>Raising prices to infinity cannot induce supply of a good or service for which there is simply no capacity to provision.

If I understand the situation correctly, Texas regulators opted for lower electricity prices by not connecting to the national grid. In a sense, they opted to forgo paying for insurance for an event like what happened this year. Is this correct?

Also, there is no fallacy, because higher prices do not mean supply will increase. But rising prices are a signal that there is demand if more supply were to come in. Sometimes, it's not practical for that to happen, but it is, over a sufficiently large timeframe, a good signal that alerts others that it might be worth it to jump in participate in that market.