While I appreciate the free trade view, could you point to the part where they say setting the price high helped in a considerable way?

ERCOT has authority to load-shed, regardless of price. From the article:

> For the entirety of 2020, Texans paid $9.8 billion to keep the juice flowing. On February 16 alone, they spent roughly $10.3 billion. Costs for the month of February totaled more than $50 billion.

The price reaction time is generally too slow, and judging by the bills incurred, ineffective as a control mechanism - hence the massive outrage on incurred costs. Do the costs seem appropriate?

While I haven't read the whole article, blackouts mentioned were the effect of load shedding and the principal action that prevented grid failure. The price was fixed only after the critical period, by an unknown criteria and questionable need. Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days?

> Yes, you don't want price to drop too low after a load-shed, but do you need it maxed and do you need it for days?

Look, the simple answer to your question is no, of course. But, given that we understand the reason why controllers acted the way they did, these criticisms are taking advantage of hindsight, and hindsight is 20/20. The controllers needed to not just shed load, but to keep demand down until the storm passed. They weren't thinking about price/demand elasticity and how much Grandma's electric bill was likely to be. And furthermore, it's not correct to expect every public operator to second-guess every move they make, because it slows down the public sector, increases public sector bloat, increases cover-your-ass behavior, etc.

If you're going to apply hindsight to arrive at a moral judgement, then it's better to apply that hindsight not at the people who were time-stressed to prevent complete grid collapse, but to the gas industry that refused cold-weatherization for short-term profit.

I'm not unsympathetic to the people who got screwed with five figure electric bills. If a state employee screwed up on the pricing, the state should pay the bills. But I wouldn't throw the controller under the bus for it.

>> do you need it maxed and do you need it for days?

> the simple answer to your question is no

The answer is no and no. IMO, if they did only one of those things, it wouldn't be a big deal. When you set a fixed price at 100-200x normal price and hold it like that for days, you'd better have a very, very good reason and think through the consequences.

What you're saying does make sense, but I wouldn't give them a free pass, unless they can explain their reasoning. I don't know - maybe they did. If you're doing things with such implications, you'd better be able to explain your choices and reasoning. Not just to cover you ass, but to really consider the implications and possible alternatives. And we're not talking about a few critical minutes or hours, they kept the price for days.

But regular consumers weren't aware of the increased astronomical prices. Joe plumber wasn't aware that running his lights would cost so much money. The prices weren't dissuading or decreasing demand.

The free market only works when everyone has full information and a realistic alternative. When the alternative is "freeze to death" and the information is "you'll get a bill next month between $500 and $500,000", it doesn't work, and something needs to step in and protect people.

I feel like this thread is brigaded to death. The fact of the failure is clear. But the one constant in all of these arguments is to introduce uncertainty and attempt to shift blame.

I think it is an odd choice to blame the consumer in this scenario since customers just one state over did just fine throughout this ordeal.

Joe Plumber didn't have to pay any more... and the fact people continue to not understand this makes /every/ thread about the Texas incident last February pointless.

I don't know who's telling the truth: https://news.yahoo.com/5-152-power-bill-texas-192316981.html

Edit: Perhaps in the end consumers didn't have to pay. I haven't found anything saying they didn't.

The very article you link is talking about exactly one small provider that has an entire business focused on consumers signing up to pay wholesale rates live (which are generally much lower than the contract rates) called Griddy. Griddy customers are the ONLY individuals in the entire state who had their power bill go up last February during the storm. According to Griddy they had around 29000 customers in Texas last year and there are roughly 29 Million people in Texas, so that means less than 1/10th of 1% (0.001) of the Texas population had to pay an increased power bill last February.

There are different systems in different municipalities. Houston and Dallas both have systems where multiple providers can offer service which are distinct from the providers responsible for the actual utility infrastructure (power lines to your house). Austin and San Antonio both have municipally owned utilities (CPS Energy in San Antonio, Austin Energy in Austin). For the majority of households they either have a contracted rate based on their agreement when they signed up for service (just like a cell phone contract), or they have a legally set rate which requires a ballot issue.

This is WELL established. There's no dispute here, and if you can't "tell who's telling the truth", it just means you haven't bothered doing any research before deciding. The national media used the snowstorm in February as a political tool to kick Texas while it was down because they see it as a Republican bastion (even though the majority of the population lives in reliably blue cities in national elections and Texas is purple now), and used something truthful for less than 1/10th of 1% of the population to act like it was that way for everyone to make the issue seem larger than it was.

Also from your article "Despite the astronomical prices, Scott-Amos is considered one of the lucky ones, as millions of people across Texas are still without power while temperatures remain perilously low." Griddy customers pay the live wholesale price, they were also immune from forced load-shedding meaning they didn't go without power during freezing weather like most other Texans did, so true to their contract they paid the live wholesale price and in return received guaranteed service. Sounds like they got exactly what they signed up for at the risk they decided to take which 99.999% of Texans opted not to take for the safer (but generally more expensive) financial bet.

Thank you and thank you for the information/numbers.

In regards to "The national media used the snowstorm in February as a political tool to kick Texas while it was down because they see it as a Republican bastion" I agree. However, it didn't help that this problem was spun around by the opposite side and used to blame solar and wind energy sources as the reason for the problem.

From what I gather(ed) the root problem was the lack of winterization to [all] energy infrastructure. But perhaps I'm misinformed on this too. Do you have additional insight?

Thanks.

> From what I gather(ed) the root problem was the lack of winterization to [all] energy infrastructure.

This is mostly the case. The primary issue wasn't that generation infrastructure wasn't weatherized, it's that wind turbines were not properly weatherized and failed, and the NG peaker infrastructure /was/ weatherized and took over, but was having issues meeting demands because the NG well infrastructure was not weatherized, meaning the peaker plants couldn't draw enough gas to meet demands.

Another major confounding factor during the snowstorm was that grid didn't have enough high voltage pathways to support the amount of power that had to be shifted between generation locations and the generation locations were too spread out regionally (Texas is a large and mostly empty state) to maintain grid stability, so there was forced load shedding to prevent phase shifting out of spec or grid islanding.

Also, while we're at it, it's bullshit when people say that "Republicans deregulated power in Texas, which is why it has an independent grid." Texas has ALWAYS had an independent grid. When the national grid started forming in response to New Deal legislation in 1935 states could avoid being affected by federal regulations by not transmitting power across state lines, so Texas chose to not connect its existing grid to the national grid as it was forming. Originally Texas had two independent grids, but they joined during that time, choosing to remain disconnected from the national grid but sharing with each other. ERCOT was actually formed to begin internal regulations of power in Texas in response to a huge national power disaster in 1965 that didn't affect Texas, but made the state realize it needed /some/ regulation.

I don't make any judgements as to whether this situation is better or worse, and it was certainly politically motivated, but it's not new and it's not recent, so most of the things written about it are simply untrue.

I agree with your objective points. But one thing your narrative leaves out is that there were power shortages creating long outages causing substantial damage, regardless of what end users ended up paying. The media latched onto the spot price and Griddy customers because they love red herring sensationalism, but regardless of the media's disinformative narrative there still was a massive market failure here. It was just felt mainly through infrastructure collapse rather than price gouging.

> But one thing your narrative leaves out is that there were power shortages creating long outages causing substantial damage,

Sure, this is true. That was never in dispute though, so I didn't address it. I don't think I have a "narrative". I'm just tired of every single thread about what happened last February in Texas turning into an opportunity for everybody to get their political kicks in on the basis of lies and twists. That behavior does exactly nothing to solve any of the problems identified, and it stokes feelings of undeserved self-righteousness.

The power shortages could have been avoided had wind generation been properly weatherized and had we had properly weatherized gas wells to supply the peaker plants. Neither of those things were true, and therefore this situation occurred. So far, we seem to have improved generation weatherization since, but the wells are still not weatherized, so it's possible this situation (or something similar) could occur again. It remains to be seen.

I just meant 'narrative' as a tying together of facts and corresponding synthesis - an inherent thing rather than a bad thing.

I do think the market failure here is a bit political, in that it's market fundamentalism to rely solely on spot prices, falling back to wishful thinking that short periods of extremely high prices will somehow incentivize new investment into the market. That decision to not have a capacity market is definitely a political one.

Agreed on the physical things that need to happen to prevent this from reoccurring, but the question is how to get those things implemented. A strong regulated market would just declare that they need to be done, and ignore the protests of how burdensome they are. Whereas a deregulated market dynamic really needs a forward capacity market or some other incentive for plants to do the preparation for staying online. And this applies to both the electricity and natural gas markets.

Unfortunately reality is more complex than we would like it to be. You're correct that a proper capacity market would likely have mitigated much of this issue, on the flip side capacity markets in other regions/grids are a major driver behind continued coal power generation as coal is the lowest cost type of generation for capacity markets. The lack of a capacity market in Texas is not motivated by environmental concerns, but nonetheless if such a capacity market were created in Texas it would likely be detrimental to the environment given the current overall incentive structure.

The bigger issue is that ERCOT /has/ made a regulation saying generators need to weatherize, which they have done so and been inspected and verified. But ERCOT can't control the natural gas producers, and they have thus far mostly refused to weatherize their wellheads, and therefore we may once again find that we can't drive peaker generation high enough to meet demand due to inadequate natural gas supply pressure. The oil & gas industry and electrical utilities are regulated independently in Texas, although they are often considered to be the same as "the energy sector", and so there is definitely more that can/should be done here.

I guess we'll see how it pans out. With better weatherized renewables, it's likely we won't see this situation re-occur. There was plenty of wind blowing during the crisis, so had the wind turbines been properly weatherized we wouldn't have needed as much peaker capacity anyway.

It feels like "capacity" is a straightforward measure of what was missing here, but maybe there is a better definition of "capacity" that would favor coal plants less? Off the top of my head, perhaps some statistical modeling that would let a distributed combination of wind/solar count as "capacity", with well-defined pricey penalties if they renege on their commitment?

It's only a form of exponential backoff if the end-users are aware of the prices and can adjust behavior according to the prices. Otherwise it's just another way to stiff the consumer.

The article said that their automated systems priced power too low since it thought there was an oversupply, but it doesn't say that any providers came online at $9000/MWh that wouldn't have also come online at $2000/MWh. There's an artificial pollution cap that loosens supply at $1500/Mwh.