Essentially the effect of what you’re saying is poor people would be priced out of an essential utility to ensure rich people get a stable supply.
No, that's not the case. The entire point of a market system is to encourage people to use the limited resources on the most critical needs first. However, since there is a fixed rate culture the end result is that everyone wastes energy on non essential needs.
There simply aren't enough rich people on the planet to steal all the 75GW and even if they did they would be broke in the end. I don't know where you got that idea. The rich are in the minority. Also, you're forgetting that rich people will waste more energy if their rates are artificially kept lower.
Poor folks would be insulated from the large swings in price by the 25-50% guaranteed price portion of the power supply. (And you could make the price guarantee portion progressive by making it a constant 3kW (averaged over an hour) or whatever regardless of house size, so smaller houses would have much more of their electricity at a fixed rate than larger houses.)
In Austin's cade, Austin Energy built out way too much off of essential circuits. Office buildings stayed lit because they trunked off a circuit feeding medical centers, emergency services, that type of thing.
So the only place Austin Energy could go for load shedding was their residential customer base. Even then; they didn't execute true "rolling" blackouts, because that implies dividing the supply of power you have somewhat evenly across your entire customer population in a reasonable time based multiplexing scheme so that everyone gets their chance to run the heat. To minimize the amount of time people go without any heat, and at regular intervals so people can plan their consumption.
Can't speak for other metroplexes, and the co-op I get power from did a perfect job.
Residential areas should maybe be the ONLY places where a fixed rate would be allowed. Everywhere else (commercial, industrial, etc) should have to have real-time pricing. That would reduce the swings in price since demand would be much more elastic.
I'm thinking about places in AZ/NV where some companies and even some municipality groups (i.e. bureaucratic/permitting type) have moved towards four 10 hour days instead of five 8 hour days.
This is a bit better for those employees QOL (since they get 3 day weekends all the time) and also benefited the employers since they could lower their power consumption for an additional day.
Or “if we took Wednesdays off instead of Fridays, we’d benefit from Friday power being cheaper than Wednesday power”.
I still think market-aware power metering is a good thing for large users.
Now that said, having an electric system where this is necessary is itself a market failure.
They couldn't.
Either people still got hit by massive bills (thousands or tens of thousands of dollars), or they cut usage (voluntarily or otherwise) and froze to death or poisoned themselves trying not to.
Municipal water and sewerage perations couldn't function. Pipes froze and burst. Massive damage precipitated by underprovisioning, risk-shifting to the most vulnerable, and a gamble that lost.
Life ain't textbook neat.
I worked at a power monitoring startup. We looked at states that had peak demand and tried to estimate commercial electricity bills and sent alerts if a business was close to its peak usage.
“ Some utilities will charge customers based on their individual peak demand. The highest demand during each month or even a single 15 to 30 minute period of highest use in the previous year may be used to calculate charges”
https://en.m.wikipedia.org/wiki/Peak_demand
It’s hard to figure out what the charges are going to be.
People have enough shit to be worried about than to worry about their power ticker going up and down. This is not something we should add as a burden to our citizens.
Next I'm going to hear people wanting to short electricity.
Also applies to net neutrality and health-care btw.
What happens in such situations is electricity ends up being rationed with rolling blackouts. Or, if you manage to produce enough anyway by massive government investment, per capita energy usage skyrockets. The former situation happens in developing countries and the latter in oil-rich countries like Saudi Arabia which heavily subsidize electricity costs so it ends up being cheaper to just run the A/C at full blast constantly instead of properly insulating your household.
But most people don’t care about climate change, so maybe that’s the direction things would go.
Texas saw similar temps in late January, 2011, highs around 20°F, lows near zero. That was ten years ago. There weren't widespread outages.
ERCOT's planning excluded that recent history.
Put the responsibility on the generators, not consumers.
Free-market pricing seems wrong, as would per-minute pricing, but something like a 3-window (on-peak, off-peak, standard) time-of-day rate seems more acceptable.
That's a big if. In reality, they won't be adequately informed - they'll be at best adequately disinformed by the marketing departments of the power companies and third parties popping up around variable-pricing schemes. And to the extent exposing the customers to price variability is beneficial for the suppliers, the market has a nice way of removing the previously available options from the choice pool.
There's a spectrum between "let the people decide for themselves" and "the people will predictably decide to do something stupid and then they'll beg to be bailed out, so perhaps let's not offer that option", and I feel this may fall closer to that second end.
Heads you win; tails someone else loses; how much would you like to wager?
So a bunch of people do something obviously stupid - like getting scammed by a tech support call, or get infinite debt on a payday loan, or put a hand in a moving machinery and lose it. Now they're there, scammed, without money, and/or a hand. What are you going to do? Deny them healthcare and basic support? No, we help them anyway, and instead chase scammers, put limits on payday loans, and enforce safety requirements on equipment - we take away the choice of being stupid, because that's more reasonable than being indifferent to the suffering of victims of their own stupidity, for the sake of enforcing a corrective feedback loop.
If a traditional electricity supplier tried to buy all their electricity daily at the spot price and not hedge against any risk, they would quickly go bust. So why is it sensible for consumers to be allowed to do that? Some businesses may buy their energy at wholesale prices through their supplier, say an aluminium smelting factory. But those businesses will have full time traders who are also buying insurance/derivatives to protect against volatility in the market. Consumers should insure themselves against that risk too, by using a more traditional energy supply contract.
> The people signing contracts to buy Texas electricity at wholesale prices were doing so to economize. In some theoretical sense they accepted higher price volatility in exchange for usually lower prices, but in a much more practical sense they wanted the usually lower prices and couldn’t afford the higher price volatility. And then when prices rose they were wiped out.
> But the Griddy stories suggest that there’s something to it. It turns out to be really easy to accidentally engage in risky financial speculation, to somehow make disastrous bets on spot power markets in your monthly utility bill because it’s simple to sign up. If life is a constant series of high-stakes financial gambles anyway, perhaps it is tempting to choose some of your gambles on purpose.
https://www.bloomberg.com/opinion/articles/2021-02-22/electr...
But I never in my wildest dreams imagined that rates would shoot to 100x normal values for days on end. The very claims of “it’s market driven!” made me think that was impossible - how could any efficient market sustain such prices?
Realizing now that I dodged a bullet.
In the past, one could count on their hands and feet the number of contracts that one would enter into over one's life.
Now? There's so much churn that the act of accepting is more a ritual or formality. One that sadly has the capability to take advantage of a lot of people due to information asymmetry.
More recently - and still IMO OK - maybe you entered into more than 20 contracts in your life, but you were unlikely to have 20 contracts ongoing simultaneously. Today? I don't even know how many contracts or pseudo-contracts I'm involved in, but its in dozens.
That's my biggest reason I started to avoid SaaS and subscriptions as much as I can. Because every service you subscribe to is a relationship you enter, that you now have to manage, keep in mind. These add up quickly.
I remember the Cal ISO rolling blackouts of 2000-2001.
I think other utilities like internet service adopt this construct, then monetize worry to get you to pay a little more for all-you-can-eat.
There's an interesting quote from a former chairman of the atomic energy commission:
It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter, will know of great periodic regional famines in the world only as matters of history, will travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds, and will experience a lifespan far longer than ours, as disease yields and man comes to understand what causes him to age
Even if climate change is as bad as WW2 (doubtful over the same time scale), people still had children then, and they still had children when every city was covered in a foot of horse poop, all your kids died at 14 and doctors didn't believe in handwashing. In fact they had more!
It takes a bit less than 3x resources to have 3 kids though, since they share things.
Wow. If you are only paying $12 a month for access to the grid, you are paying a small fraction of your share of the cost of maintaining the grid. These consumer solar subsidies are a massive subsidy from the poor to the wealthy and really aren't sustainable.
Residential solar IMO is mal-investment because grid scale solar has better economies of scale. Solar plants are easier to maintain. The grid is not built for widespread net metering. Rooftop solar has more fatalities than nuclear because of installers falling off.
You are likely confusing wholesale and retail prices of electricity. Even just considering solar, the cost for a utility to generate the power itself is likely between 2-4 cents per kilowatt. Most states require the utility to essentially pay the retail rate for electric power for any power generated by rooftop solar since it directly offsets the electrical usage. (Never mind that the electric power might have to be purchased when the utility doesn't want the power.)
Buffet has complained about how this issue:
>...His logic is simple, he wants to have to pay wholesale electricity rates for the energy generated by rooftop solar instead of the same price NV Energy is charging these customers since he says it will penalized customers without solar panels.
https://electrek.co/2016/03/01/warren-buffett-explains-his-l...
So unless you are using the wholesale price for the estimate for the value of the excess electricity generated, you are greatly overestimating its value.
Besides overpaying for the electricity generated by rooftop solar, your $20 access bill is another subsidy. One estimate is that the average yearly cost to maintain the grid is about $750 per customer.
https://blogs.scientificamerican.com/plugged-in/the-u-s-elec...
Why do you say that? If the government wants to subsidize solar power, isn't it better to do it in a way that is safer, less expensive and the benefits are shared by all consumers?
There’s a massive programme in the UK to fit homes with meters that do this.
Another electricity billing method in the UK that may or may not be a novelty to Americans are pay-as-you-go meters, typically fitted in houses that have had problems paying their bills on a monthly basis.
The meter has a card reader built in and you buy the top ups from shops (anywhere I think - newsagents, gas stations). When you put the card in it, it tops up the balance, and when it hits 0 it cuts you off. This happens at random times if you forget to do it, you can just get plunged into darkness whenever. It's pretty dickensian shit and you don't hear as much about them these days, but I think lots of houses still have them fitted.
Also, due to Ofgem regulatory requirement all plans have a cap, so this couldn't happen. (It's not capped cheap of course, but it's not going to cost thousands/month. With Octopus specifically it translates to 35p/kWh cap on its variable rate plans, ~double recently typical prices.)
When, say, 75% of demand is insensitive to price signals, to get the 25% of demand that is sensitive to respond takes a MUCH bigger pricing signal to have the same demand reduction than if 100% of demand was responsive to demand signal.
What's needed is, say, a guarantee of 25-50% of average consumption (or maybe enough for certain essentials) being charged at the base rate while the all the rest for everyone is charged at some multiple of the wholesale rate. But this only would work well if everyone had smart thermostats on their heat, their hot water, their airconditioners, and all other major power consumption sources. Otherwise people would be unaware of this pricing signal until the next month.
Also, maybe it'd be a good idea to have the main thermostat in the house (talking to the meter) show some estimate of the daily energy cost so people don't have to wait a month to find out they're using an insane amount of electricity somewhere.
Pricing signals work great (including for consumers) if supply/demand is elastic. If it's inelastic, it ends up looking like profiteering and passes on huge risks to those often least able to take them.