Y’all, it’s f’n cold here.

I greatly appreciate your commitment to intellectual honesty, Matt.

Yeah but in theatre they get the lines correct.

It really depends. If you told GE or Siemens or whomever - hey guys, we need a system that does provides so much power, so much backup, etc. and it is a competitive bid, and you need to supply the lowest priced average power - and no subsidies! - you'd certainly end up with a portion of wind power on your grid. The problem is no one has ever done that. There's always subsidies and market distortions, so it is really hard to say what is the best way to do things.

I'm sure there are others here on RGO that are from Texas too, but you're the only other one that I know for sure is from Texas, so I get that this all personally affects you and I more than others here. I also don't disagree that sometimes mother nature wins.

However, though I maybe don't necessarily agree with EVERYTHING in that link I posted, I still do stand by the general premise of what it was saying. I think deregulation of electricity in the state was a bad move. It's one of those areas where I simply think the government should be in charge. Well, not a government like the one we have here in Texas, but you get my point.

Where the capitalism before all else ethos, as is preached as gospel here in this state, falls apart is that it privatizes corporate profit and publicly subsidizes (to use Ward's word) corporate loss.

As an example, Denton Municipal Electric (City of Denton) just paid $207 million in one day for electricity. That's more than they paid for electricity the entirety of the previous year. Two electricity providers (Brazos and I forget the other one) have already filed for bankruptcy. These providers are either simply going to fail or pass this extra cost onto the consumer. In either case, the consumer loses and will pay more either directly through increased rates or indirectly through tax money needed by the state to fix this whole mess.

This all reminds me of 2008 when the taxpayer was yet again asked to foot the bill for corporations operating on the bleeding edge (many would argue beyond the bleeding edge) of financial responsibility. One way or another, your average joe electrical consumer is going to foot the bill for this fiasco and the fossil fuel companies are going to line their pockets.

Bottom line, if hardcore capitalists are going to make the argument that a deregulated electrical grid is better for the consumer, they have to be honest and account for the "hidden" costs incurred by the consumer when these over-capacity events happen.

When it all comes out in the wash, deregulation doesn't smell so nice anymore. I'm not saying that there maybe isn't a happy medium somewhere. I'm just simply saying that I don't buy this notion that there should be as little regulation as possible, especially for things like utilities that EVERYONE needs.

www.kwtx.com/app/2021/03/04/ercot-overcharged-power-companies-16-billion-for-electricity-during-freeze-firm-says/

2.1 Billion owed by Brazos Electric Power Cooperative. They are declaring bankruptcy as a result of this fiasco. Wrap your brain around that.

Well, I think we can talk about electric markets without getting political. I don't think this really is a red-blue issue.

Deregulation isn't good or bad in and of itself. Markets deliver what they're structured to deliver, sure as death and taxes. If the market delivers something other than what you expect, that doesn't mean the market failed... that means it wasn't structured correctly. As I mentioned, ERCOT carries an excess capacity (over and above what a true energy-only market would dictate) designed to have one load limit every three years for a few hours. You pay increasingly more for each annual reduced hour of overcapacity, there is diminishing returns. Its like insurance, to have a zero dollar deductible with no max out of pocket you end up paying a huge premium.

ERCOT has a deregulated retail electric market. Texas does not have a deregulated electric grid. The generation side is still regulated, and so is delivery. Only retail provision is unregulated.

Pointing at our deregulated retail option and saying "this is why we don't have enough capacity" is like saying we need state run grocery stores in a famine. It doesn't make sense. The power wasn't there, we physically would have needed plants that don't exist in the state. At the equipment failure rates we we saw, we would have needed something like 12 additional nuclear power plants to cover our generation gap. That's a cool $176 billion just to build, plus the actually cost to run. We average 50-60 GW peak daily, so that means we'd be in a situation where nearly half of our generation runs only once a year. Right now there is already a significant portion of our generation that only runs a handful of days per year, and may go a year or more without running at all. That has a cost, and as long as companies budget and report financial outcomes on an annual basis, that is a very difficult kind of cost to bear.

No market in the country carries 25 GW of excess capacity. Most capacity markets in the US are 2-5 GW. ERCOT being structured like MISO would have resulted in the exact same outcome, as far as market structure goes.

It would be engineering-trivial to prevent this from ever happening again. But it would be unreasonably expensive. No one wants to pay 15-20% more for their electric bill, but that is what it would take (at minimum).

As for the local co-ops. It really isn't an indictment of a market structure's problem when a small co-op does what Brazos did. They depend on gas being cheap to cover their swing load when it appears. They could have bought gas calls on a daily basis to cover their gas exposure. They did not. They probably have no traders on their board. They were carrying risk that they did not manage.

Again, this is sort of like an airline buying fuel at spot prices then being bankrupt when they can't get fuel. There's a reason we have markets where people can lock in supplies in multi-year contracts at pre-negotiated rates. What Brazos did was no different than the people who foolishly were using Griddy paying wholesale tied to an auto-draft bank account. Sometimes ignorance costs. Why should you or I pay for that?

Members of Brazos co-op in hindsight should probably have better people running their co-op, don't you think? This wasn't unavoidable.

Now, I do think there is an argument to be made that at some point the price feedback mechanism for power breaks down. There is no price in the world that could have attracted additional generation in the timeframe needed. You just can't build a powerplant that fast. So in a squeeze event like this, price essentially goes to infinity because there's no way to bring it to equilibrium with demand. But again, we can mitigate this - but at what cost? Who in Texas would have gladly swallowed a 10-20-??% increase in their power bill if this was brought up in January?

Thanks for mentioning the regulation/deregulation.  I've seen so many argue that "regulation would have saved us from this", although the regulated areas are what mainly fell apart.

Also, those collectivists that argue that regulation would have saved texas from this, are the same who argue that free-markets don't work..  Yet Brazos will go under due to mismanagement and leave behind companies who are better managed in a prime example of the free market working.  It's just never as painless as some expect/hope.

Sorry man I don’t see how you got nothing should be regulated from what I posted. What happened in Texas is that our regulation failed to prevent the event. PUCT didn’t exercise oversight to ensure the grid was resilient. TDUs failed to effectively shed load when needed. And, yes, our power market which is deregulated but has a regulatory required structural capacity didn’t have sufficient capacity. You don’t fix that by saying electric providers need to be regulated.

We had a similar event in 1989, ten years before either wind or regulation.

Personally I see the good in a grid monopoly. Our markets and corporate financial structures are based on annual cycles, so the longer the payout for something is the less likely it is to be financed on a traditional model. Billion or trillion dollar projects like an electric grid aren’t really feasible, and it’s beyond wasteful to have competition- can you imagine two competing and overlapping grids? It’s not possible.

But the devil is in the details. I don’t see this as a regulation bad market good or markets bad regulation good argument and more than it is a wind bad wind good argument.

Those kind of false binaries make for great political wedge issues but they’re painfully inadequate to actually explain or fix anything in the real world.

Always a good option!! Or better yet we can talk about something more interesting like music or gear. First round is on me.

That's not how we roll down here. Members of the Texas state legislature apparently don't own mirrors (for moments of self reflection).

If history is any guide, we'll forget in a few months, it'll happen again and no one will remember this except for crusty people like me who will say "yeah, remember the report on the 1989 2011 2014 2021 event that came out in 1990 2012 2015 2022 that no one read?"

Haha