Re:Texas power crisis revealed flaw in market’s design
by ocschwar on Wednesday February 09, 2022 @08:55AM
(#30272623)
Predictable isn't good enough.
Predictable is a reason for a government regulation.
Without that, you need quantifiable.
What is the probability of a polar vortex this year? (P)
How many hours of high prices would that cause? (H)
What will the price be during those hours ? (Pr)
What is the probability that our grid uplink will go down and cut us off? (Pd)
So, on the profit side: P x H x Pr x (1-Pd)
Liability:
What is the probability that our failure to winterize will cause a blackout? (Pb)
How much damage will that cause ? (D)
How much of it is our legal responsibility? (L)
Pb x D x L
Now: how much will winterizing cost? C
The big question:
C ?>? Pb x D x L + P x H x Pr x (1-Pd)
Complicating factors: in Texas, L is 0. For everyone.
And P,H,Pr, and Pd are all non-zero, non-negligible, but not quantifiable.
Predictable is a reason for a government regulation.
Without that, you need quantifiable.
What is the probability of a polar vortex this year? (P) How many hours of high prices would that cause? (H) What will the price be during those hours ? (Pr) What is the probability that our grid uplink will go down and cut us off? (Pd)
So, on the profit side: P x H x Pr x (1-Pd)
Liability:
What is the probability that our failure to winterize will cause a blackout? (Pb) How much damage will that cause ? (D) How much of it is our legal responsibility? (L)
Pb x D x L
Now: how much will winterizing cost? C
The big question:
C ?>? Pb x D x L + P x H x Pr x (1-Pd)
Complicating factors: in Texas, L is 0. For everyone. And P,H,Pr, and Pd are all non-zero, non-negligible, but not quantifiable.