I grew up in Puerto Rico, the power company there is run by the government, and serves a counter example. There are many articles about the age of the infrastructure and how it collapsed after Maria and the Earthquake. Of course part of the problem is poor management by the government and uncontrolled acquisition of debt.

There must be some middle ground that works.

I grew up in Norway. As a grid customer I could shop around for the best power company that fit my situation (e.g. solar? Apartment?). Norway is covered in snow 8-9 months of the year. I think what you're describing is a problem with money not reaching infrastructure investment locally for whatever reason: not public owned infrastructure issues in general.

Its a complicated subject, the power company is a mandated monopoly, its fully owned by the government.

In the 50s or so the infrastructure was created, including power plants etc, it was a profitable venture for the government, so they borrowed against the profits of the energy company, then failed upgrade/update any infrastructure. Add to to that the retirement pensions of all the people which they did not fund and it creates a big problem.

So now as it stands the energy company is in debt ( technically the government owes the energy company money but the government is insolvent ) and they are trying to sell it to a private entity.

Also if you are wondering why anyone would want to get a private pension plan instead of a 401k, well you werent allowed to put your money in a 401k ( same thing happened to the teachers by the way ). It actually very sadto hear the stories of people that worked theur whole life and have nothing to show for it due to the greed of politicians.

> in Puerto Rico, the power company there is run by the government

> in Norway (...) I could shop around for the best power company

The grid is a common good.

It's the same for the grid in Sweden (Svenska kraftnät), also how optic fiber is deployed here in Stockholm, the costly infrastructure was developed and is maintained by the government, private ISPs can lease out capacity but aren't the ones maintaining it. That avoided the costly deployment of multiple similar infrastructure per provider like you see in the US, where corporations cornered some markets and made the barrier of entry so costly that they became de facto monopolies.

I understand that. But the context of this thread was

> there shouldn't be a profit motive attached to basic services like electricity

Ah, now I get that. Adding my two cents on this discussion: if there is a profit motive for any modern basic human need (food, shelter, energy, communications, healthcare) it should be very well regulated to protect society. It may sound paternalistic when seen with a neo-liberal eye to it but I have developed a firm belief that neo-liberalism has utterly failed as a societal experiment to move us forward.

Statnett, a state owned entity operated by the energy ministry, runs the Norwegian grid.

I understand that. But the context of this thread was

> there shouldn't be a profit motive attached to basic services like electricity

I replied to (a comment) and tried to contrast how a state owned power grid can still have profit models attached and function both technically and for it's intended customers.

Interestingly, ERCOT is a non-profit.

(Like most hospitals in the US, by the way, coming back to the original "There shouldn't be a profit motive attached to basic services like electricity, policing (private prisons), or medicine" comment.)

My understanding is that they're registered as a charitable organization, not a non-profit. These terms are often used interchangeably, but from a tax and earnings perspective they mean different things. This is often further confused with not-for-profit organizations, which is yet another thing.

> My understanding is that they're registered as a charitable organization, not a non-profit.

That's impossible in the US; “charitable organizations”—501(c)(3)—are a subset of nonprofits—501(c).

501(c)(4)

Right, not the same as 501(c)(3), was my point exactly.

501(c)s, including 501(c)(4)s, are nonprofits, so “not a nonprofit” was wrong.

501(c)(3)s are charitable organizations, so “as a charitable organization” was also wrong. But 501(c)(3)s are a subset of 501(c) and thus are also nonprofits, so your implication that they could be a registered charitable organization but not a nonprofit was also wrong.

As a 501(c)(4) they are a nonprofit and not a charitable org; if they were a 501(c)(3) they would be both.

Who says 501(c)(4) are not non-profits?

The 501(c)(3) are the charitable ones, by the way.

No. My point was that 501(c)(3) and 501(c)(4) are not the same thing. The important point to note in this case is: "501(c)(4) organizations may engage in unlimited lobbying in furtherance of their social welfare purposes."

"The more generous limit of non-exempt activity permissible to a 501(c)(4) explains why a 501(c)(4) organization may engage in substantial amounts of political campaign intervention activities even though the regulations make clear that such activities do not constitute the promotion of social welfare."

It's less pedantic and more: you can call a fork a spoon all you want, until you have to eat soup with it.

Ok, so when I said “ERCOT is a non-profit” and you replied “they're registered as a charitable organization, not a non-profit” you really didn’t mean that it was not a non-profit and your point was that it’s a 501(c)(4) non-profit which is not the same thing as a 501(c)(3) non-profit. And a spoon is not the same thing as a fork. We agree on both counts.

Edit: or maybe you were referring to hospitals? In that case you may be right and I was using the term loosely when I said “most”. There are different kinds of hospitals. My later comments were about ERCOT, not hospitals.

This is usually the correct position. Regulated competition and controlled monopolies try to provide the best of both worlds. Private companies will always push for deregulation or find ways to exercise a monopolistic advantage because they are incentivized to do so. Companies should be allowed to optimize within the regulated structure set forth by government. Aside, this is why government corruption cannot be tolerated and we must have strict laws limiting lawmakers' actions when reentering the private sector and oversight when they are in the public arena. We cannot have lawmakers eroding regulations in the name of increased profit when those regulations guard the public from poor outcomes.

I don’t think the “more laws!” approach will cut it. Many of the most corrupt countries in the world have extremely harsh anticorruption laws (inevitably these laws are applied to political enemies and not the corrupt rulers).

Assuming people are corrupt and greedy and then working backwards from that point imho is the best approach, and that often times means giving people less control over our lives.

Less regulation has generally led to more public harm. Toxic waste in rivers, siphoning of pensions and retirement plans, ponzi schemes, and on and on and on. There is always a balance to strike and then a constant rebalancing. We must guard against regulatory capture and many other ways the system can go wrong. This means we should favor the election of informed lawmakers that understand complex systems and then oversee them. This is a very technocratic position, but also a balanced position.

An approach some countries use is to operate it like a company, but have it fully government-owned.

If, say, every county it serves owns a share of the company, you set up a structure in which it isn't supposed to generate a profit: shareholders can't run it into the ground for monetary reasons. On the other hand, being independent from the government itself makes it less vulnerable to corruption and harmful interference.

Isn't the middle ground what we have in the US, regulated utilities?

You're saying the US is the middle ground between Texas and Puerto Rico - both parts of the US? Maybe you need to be more specific about where you are referring to.

It's kind of weird to see HN twists itself into knots while putting forth the question of "How did this happen, how can we prevent this". While turning away from the countless regulated states in the country that get cold weather and don't have their systems shutdown because they have some sort of regulation.

The middle ground is what Europe does.

The failures of what the US calls "regulation" is shown by California (where decades of under-investing in both modernization and upkeep has led to countless deadly fires) and the Texas clusterf..k.

In the almost 30 years I've lived in Germany and a bit of Croatia, the only time I can remember I lost power without actively causing it myself by careless drilling was the Nov 2006 europe-wide blackout.

I think there's a place for privately operated power generation. It doesn't have to be one or the other. There should be some avenue for the profit motive to produce effeciency gains. There needs to be effective regulation, though. And perhaps the amount of regulation needs to be proportional to the fraction of power generation that is privately operated.

Yes. Most of the US has privately operated with close regional oversight usually called a public utility commission for gas, electric, water, landline, and sort of for cable. It approves rate changes, assessments for big projects etc.

The system works very well overall, avoiding both extremes of full government and full private. My rates are reasonable and I've very rarely had outages of anything over decades.

Edit. Cable is the exception. They are a PUC approved monopoly or duopoly with intensely abusive customer experience, in most places.

Power generation != power distribution.

You can (and should honestly, if you're liberal) have privately owned power generation, but the infrastructure and network? Its a bad idea. Private road, private rail, private lines... The same way, you can have water extraction and cleaning privately owned (and some say you should), but its dangerous to let private sector run the water infrastructure.

And also, if any power generation company is caught lobbying against public infrastructure funding or nuclear power plant funding, kill them. force sell or something. You can't have private owners with skin in the game lobbying public spending.

The issue isn't public vs private, it's the combination of a profit motive + inelastic consumer demand + lack of alternatives. It would make sense to run electricity as a public enterprise, to run it as a deeply regulated private one, or run some kind of mix - public ownership of distribution, private ownership of generation.

For the price I paid for power in Silicon Valley (32c kWh) versus what Texas pays, I could have taken the extra money and purchased a spare generator and a large fuel tank, and then enjoyed a fraction of my current bill while still being prepared for a blackout.

Or took the different and invested it in the cost of solar panels and a battery. We’re taking about almost $100 a month difference.

>There shouldn't be a profit motive attached to basic services like [...]

what about food, shelter, and clothing? Those are all privatized and arguably more important than electricity or medicine.

It’s also a lot easier to shop around for those goods and services.

Excellent point, there should be government-provided options (not the only options, that's clearly infeasible) or subsidies for those as well, for exactly the reasons you state.

You don’t have to speculate on what life is like in conditions you’re describing. There’s tons of first hand accounts of life in East Berlin behind the iron curtain, where the government “provided” food, sheltered, and clothing.

If it's not competitive with the current "capitalist" offerings in those areas, people won't choose them unless necessary. The only reason we have hunger and homelessness in a nation as wealthy as the USA is through choice, not lack of resources.

There's a difference between privatization and extortion..

Also the `whataboutism` isn't productive. There's a clear need for regulation.

The customers shouldn't have to foot the bill for the companies lack of investment in their own infrastructure even after 11 years ago it was advised they had to winterize..

Also customers don't have the choice to choose an 'on-the-grid' supplier.. So ?

In the most altruistic sense, I would love to believe you. Things like the VA, the FAA, the USPS all point me to Milton Friedman's 4th quadrant of spending money. Quality does not equal efficiency or price.

Maybe the US has been intentionally hampering its privatisable services to make the case for privatisation?

I don't understand the problem with the FAA but the VA and USPS have been deliberately sabotaged in the past to "prove" the political end you state in your post.

The FAA is often at odds with the NTSB about how to keep aviation safe. The streamed hearing of the inquiry into the crash that killed Kobe Bryant is a rare example of that entering the public arena.

On the other hand, commercial aviation has become unprecedently safe, so it is not like the FAA is making a mess of things in general. Nevertheless, the 737 Max debacle has revealed an unhealthy level of regulatory capture.

Who do you think is more efficient in terms of utilizing resources, Amazon delivery or USPS, a private hospital vs a public one /VA? There is no reason what so ever to strive to cut waste, as bureaucrats know they'll be getting paid either way. So in all cases it's always "we need more money" at the taxpayers expense.

Not sure where this notion that government will deliver services in a more efficient ways come from. As the poster above said, there needs to be middle ground.

> Not sure where this notion that government will deliver services in a more efficient ways come from.

All the countries where governments deliver healthcare and it is significantly more efficient than the US system?

Canada is entirely private beyond the govt providing the funding with the exception of a few public hospitals (like the US many are privately owned non-profits, academic centers tend to be public).

I agree with some hard regulatory angle on the power grid, especially considering the very unique technological constraint of maintaining the required frequency.

The thing I am concerned about is masking market forces from consumers. Potential "band-aid" solutions for the current approach might include adding a capacity market, or requiring that all consumers operate on a variable rate plan in order to more fairly mediate demand vs supply. Customers with fixed rate plans in Texas had no incentive to not run things like electric clothes dryers or resistive pool heaters while others were literally freezing to death.

If you think about fundamentals of consumer behavior and markets, a fixed rate electric plan is like buying an insurance policy or options contract on some underlying security. If you have a lot of derivatives in play, bad things almost always happen regardless of the underlying asset types.

I'm not sure that variable-rate plans would actually have cut demand all that much.

I mean, I agree variable rates could stop people running clothes dryers, close down industrial users and so on. But the remaining demand would be extremely price-inelastic; How much would you pay to stop your pipes bursting? $3000? $10,000? More?

So long as the amount of power being generated is less than the amount of power needed to prevent anyone's pipes freezing someone's pipes are going to freeze, and no amount of shuffling around who gets the power is going to change that fact.

I agree with inelastic demand. There is certainly a bare minimum level beyond which we still have a crisis.

That said, I think the higher order effects of a market regulated to require more responsive rates could lower this threshold.

For instance, if every homeowner in texas might get stuck with an expensive winter heating bill because of new regulations around rates, we would consider requiring all new construction use gas furnaces where possible.

As it currently stands, I was just talking to a friend who got taken to the cleaners because his brand new construction uses resistive/heat pump for heating, despite the trivial & cheap availability of natural gas.

Eh, seems like the opposite to me.

If rates are predictable enough that a gas furnace is sure to pay for itself over the next 10 years, people will easily identify it as a good investment.

On the other hand, if the rates are variable, switching to gas is a gamble. Might save me loads of money, might not save a dime.

CA very tightly regulates PG&E the “private” company charged with running the electric and gas utilities in Northern CA.

You can search for the minutes of the public utility commission’s decisions on budgets. They micromanage down to costs of replacing fences around facilities.

The result is a massive cluster fuck that has killed dozens in the state.

That sounds ok until you hears about state companies and how the run. I was born after the communism fell in the eastern block and we didn't have blackouts every now and then, we had electricity every now and then. Blackouts were the rule.

I'm pro capitalism, I think companies work better when there's a profit to be made and I also believe the state should hold a share in what is called "natural monopoly" to keep things on track if it's necessary.

I generally agree but I can’t in good faith trust anything the US government does. Maybe local and state governments should run free healthcare as many seem to function much better than the federal government, but there are also state governments that are corrupt as well.

Until we fix the government corruption I can’t get on the free healthcare for all train. I already pay nearly 50% of my income in taxes with little to no short or mid term benefit. Jacking that up even more for basic health coverage doesn’t feel worth it.

If you’re wondering what I mean by corruption, just look at the latest Covid bill that sends billions to other countries and sneaks in random bullshit about internet streaming...into a pandemic relief bill. This isn’t a your side vs my side issue. It’s all bad. They’re all corrupt.

Kill companies caught corrupting politicians. A gas to electricity owner corrupting an official to disapprove a nuclear plant project? Force sell the company. A water company caught paying a city concil to reduce spending on water infrastructure/quality control? Kill the company. It is easier than running through corrupt politicians.

> I already pay nearly 50% of my income in taxes

...I am curious as to the math behind that. The highest federal income tax bracket in the US is 37%. Only income over $523,601 (as of 2021) is taxed at that rate.

Payroll tax, state and local income tax, property tax, sales tax...

Not sure about "over 50%" but "nearly 50%" could be "over 40%".

Federal and State income tax alone bring it to 46.9%. Add in property tax and it’s over 50%.

Also it’s not technically income, but there’s also cap gains tax that I pay almost every year.

All in all, Americans pay an insanely high tax for what we get. Our tax dollars go to corrupt politicians that use the money on foreign aid and starting wars, defense contractors and military. It’s disgusting.

If there were no profit motive for medicine, we wouldn't have therapeutics.

Anyone who invents a cure for cancer deserves to be paid handsomely imo.

there should some sort of public/private partnership... when governments monopolize industries and there aren't market forces at play at all, it tends to result in a sub par good/service.

Yes, "but", capitalism! How dare the State/Gov get in the way of private corporations? Why would the State/Govoffer something for free (or reasonably priced?).

What makes it more "fun" (nothing funny about the ordeal and the deaths in Texas)(btw I've been in Texas many many times - wonderful place, great people!) is that Texans are very conservative on one hand, and very pro-super-aggressive-capitalism on the other hand. Which makes no sense.

Seth Meyers said something on his show a couple nights ago: if you tell the antilopes that they are free to wander around in the zoo, it is only fair to tell them that the lions will ALSO be free to wander around in the same zoo.

Seeing this from Europe, I find it brutally ironic when people lose "free" to a corporation (weather reports, software to do your taxes, etc.) You (citizens of the USA) can do 10 things wrong to get yourselves to this predicament, and you take these 10 steps with acrobatic accuracy.

Capitalism works really well when their are penalties for failure.

Sell a terrible car and people buy a different product, but when you have local monopolies like rural hospitals you always run into issues.

With Texas electricity markets you make more money if everyone is generating 1/2 power in an emergency when the market hits it’s legal maximum. That set’s up very poor incentives. It all comes down to this: ERCOT can be more susceptible to wholesale price spikes because it does not have a capacity market, which pays power plants to be on standby during peak demand and weather emergencies, for example. ERCOT’s model means consumers are not paying for generation that may never be called into action. https://www.reuters.com/article/us-electricity-texas-prices-...

PS: It’s an often reported lie that the price was set by regulators, they set a limit well before the storm and the market I created the price to 9$/kWh and then was capped by that limit. If sufficient generation was online the wholesale price would have remained anything below that 9$.

> With electricity markets you make more money if everyone is generating 1/2 power in an emergency.

The per-megawatt hour prices might be higher, but is there evidence that overall revenue is higher? I understand that supply is down as well, so overall revenues might be worse or equal to normal levels. Furthermore, people in yesterday's griddy thread mentioned that currently the price is fixed at $9/MGWh by state regulators, which isn't exactly a free market.

Real-time wholesale market prices on the power grid operated by the Electric Reliability Council of Texas (ERCOT) were more than $9,000 per megawatt hour late Monday morning, compared with pre-storm prices of less than $50 per megawatt hour, according to ERCOT. https://www.reuters.com/article/us-electricity-texas-prices-...

They where producing less lower but not 50 / 9000 aka 0.56% as much power. That’s how a few people where getting 10k bills for a week spike. Also, prices where capped by regulators, they would have spiked well past 9k/MWh without that regulation. In the long term customers pick up the bill while power generator who generated any power end up making bank.

> prices where capped by regulators

Not true.

Early in the crisis so much generation capacity went offline that there was no way that that it could meet all of the price-insensitive demand (most consumers pay a fixed price, regardless of wholesale prices). If you attempt to run the grid when demand exceeds supply it will damage generators, making the problem worse. To avoid that, regulators shut off power to people who still had a working connection to the grid and would have been happy to consume power at their contracted rates.

As generation came back online, prices dropped quite low because demand was artificially constrained. The regulators then overrode the market and set the price to the maximum allowed by the system to encourage all generators to come online, which would then allow them to start turning people's power back on.

Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented. Those blackouts where excessive and thus reduced the wholesale price below it’s maximum.

As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts. Regulators said, you can only have rolling blackouts while rates are near the maximum because otherwise you’re simply going to keep cutting people’s power off to save yourself money.

Granted, outside of context it seems like really odd behavior. But again this was retroactively filling in periods where prices dropped artificially rather than proactively increasing the prices. It’s no different than the SEC stepping in when someone manipulates a financial market.

PS: That said some of this was simply technical as blackouts aren’t capable of the kind of fine grained second by second control needed to maintain a stable electric grid.

> Not quite, prices capped first. Then when that was not enough rolling blackouts where implemented

Again, no. The cap was in place before the floor, but was never binding: they did blackouts before the price hit the maximum, not after.

> As rolling blackouts where implemented by people paying wholesale rates they obviously have an incentive for excessive blackouts

The decision to do blackouts was made by ERCOT, not by transmission operators or power retailers. (Retailers are the only ones who have an incentive to do blackouts, though transmitters generally also have a retail operation.)

What’s the price on an expiring naked short when their isn’t enough of the stock to meet your demand? All your money.

As utilizes are required to sell at contracted prices to the general public and must buy from insufficient supply that’s the situation. Actually breaking equipment isn’t needed to demonstrate this. If you’re doing rolling blackouts from insufficient supply then your at price infinity or whatever price limit is setup to protect you.

I am using utilities rather than TDU’s as while they are required to provide access to others, enough do both to make the distinction meaningless in this instance.

PS: ERCOT making that decision is only relevant if it could have been avoided. So, if you can find someone saying their was sufficient supply to cover demand then I will withdraw my argument.

> while power generator who generated any power end up making bank

I.e. generators, who are well prepared for the adverse conditions, finally got paid for their investment?

That’s assuming independent operators. Companies who had generators online and online where better off because of the supply shortage than if everything had been online.

Note that it's $9000/mWh, or $9/kWh. That's a regulated maximum wholesale price, not a fixed price.

>That's a regulated maximum wholesale price, not a fixed price.

Seems to be a price floor and/or set price.

> Texas’ Public Utility Commission, appointed by Abbott, raised the wholesale market price of electricity to $9 per kilo-watt hour — a 7,400% increase over the average 12 cents per kilo-watt hour — in response to rising demand. The hope was power generators would be enticed to produce more electricity.

https://news.ycombinator.com/item?id=26244895

They didn’t set the price or make any decisions around the storm, they set a price limit.

“Last week, the price shot up to the legal maximum, set by the Public Utility Commission of Texas (PUCT), of $9 per kilowatt hour.” https://krdo.com/news/national-world/2021/02/24/how-texass-d...

It’s the market that chose that price, with sufficient generation is would have stayed at normal rates.

>They didn’t set the price or make any decisions around the storm, they set a price limit.

This seems to be contradicted by another source:

>The PUC met Feb. 15 to address the pricing issue and decided to order ERCOT to set prices administratively at the $9,000/MWh systemwide offer cap during the emergency.

>"At various times today (Feb. 15), energy prices across the system have been as low as approximately $1,200[/MWh]," the order states. "The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest."

https://www.spglobal.com/platts/en/market-insights/latest-ne...

The key thing to note is that in the second paragraph, the utility commission thought the free floating price of $1200 was too low, and bumped it up to $9000 to "reflect scarcity of the supply".

From your article: “Real-time locational marginal prices for the Electric Reliability Council of Texas remained at or near $9,000/MWh cap on Feb.” If they set the rate at 9k it would have stayed at 9k not near 9k.

What your referencing is points in the day when the price fell because rolling blackouts where intentionally created. “If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest.” That’s saying if rolling blackouts are implemented then the price should be at the limit. Grid operators can’t simply turn off more people’s power to reduce the demand arbitrarily below the limit. So, prices where adjusted retroactively.

As to why that’s relevant, Grid operators are stuck with the bill. If they can maintain normal prices by simply cutting off everyone’s power to avoid losing billions that’s what their going to do. But, the are not allowed to arbitrarily cut people’s power because they dislike the current wholesale rates.

Again, choice was made about this storm, just enforcement of existing rules.

This is exactly the wrong mentality that leads to exactly the wrong outcomes (e.g. the title of this article).

The goal of “basic services” should never be cheap, but good instead (i.e. quality, not price). And that is what should be regulated (e.g. metrics like “health outcomes” in medicine, “number of blackouts” in power distribution, ...).

Then, the market should take over, to optimise for price (== profit), because that also optimises for social well-being (e.g. in medicine, “cheaper” directly leads to “more affordable healthcare” and indirectly to “healthier population”). The idea that “profit” shouldn’t be optimised or that the government should take over is obviously misguided, because there is no guarantee or reason why the government would maintain quality if the free market cannot (instead of “profit” they would optimise for “employment” or “corruption” or “size of bureaucracy”).

> Then, the market should take over, to optimise for price (== profit)

The problem with that is that it's far more attractive for a private entity to book profits, instead of investing into their infrastructure.

Thinking about it, the Texas disaster seems to be quite a nice illustration of that.

So the metrics should measure the quality of the infrastructure and regulation should reflect that.

Without the proper metrics, there’s no guarantee that the government will invest in infrastructure either (instead of, say, corruption - paying outrageous amounts of money to friends&family for subpar service).