child could freeze to death. I think the death count from exposure (freezing to death) in TX during that period is now 4, and I expect that will climb as we get a more full picture.
Meanwhile, many office buildings and rich neighborhoods had relatively uninterrupted power. What resulted in this class-stratification of power availability?
An energy exec was recorded on a call saying that the storm was "very good for them" in reference to the high profits made during the storm. Should these companies be allowed to rake in cash on one side of the system while passing thousands of dollars bills to their consumers on the other side to profit off human misery and misfortune?
On the other side, other energy companies skimped on winterization, leading to their gas lines freezing. Does anyone think "not being able to price gouge during the 4 most profitable days this year" is sufficient market-punishment to change behavior of these actors?
ERCOT and the energy players built a system that killed several people and made hundreds of thousands miserable. Author says "ERCOT is not evil", but I disagree: intent is irrelevant if greed motivated lack or risk management results in this scale of death, misery and destruction. Everyone working to make energy a "free market" in Texas has a share of the blood on their hands from building a system that led to this outcome. There should be a thorough investigation and several people deserve to end up in prison as a result. But, being that this occurred in "free market" loving Texas, I won't be holding my breath.
Perfect example of why basic human needs should not be run as a for-profit "free market".
Nonsense. There should be a price ceiling to consumers during natural disasters like this and regulations powerful enough to mitigate them more effectively.
People are not able to make rational financial decisions when reducing power consumption means your 11 year old child could freeze to death. I think the death count from exposure (freezing to death) in TX during that period is now 4, and I expect that will climb as we get a more full picture.
Meanwhile, many office buildings and rich neighborhoods had relatively uninterrupted power. What resulted in this class-stratification of power availability?
An energy exec was recorded on a call saying that the storm was "very good for them" in reference to the high profits made during the storm. Should these companies be allowed to rake in cash on one side of the system while passing thousands of dollars bills to their consumers on the other side to profit off human misery and misfortune?
On the other side, other energy companies skimped on winterization, leading to their gas lines freezing. Does anyone think "not being able to price gouge during the 4 most profitable days this year" is sufficient market-punishment to change behavior of these actors?
ERCOT and the energy players built a system that killed several people and made hundreds of thousands miserable. Author says "ERCOT is not evil", but I disagree: intent is irrelevant if greed motivated lack or risk management results in this scale of death, misery and destruction. Everyone working to make energy a "free market" in Texas has a share of the blood on their hands from building a system that led to this outcome. There should be a thorough investigation and several people deserve to end up in prison as a result. But, being that this occurred in "free market" loving Texas, I won't be holding my breath.
Perfect example of why basic human needs should not be run as a for-profit "free market".
From the article:
>> TL;DR: time of use rates are, on net, a Good Thing; markets are great, except when they fail; low risk isn’t the same as no risk; ...
NO, this is not an example of "Free Markets" failing.
This is Free Markets working exactly as designed.
Demand massively increased, due to the cold weather Supply dramatically shrank due to the same cold weather The market is dynamically priced OF COURSE prices went hyperbolic
Why wasn't this tail risk/opportunity anticipated by the various suppliers, so they pre-built their systems to withstand such cold weather, to be able to take advantage of the windfall?
Because literally no one could afford to do so. The general market is a free-for-all low-cost race to the bottom. Invest more and you won't be competitive. Moreover, if enough people follow your strategy, you'll never see the windfall. No one can make the decision to invest in any quarter, so it never gets done.
Yes, intelligent regulation is a pain in the arse, but free markets really do only one thing well - dynamically allocate resources and adjust pricing. Important, for sure.
But a complex society also needs disaster planning and resource allocation, and to prevent Tragedies Of The Commons, both of which Free Markets(TM) will not only fail to solve, but will aggressively screw up.
NO, this is not an example of "Free Markets" failing.
This is Free Markets working exactly as designed.
Demand massively increased, due to the cold weather Supply dramatically shrank due to the same cold weather The market is dynamically priced OF COURSE prices went hyperbolic
Why wasn't this tail risk/opportunity anticipated by the various suppliers, so they pre-built their systems to withstand such cold weather, to be able to take advantage of the windfall?
Because literally no one could afford to do so. The general market is a free-for-all low-cost race to the bottom. Invest more and you won't be competitive. Moreover, if enough people follow your strategy, you'll never see the windfall. No one can make the decision to invest in any quarter, so it never gets done.
Yes, intelligent regulation is a pain in the arse, but free markets really do only one thing well - dynamically allocate resources and adjust pricing. Important, for sure.
But a complex society also needs disaster planning and resource allocation, and to prevent Tragedies Of The Commons, both of which Free Markets(TM) will not only fail to solve, but will aggressively screw up.
When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot.
They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied through their teeth.
This was in MI, not TX. Maybe Griddy is different. I suspect they farm out signup to the same type of contractors.
I think the idea of consumers responding to energy prices is nice, but has some pretty glaring issues.
How many consumers are aware of hourly energy prices? How many on deregulated plans even understand that they pay more when usage is high?
Can they react fast enough to changing prices? Leaving a light on during vacation should cost you some money, but it shouldn't wipe out your 401k.
This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley.
At the end of the day, it still comes down to losing power or losing 5 figures of cash that you probably don't have. Most people aren't in a position to be "homo economicus" when it comes to heating their home in a blizzard. It doesn't solve their problem to give them a choice between losing power, or going bankrupt. Many will choose to lose power, and die running their car in the garage just the same as if they had a blackout.
If price sensitivity causes someone to set the AC on 80 the hottest day of the year, that's great. But expecting consumers to handle tail risk is a silly idea.
I suspect you could get 99% of the effect by only passing a small price window to consumers, and managing the tail risk collectively.