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Eldorado

Utility firms price gouging as Texans suffer

69 posts in this topic

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Peter B
21 hours ago, and then said:

It will be interesting to see if the usury is allowed and if these folks refuse to pay it, will they be disconnected.

Do you mind me asking why you used the term 'usury'? These were contracts for the purchase of electricity and there wasn't any lending or charging of interest involved.

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Peter B
13 hours ago, Liquid Gardens said:

It's tough to get clear information and I'm not sure of all the factors that go into market pricing for utilities, but it's more complicated than the typical 'price gouging' where food or bottled water or what-not is jacked up in an emergency.  Furthermore, this is what these people agreed to, and it came back to bite them.  If someone makes a bad investment knowing the risks and loses all their money, I doubt many would argue we should bail them out.  I don't think they should go without electricity in an emergency, but I'm not sure they should be let off the hook for these bills.

This article talks a little about it: https://apnews.com/article/texas-high-electric-bills-explained-aa77ff97be48bf2c8fabfdc2e4a6d08c.  Choice quote: "Rhodes said bailing out customers may be a hard sell since they opted to pay wholesale prices and may have paid a much lower price than others for some time.".

I agree. To me this is little different from people choosing to not insure their homes: you save money every year compared to people who do insure their homes, but then you have a large expense in the unlikely event not insuring turns out to be a bad decision.

Having said that, it would be useful to know how much information consumers were given when the contracts were offered to them. If pushy sales people leaned on consumers, and either said nothing about the maximum possible wholesale price or fudged the issue, then that's a whole different matter from consumers being warned how high their bills could be and perhaps being given historical information on the whole electricity price.

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Peter B
13 hours ago, razman said:

i really dont see how a natural disaster affecting power should affect wholsale pricing.

The wholesale price is determined by market forces. Supply decreased as various power stations went off-line (AIUI due to lack of winterisation among other factors); demand increased for obvious reasons; in that sort of free market environment the price increased.

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pallidin
Just now, Peter B said:

The wholesale price is determined by market forces. Supply decreased as various power stations went off-line (AIUI due to lack of winterisation among other factors); demand increased for obvious reasons; in that sort of free market environment the price increased.

So, it's OK to rape people?

BS. And the governor calls BS.

 

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pallidin

Say, Peter B, why the hell are you defending this clear absurdity?

Let me guess... you have some type of financial interest... DUH!!!!!!!!!!

Edited by pallidin

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Peter B
1 minute ago, pallidin said:

So, it's OK to rape people?

BS. And the governor calls BS.

 

"Rape"? Seriously?

Why would these tied-price contracts exist in the first place? Presumably because most of the time people on those contracts have much smaller electricity bills than people on fixed-price contracts.

If these sorts of contracts are unacceptable now, why weren't they unacceptable before now? Presumably people on these contracts weren't complaining when they were saving money compared to those who were on fixed-price contracts. And presumably they chose to sign up to these contracts of their own free will (if they didn't, and were in some way coerced or lied to, then that's a different issue).

As I said in an earlier post, "...this is little different from people choosing to not insure their homes: you save money every year compared to people who do insure their homes, but then you have a large expense in the unlikely event not insuring turns out to be a bad decision..."

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pallidin

Whoa..  you're seriously defending what is legally known as "price gouging"? Under the quise of "contract"? Which is now temporarily unenforceable?

What part of the emergency order do you not understand?

It's very clear.

Edited by pallidin

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Peter B
5 minutes ago, pallidin said:

Say, Peter B, why the hell are you defending this clear absurdity?

Let me guess... you have some type of financial interest... DUH!!!!!!!!!!

Ah, you got me!

Yes, when I post here I masquerade as an ordinary Aussie, but secretly I'm a rampant capitalist with huge financial stakes in a bunch of Texas power companies.

.

.

.

.

Um, actually, no. I'm an ordinary Aussie.

As for whether I'm defending "this clear absurdity", I'm merely explaining that what happened in Texas was a logical and predictable consequence of the way the retail electricity market operates in Texas. This is how a very lightly regulated market works.

Personally, if I was living in Texas, I wouldn't have touched one of those tied-price contracts with a barge pole. Any more than I'd have bought a house and decided to not insure it. As far as I can see, those two decisions are economically similar; but I'm happy to have someone explain where and how my logic is wrong.

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pallidin

All is good. Peace to everyone...

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Peter B
5 minutes ago, pallidin said:

Whoa..  you're seriously defending what is legally known as "price gouging"? Under the quise of "contract"? Which is now temporarily  unenforceable?

What part of the emergency order do you not understand?

It's very clear.

Okay, fair enough, I've checked out the law (here). Yes, taking advantage of a declared disaster to sell a necessity at an exorbitant price is illegal.

However I'll leave it to the lawyers to argue whether the electricity retailers broke the law. I'm sure the retailers' lawyers will argue that the process for determining the price was set when the contract was signed, and the specific price was set by another organisation, therefore the retailers themselves didn't specifically engage in the behaviour deemed illegal in the law.

But just to be clear - good for the consumers if they win their court cases. Perhaps then the Texas Government will legislate for the electricity market to be better regulated so these sorts of situations don't occur again.

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pallidin

Great statement!!!

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razman

Its just bizarre , even if you paid 100 a month , and got a 6000 bill , thats like 5 years of payments in a couple weeks. Mind boggling.

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razman

Because the energy systems weren't winterized? 

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pallidin

My neighbor to the left is Smith, to the right, Wesson.

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pallidin
6 minutes ago, razman said:

Because the energy systems weren't winterized? 

Well, it wasn't like it was a minus 1000 degrees. What was the lowest temp. there at the time?

Generation systems and transport lines by nature run HOT.

Should have been no problem.

This was a degraded infrastructure issue; nothing to do with temperature if the infrastructure was up to national standards.

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Peter B
45 minutes ago, pallidin said:

Great statement!!!

Cheers Big Ears Flippers. :)

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Peter B
51 minutes ago, razman said:

Because the energy systems weren't winterized? 

 

38 minutes ago, pallidin said:

Well, it wasn't like it was a minus 1000 degrees. What was the lowest temp. there at the time?

Generation systems and transport lines by nature run HOT.

Should have been no problem.

This was a degraded infrastructure issue; nothing to do with temperature if the infrastructure was up to national standards.

This article explains what happened and why. Sorry, it's a long document. But the tl;dr of it is that they say the failures were caused by things like electricity companies failing to install extra insulation, wind breaks and heaters in their equipment, and moisture in the air causing valves to freeze.

What must be frustrating to consumers is that these problems were apparently identified after a similar cold weather event in 2011, and another failure was only narrowly avoided in 2014. The problems weren't fixed because, apparently, the electricity companies leaned on regulators and politicians. According to the article, the electricity companies said the fixes were unnecessary; critics put it down to corporate greed.

So yeah, not enough winterisation.

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Peter B

https://www.khou.com/article/news/local/texas/ercot-texas-power-grid-total-collapse-blackout/285-ae35263d-dfad-49b5-aa6b-26f12c3e1654

Last week, the Texas power grid was “4 minutes 37 seconds away from a total collapse,” meaning a statewide blackout, ERCOT officials said at an emergency board meeting Wednesday.

Had it happened, Electric Reliability Council of Texas says Texas would have been in the dark for weeks if not longer.

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RAyMO
19 hours ago, joc said:

Maybe you should not listen to what stupid people say...it kind of has a habit of rubbing off on you.

Here...let me educate you with something other than what you read in the NYT.

The United States National Grid (USNG) is a multi-purpose location system of grid references used in the United States. It provides a nationally consistent "language of location", optimized for local applications, in a compact, user friendly format. It is similar in design to the national grid reference systems used in other countries.  link

 

 

 

19 hours ago, joc said:

Yes, most of Texas’ power supply is connected to a grid entirely within state lines. It is one of three power grids in the country: a western power grid, an eastern power grid and the Texas grid.

That means the connections Texas has to other grids is limited, which in turn limits the amount of power that can be transferred from other grids to Texas and vice versa.  link

So not as stupid as you first imply. maybe you lot don't use the term 'national grid(s)' but the concept still applies.

19 hours ago, joc said:

Texas  is also a Republic.  Just sayin'

What has this got to do with it?

There are examples of totally separate sovereign nations having interconnected power supplies. It sort of makes sense to provide backup and all that. 

 

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