A Simple Response to Texas' Blackout Blues: Bend Over

Categories: Buzz

blackout blues.jpg
Peter Ryan
A picture is worth 6,700 words.
A picture is worth 6,700 words. If you look around on our home page, you'll find "Blackout Blues," a story by Brantley Hargrove about North Texas' biggest electricity company, the EPA, money and lies. It's a good read. The gist of the story is simple: We're screwed.

How screwed? Well, the Texas Public Utilities Commission and the Electric Reliability Council of Texas, which oversee the power grid in most of the state, right about now are looking at rule changes that they hope will alleviate the state's growing electricity problem: We need more. More costs money. And the companies with the power to make more are crying poor.

The PUC's agenda today says the commissioners will discuss "Proceeding Relating to Resource and Reserve Adequacy and Shortage Pricing." That proceeding just might include talk of ERCOT's recommendation regarding "Responsive Reserve & Regulation Up offer floor," which ERCOT commissioners approved back in December.

That, believe it or not, is some of the plainer English you'll find on the PUC's and ERCOT's websites. What does it mean? God only knows for sure, but according to the Texas Coalition of Affordable Power, a group of cities that keeps an eye on the electricity industry, the guys who own the power plants want the state to raise the limit on wholesale electricity prices and establish minimum prices for electricity they deliver when we need it the most. "... Generators are offering us 'a heads I win, tails you lose' vision of deregulation," the coalition's R.A. Dyer writes in a recent newsletter. Generators want more profits, which they say they need if we want more power.

Dyer points out that power generators are generally opposed to regulators poking their noses into pricing when prices are high. But now that electricity prices have dropped, they would very much like a little bit of regulation.

This is, of course, a gross simplification of a complex business. Power company managers doubtless have good reason to believe that the way ERCOT and the PUC manage things inflicts costs on the companies that they should have a right to recoup.

Could be, could be. Not sure. Frankly, we've read Brantley's story plus a ton of other stuff and spoken to a few people about these rules. What have we learned? Free markets aren't really free; they belong to the guys with lots of money. (Knew that.) Also, when consumers depend on a system of arcane experts, back-door rent-seeking and clever business folk speaking in tongues, then those consumers better educate themselves.

And buy some lube.

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The Credible Hulk
The Credible Hulk

From the article: "Dyer points out that power generators are generally opposed to regulators poking their noses into pricing when prices are high. But now that electricity prices have dropped, they would very much like a little bit of regulation."

You go on to describe the above passage as a gross simplification. I disagree, Patrick, your assessment is spot-on accurate and concise. Plain language like that is anathema to industry "experts" from the regulatory agencies and their power-co. executivetive overlords.

Patrick Williams
Patrick Williams

I should have been more careful in my pronoun placement. By "this," I meant everything I had written. Jake Dyer actually knows his stuff and has patiently tried to help me understand some of what's going on -- with limited success that's my fault, not his.

For instance, I can't grasp how an industry with price caps and floors and regulators constantly fiddling with demand and supply is considered "deregulated." (I'm also a pinko and would probably favor just nationalizing the whole industry and appointing some commissar to run it, provided we could shoot him when the lights go out. I say that from a deep, deep well of ignorance.)

The language, complexity and politics around the power business reminds me of things I've read about the financial industry. I don't understand it either, but I've read enough to know the old poker rule applies to me and other consumers in both industries: If you're sitting at the table and can't figure out who the pigeon is, it's you. Luckily, I'm too poor to invest. Unluckily, I do love air conditioning.

Patrick

Larry
Larry

ERCOT... Reliability....  Bullocks.  just industry stooges with no foresight.

More like  Electricity Really Confuses Our Technicians

jfpo
jfpo

Funny how our betters who control the "free market" hate regulation until they find something that benefits them. I'm sure these fine white men can fix this themselves if we just cut their taxes and offer their fine companies more corporate welfare.

Paul
Paul

Just another example to prove that consumers were not the ones pushing for "deregulation".

Jamwood
Jamwood

Deregulation has your electric bill as low as it has been in 10 years right now....to prove how bright you are as a consumer, do you go ahead and send in extra money just because you prefer the socialist view of services and total regulation?  I didn't think so...you liberal hypocrites all whine about what is NOT because no matter what IS you don't like it....your phone bill is lower now due to deregulation - do you pay extra there as well just to prove how smart you are?

mynameisURL
mynameisURL

 What does your rant have to do with the point being made? That being that consumers were not the ones driving the push for deregulation?

Do you always respond to strawmen created in your own mind rather than the point being discussed?

Paul
Paul

 Please go look at the graph of deregulated retail power prices in Texas since 2000 at the TCAP website.

However if we go back 11 years, you know, one more than the length of the deregulation of the power market, we find out that adjusted for inflation, power was cheaper then.

Please explain how the power I buy from an electric cooperative and a municipal power agency (both are within the ERCOT boundary) is cheaper than the cheapest rate I can get in the Dallas -- Ft. Worth area.

I would love to have a true deregulated electric power industry.  We do not have one.

Can you also explain the little untold story about the real reason why the generators are having problems?  You know, the one where they bought forward hedges on nat gas at $3.50/MMBTU and the spot price is now $2.45/MMBTU.  The real problem with this so called unprofitability is due to the fact that they are now having to sell a product for less than the cost of the raw material to make it.

As far as calling me a liberal ... them is fighting words boy ...

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