When I lived in the poor part of town, "energy deregulation" companies were always coming around, aggressively trying to get me to sign up on the spot.
They never talked about risk, they just told me I could sign here to save $100s on my power bill. I asked them about the details and they just lied through their teeth.
This was in MI, not TX. Maybe Griddy is different. I suspect they farm out signup to the same type of contractors.
I think the idea of consumers responding to energy prices is nice, but has some pretty glaring issues.
How many consumers are aware of hourly energy prices? How many on deregulated plans even understand that they pay more when usage is high?
Can they react fast enough to changing prices? Leaving a light on during vacation should cost you some money, but it shouldn't wipe out your 401k.
This article seems to suggest the answer is a fully automated smart home, with some kind of AI to intelligently manage your power usage. Sounds awesome, but I don't think that's ever going to be a reality outside the valley.
At the end of the day, it still comes down to losing power or losing 5 figures of cash that you probably don't have. Most people aren't in a position to be "homo economicus" when it comes to heating their home in a blizzard. It doesn't solve their problem to give them a choice between losing power, or going bankrupt. Many will choose to lose power, and die running their car in the garage just the same as if they had a blackout.
If price sensitivity causes someone to set the AC on 80 the hottest day of the year, that's great. But expecting consumers to handle tail risk is a silly idea.
I suspect you could get 99% of the effect by only passing a small price window to consumers, and managing the tail risk collectively.
I am a high-income New Yorker. If this were available to me, and if I could (a) set a cap past which I lose power or, preferably, (b) hedge by buying power call options, I’d take it. (Depending on the cost of (b).)
That said, it’s a complicated financial product. We don’t sell derivatives, structured products and alternative assets to the poor. (Robinhood et al aside.) Power shouldn’t be an exception.
I would have called it "Russian roulette". High reward, high chance of an unavoidable catastrophic loss.
The most obvious one would be to just disconnect your house from the grid whenever prices exceed some threshold that only actually happens once a decade.
Even if that means you go stay in a hotel, doing that once every ten years for thousands of dollars in savings over the same period could be totally worth it. And there are also even less inconvenient alternatives, like buying a generator for less than you save in electricity and using it during price spikes, which means you also get a "free" generator to use during ordinary power outages.
Meanwhile it helps the grid because people who are willing to do this voluntarily remove load during crunch time and prevent the need to do rolling blackouts that unexpectedly freeze people's pipes.
Generators automatically notice when the regular power goes off, but I don't know if they can automatically notice when prices rise above a certain threshold.
My apartment does not rely on electricity for heating; it's steam-based. Were it electricity-based, I won't switch.
But in the summer the price of electricity is like 50% of what plain Con Edison used to offer, and it's the time when power consumption peaks because of the running of air conditioning all day.
The reported generation mix is low-carbon, about half of it comes from nuclear plants, some from hydro and solar, about 1/3 from gas-fired stations, apparently zero from coal-firing stations.
So, for me it's a win-win so far.
What is genuinely sad is that Griddy has a "price-lock" (ie a fixed rate) for the summer, which is exactly what you're talking about regarding tail risk. They just don't have it for the winter, which is normally the cheapest time in TX and clearly couldn't set up a decent fixed rate quickly after they understood the implications of the polar vortex. What they should have done is sent an email to their customers offering a fixed rate for the month even if it was expensive.
> ERCOT shall ensure that such Specified Resource is only allowed to exceed any such limit during a period for which ERCOT has declared an Energy Emergency Alert (EEA) Level 2 or Level 3. This incremental amount of restricted capacity would be offered at a price no lower than $1,500/MWh.
I've read the Dept of Energy doc, and I think they were trying to make sure that power companies could pay for the pollution offset credits after the fact. Also, since Texas has a soldi market based power system, they wanted to make polluting power the least desired. Little did they know.....
On some level I think it's human nature to underestimate some types of risk (and the nature of businesses to optimize for profit based on an understanding of this nature).
It doesn’t make sense to try and draw a parallel between a bad hypothetical that might happen in some indeterminate future and a negative possibility that will either come to pass or fizzle within a very short time horizon.
I think the Griddy scheme is in the process of destroying itself, as it becomes apparent how many people won't be paying their bills, either through bankruptcy or populist legislation. Despite not seeming so on paper, Griddy itself has significant long tail risk.
A great way to hedge while having Griddy would be to make a deal with your neighbor to run an extension cord when the spot price gets too high. Sleazy, but what isn't these days.
Of course such arbitrage just pushes the market as a whole towards time of use pricing, which isn't a bad thing as long as the unreasonable pathologies get worked out.
I'd suggest Texas jettison its market fundamentalist politicians and instead elect ones that advocated for proper regulations prior to this event.
It's not the answer yet. But I'd be very surprised if it wasn't the norm in developed nations in 10-20 years. It's an obvious response to inconsistent generation from renewables, and the technology itself is straightforward.
I mean, this seems pretty likely to me over a timescale of a few decades. Smart homes are currently a niche product for the rich. They've barely started on their journey to being mass-market products. That will look like the products you are already buying being smart-home capable because that's considered standard.
Solar in a desert is easier, if you only have to cover the night then install a big enough battery. But a battry in every home is probably less efficient than a huge battery next to the solar panels.
So most likely, renewables come with storage. And the smart grid idea with mostly fade. Possibly with the exception of car chargers that charge faster or slower depending on conditions.
For example, the pumped hydro station in Wales  can store up to 9.1GWh and can push 1.8GW peak, with a spin up time under a minute.
Systems like these can serve both as buffers until fossil fuel or nuclear reactors can spin up to peak in the even of wind/solar shortage, and can even serve as overnight generation to replace solar if large enough (given the usually much lower demand at night).
If each state was required to implement their own (presumably smaller) grid-scale storage this would have the benefit of removing a single point of failure and spread the cost. A construction project of this scale would also serve to create hundreds or thousands of jobs in various areas, stimulating the economy.
Having grid-scale storage would be drastically improved with a smart grid, since it would have much more real-time data on power demands and allow more seamless management of capacity.
I've been thinking about this problem for some years now, since I first became involved in microgrid controls. Rather than change the dynamics by limiting amplitude, I would change the dynamics by adjusting information latency.
Schedule customer pricing based on the day-ahead market clearing price instead of the spot price. End-customers are still exposed to price fluctuations for both good and ill. But now they can make decisions based on them well in advance. Momentary interruptions in communication no longer render the customer blind to the market price. Similarly, low-latency communications are not required for smart devices to take advantage of price changes. The most volatile portion of the market risk is also still borne by the utility.
I actually worked on a system like this https://powerley.com it's based in the Detroit area. The energy grid is going to face growing demand / supply issues over the next decade and I do believe systems like this will become more important to manage load.
It also sounds awful. It would objectively be a regression from reliable electricity to unreliable electricity, like in an undeveloped country.
The only thing such a technology would do is give the power companies a BS way to shift the blame for their planning fuck ups onto consumers, because technically it would be the consumer's equipment that killed the power.
This is shockingly myopic.
Rather than cutting off all the power for half the city, cut off half the power for the whole city. That way people could still have a small space heater and some lights but not run their dryers and who knows what else.
Griddy is simply an energy provider you can choose to hedge your bets and save money if you are smart. Plenty of people using it shut off their power or switched providers when they were informed of the incoming price surge. That some households ignoring the warnings shouldn't be a reason a service like Griddy can't exist.
It's not reasonable to expect households to monitor their electricity rates or alert emails that closely nor be prepared to drop everything to switch providers at a moment's notice for an entirely unexpected reason. I know I don't immediately read every email I get.
An even if someone was monitoring that closely, or was ready to jump, there's no guarantee they'll be able to switch:
> In a rare move Sunday night, Griddy sent out an email to all 29,000 of its customers, urging them to switch to a different provider. Thigpen says she tried Monday morning, but no one was taking new customers....
> We reached out to a few providers here in Texas. They are not taking customers. Some say they may accept new customers by next Wednesday, when they say the weather has improved. That was the earliest 'maybe' answer we could get.
Out of morbid curiosity, during a long drive this weekend, I listened to 20 minutes of an AM radio guy's pitch for some retirement annuity system that sounded quite sweet at first. As he kept talking, though, I realized that he was being very evasive about what happens if you die early. Connecting the dots - he keeps all your assets. No survivor benefits at all.
I used to do financial investigative reporting. I was looking for the catch. And it nearly glided past me. Ditto for disclosing the full details about the maximum caps on your electricity charges.
These promoters are masters at smooth, low-candor discussions of risk. They're what make the pendulum keep swinging back and forth between deregulation and re-regulation.
I think these are more common in Europe where people will often take a lump sum pension payout at retirement, and buy an immediate annuity.
I literally built a prototype competitor product to Griddy and I'm downvoted for explaining exactly how this shit works.
There’s an awful lot of research that implies humans are very poor estimators of low probability / high severity events
Customers were intelligent and motivated by a desire to do their own hedging rather than have an REP in the middle with an opaque profits. There’s a lot of profit in there and customers wanted to keep it. Customer ultimately knows his own demand and tolerances better than any REP. When I say “he” I mean men. Overwhelmingly male market. Lots of small business owners, day traders, cognizant their investment performance. This was very early. Few had even heard of Griddy at this point. I think it’s a fantastic addition to the market. What’s missing is the ability to hold futures. That would really level the playing field for sophisticated customers.
Does Griddy push real-time cost information to consumers to enable them to react to situations like this? "Scam" might be harsh, but their model clearly failed.
If everyone had this kind of attitude, we'd still be driving cars with no seatbelts.
It's very easy to become a "victim" of yourself even in a regulated world and I assure you the number of people who do will not go down, only the means of doing so will change. Perhaps we should focus on education instead of regulation.
Haha, isn't this just the thing? It's the same thing as with Kickstarter, Bountysource, numerous Google betas, etc. The risks are just sitting there visible as all heck, and fools will jump in blind and then scream when the scary event happens.
It has been the best argument for paternalism I've ever seen: not to keep people safe from themselves, but to keep fools away from the rest of us so that we can make intelligent risky decisions.
In fact, I've shifted my view of the accredited investor thing. I am so glad a bunch of blind followers can't just do something dumb and then ruin everything for the rest of us.
The only real acknowledgement that residents have truly suffered something they didn't deserve is sandwiched between statements completely clearing Griddy & ERCOT of wrongdoing:
> The point is that while Griddy customers should definitely be entitled to relief, Griddy is not evil. Nor is ERCOT.
In my experience, there are exactly two types of customers on the kinds of plans like Griddy offers: a) people who are heavily into cost-optimization and have spent the cash to automate their living quarters to take advantage of wholesale price swings; and b) people who are trying to stretch a dollar because a single dollar is all they have left.
For people in that second category, the dollar broke and smacked them in the face.
I am by no means calling people stupid for doing this; they believed the sales pitch and either did not understand (because the wholesale pricing model is actually complex) or were not told the massive potential downsides. And when the cost of keeping where you live at a livable temperature runs into the mid-three-digits per month during the summer, you're going to jump at the idea of slashing that by two-thirds.
This is consent in the same way that clicking "agree" on a 15,000-word EULA is consent. It isn't.
I would be shocked if there is any energy deregulation company that doesn't resort to this, because it's the basic result of hiring contractors and paying them on commission
These promoters would aggressively advertise "Free $10 Regal Gift Cards" or "Free $10 AMC Gift Cards", on the spot. They would say there is no catch. All you need is to be a ConEd Customer.
Every household in NYC is a ConEd customer because it is the only electric company.
Then they give you a tablet, and have you sign into your ConEd account. What they don't tell you is that you are switching your ConEd bill to a variable rate energy provider. On average, your bill is actually higher per month.
Every time I went to the movies I saw dozens of people get conned into higher monthly bills in exchange for a $10 gift card. I highly doubt anyone that signed up knew what they were really signing up for.
In upstate New York, I recall door to door salesmen doing the same thing. In NYC, too many residents live in buildings so they setup in movie theaters instead.
I wonder what their deal was with the theater venues. Does Regal/AMC rent out floor space to these promoters, or is there a revenue sharing deal?
How delightful! Here in New York we just have CleanChoice Power doing it via mail fraud.
(By "mail fraud" I mean that they do their best to dress it up as a something like power bill, except demanding a signature, to trick the unwary into signing it without reading.)
Question for those in TX: was your perception of Griddy that they were sketchy, or just a get-what-you-pay-for sort of basic service? Did they aggressively sell door-to-door?
Deregulation does that in lots of markets, if not all of them. Paying via commissions does the same.
If you have to "de"regulation something, ask why it was regulated in the first place!
I would guess there are different types of deregulation. We still have a regulatory body that ensures the market and new private entrants are operating effectively.
Griddy wasn’t some shady operation that hid the downside risks. Their customers were encouraged to monitor the real time rates and use electricity when it was cheap. The week before the storm Griddy was frantically trying to terminate accounts.
Is this entire country allergic to personal responsibility?
We have been subjected to sneering lectures from Texans and libertarians about the nanny state, socialist bureaucrats, freedom killing regulation, Venezuela, the Great Leap Forward and on and on. I'd suggest Texans kick such politicians out of government and replace them with ones that have advocated for sane policies PRIOR to this event.
My experience with these companies is that they'll just walk door to door with a pen telling you to sign on the dotted line to save a bunch of money.
I doubt most of the people hurt by this are true believers, or even had a basic understanding of the arrangement.
Markets are extremely good at optimizing for the lowest cost (most efficiently) solution, but they're no good for planning for unusual events or for handling externalities. At some point a government needs to step in and set some (unpopular) ground rules so the players in the market don't have to race all the way to the bottom to stay competitive.
No, the problem here was that the grid wasn't winterized, and the hardware couldn't handle the cold. The problem came from hardware operating way outside its specs, which caused a cascading failure.
To be clear: I'm not saying it wasn't a lack of foresight on the companies involved, it completely was. Just not because of just in time generation.
You are, of course, right in the all specific details you've brought up vis-a-vis the winterizing and the nature of the power grid. I just think you missed the parent's point slightly.
Insurance is a major part of any market, and insurance is very good to managing unusual events or externalities that matter.
> Texas - State law requires that utility and gas companies are required to offer a deferred payment plan to families and individuals in the state. No disconnect can occur if customer agrees and adheres to payment plan for past utility or heating bills. No shut off is allowed if temperature is to go below 32 degrees, or in extreme heat. Also disconnection will be delayed if detrimental to the health of a state resident, but the customer must have physician certification to get this plan.
In many ways inventory is better than insurance because you're going to use it and so the cost is limited to storage.
Don't forget that we still have the 3-4 month pipeline to do something. That means we have time to put effort into the Thailand recovery plans into place. We often encourage recovery efforts to focus on the parts that we can only get from Thailand, while other parts that can be gotten elsewhere get sourced elsewhere. Our supply management systems have a check for is this a single source component because those are riskier. It isn't hard to read the news and look into our database and figure out where we need to put pressure. (We are a fortunate 100 company so there is some weight to throw around, plus we have several peer companies that are doing the same thing and will put their pressure on the same bottlenecks)
We have our supply chain mapped 6 levels down (this is mostly because we want to ensure the mines our ores come from down use child/slave labor, but there are side benefits) so when a disaster happens anywhere in the world we know how we could be affected and have months to prepare.
Inventory isn't better. Did you miss my comment about avoiding rust? Parts in storage degrade, can be stolen, cost rent to store, go obsolete, and otherwise have issues. Also it is better for the whole world if they have consistent work for their employees instead of nothing some weeks and overtime others, and the inventory systems tend to make that worse. Some inventory is useful anyway (and we have some), but it comes with costs as well.
For example, my electric plan has different rates for "peak" (4pm - 9pm), "super off-peak" (12am - 6am), and "off-peak" (everything else). But these rates are fixed, so I know in advance how much I'll need to pay.
This still incentivizes me to shift my usage to lower-demand times, flattening the demand curve under typical conditions. But it doesn't expose me to tail risk.
It seems to want to paint the picture as an either/or decision between fully variable real-time rates and completely flat rate plans. There are a whole set of possibilities in between, including but not limited to putting dispatchable appliances like smart electric water heaters and electric cars on more aggressively variable rate plans.
That is essentially a fixed-rate contract. It provides different incentivisation from a flat-rate contract, but… all the rates are still fixed.
> I believe we ultimately need some degree of real time price exposure for consumers if we are to induce these kinds of widespread energy efficiency investments, because it can and does encourage significant reductions in individual electricity consumption during times of peak grid demand, which is good for the grid and good for the planet.
And I'm just pointing out that you can get most of the benefit without exposing consumers to additional risk, and that such plans are already widely available, at least where I live.
Regulations would have solved this. Why does the word "regulation" only appear in this article once? Make winterization standards a requirement of participating in the market.
1) Variable rate plans based on wholesale market resulting in customers getting massive electricity bills during the wholesale market price spike.
2) Due to lack of regulation, little to no spending on winterization of generating capacity, with the purpose of ensuring lower prices for consumers and higher margins for generators. Both of those objectives were accomplished by the system, but the tail risk/cost management was not, and therefore it was effectively socialized.
If the tail risk (at least the risks we can see) were addressed through regulation (the only way to do so), prices would rise for all plan types to pay for the winterization, irrespective of whether they are variable or flat rate.
That regulation and associated price rise has been up to the moment unpalatable to Texas voters.
Some part of electricity demand is inelastic, and required to live. Much of the electricity demand is elastic, and will respond to price signals. TVs, computers, clothes washers and dryers.
We do need winterization regulation as well, but once we're up the creek, price signals can be useful. Smaller price signals with more reasonable caps though. Just enough to convince you to turn your PC off so we can avoid blackouts.
(Here's what 'nearly fully' means: This is the section of what oversight ERCOT has over individual producers. https://www.puc.texas.gov/agency/rulesnlaws/subrules/electri... . It's a quick read, nine pages.)
In fact your plan was probably counterproductive since the cheapest power to you came when it was most expensive to the operator--over night.
But, at the same time, consumers that have no visibility into their current electricity prices are unable to alter their behaviour. Until there's extremely high-resolution, real-time price transparency, this system is destined to fail.
Also consumers have base loads just like generators have base loads: you might defer doing laundry, but no one is going to unplug their refrigerator during a electricity price surge. Again, this simplistic spot pricing scheme is destined to fail if it doesn't meet consumer's need to have predictable baseline consumption rates.
I weakly agree with the author here that demand-based pricing is in everyone's interest, but that said, last week in Taxas was a systemic failure of immense proportions and everyone involved in planning Texas' electricity grid should be ashamed.
It's probably an additional $3-6K on top of the smart meter to build in such switching (an ATS and a control system to understand the current/projected rate and switch based on it). For this event, going down to your main panel and flipping the main breaker for a few days would have accomplished the same thing for no cost.
I suspect the same people who bought Griddy's save money almost all the time plan are not the ones likely to install $5K of extra switching equipment at their house to protect themselves from a multi-day deep freeze event in Texas. Certainly no landlord is going to install that where they bear the costs and maintenance so their tenants can buy cheaper electricity.
For example just by heating and cooling houses a few hours before people get home, we can shift a lot of demand towards the middle of the day when solar power is abundant, and away from evening peaks.
We're definitely going to need something like this for widespread EV usage, where cars can potentially upload power to the grid.
Government has a role here in setting standards. They are the ones who get blamed for high energy prices or outages, anyway.
These guys used to do this in NYC.... would let ConEd turn off your AC in the middle of the summer
(Under the hood it's an IOT zigbee hub)
I think the right regulatory approach this case would be to require the purchaser to manage their risk so that you can shop around like we do with other insurances. So if you go with a retail electric company you don't have to worry since you're not the purchaser.
It's why people buy products and services rather than vertically integrate everything in their lives. I don't want to live Texan Power Simulator any more than I want to be mining my own bauxite or replacing my driveway. Buying a product or service is granting the supplier a profit in exchange for them worrying about and executing the business. But you don't buy power any more. You buy access to a dynamic marketplace in which you probably didn't really want to participate.
What if there were real time pricing per byte coming down from your ISP and you had to sit and stare at your screen waiting for an affordable moment to check your email? Or what if you had to stop mid-shower to avoid spending five figures to rinse the soap off? I can't imagine being happy in those cases, I don't know why I should be happy about it for electricity.
You're on to an idea that the article doesn't cover: If you want consumers to constrain their utilization during periods of high demand without using price shifts, you might require they install suitably "smart" thermostats and appliances along with their smart meter. These could allow the utility to forcibly curtail power use without rolling blackouts. Some utilities already offer a softer version of this, with your Nest offering to tweak your schedule to marginally lower your bill.
Of course that kind of invasive control would likely not go over much better than $16,000 power bills.
For example, Tesla Powerwalls (disclaimer: I've got a few) already allow custom time-based controls precisely for the purpose of saving money when on a utility plan that is split into peak/shoulder/off-peak pricing. That's one of the ways they can offer some direct financial return (benefits from generator replacement and on-site production aside). That's not granular enough or automated enough to react to a situation like this one, but on the face of it doesn't seem like any reason it couldn't be. If Tesla had an API that someone like Griddy could talk to, an interface in the app for something like "price-based control" seems like it'd be doable and an interesting value-add and a relatively low lift. Powerwalls already have remote control functionality for grid-operator/customer deals. And it'd give a lot more buffer.
However those of course are $6.5k a pop right now. Long term it might be more fruitful for many people to lean on future electric vehicles for this. Those have humongous batteries and alternate ROI so a lot of people may ultimately have them anyway, vs being a dedicated expense. Hopefully the next decade, along with more fundamental grid investment period, will also see the natural spread of more and smarter buffering options.
Unfortunately, that's a terrible option too. The cold is survivable with some gear, but your pipes will freeze and burst unless you drain them (which I have no idea how to do, if it can be done).
We also had several deaths due to people using gas heaters indoors. I think it releases carbon monoxide? Not entirely sure, but those outdoor heaters are meant to be outdoors.
It's possible it might be doable with a user override.
Where do you draw the line? "Griddy, please turn my power off if the price goes above $1/kwh"... "Griddy, please turn the power off if I forget to pay the bill.", "Griddy, I'll take a $10/month discount if the power gets turned off when my bill is paid late?", "Griddy, I want to use non-ripoff plan, so I'm happy for you to turn my power off the minute I pay late".
See how it isn't really feasible to stop power companies forcibly illegally disconnecting debtors if you allow a debtor to agree to be disconnected voluntarily?
I think these regulations came into place after people died due to the cold, or died because they needed their oxygen generator and power was cut. Possibly the regulations were proactive.
I worked with a company that built prepay power systems that communicated by modem, and cut the power when the money ran out... except when the regulations (mostly sensible rules) kicked in to prevent harm.
In New Zealand there is also a ripple control system to shed domestic loads during peak demand (mostly hot water cylinders).
Traditionally they sent a technician out to read each meter and turn off the electricity if necessary, but there are newer "smart meters" that communicate your usage to the power company (although I'm not sure if those can also be remotely triggered to turn off your power, I would suspect not).
Where I grew up in a small town in the Midwestern US in the 1990s, the meters were usually installed on an external wall at the back of the house. My part of town had underground power lines (good during thunderstorms, bad during road/building construction) and I suspect the meter was right where the buried cable came into the house. Every month a uniformed person from the power company would walk through everyone's backyards taking the reading from each meter.
Fun fact: most utilities and similar services have historically worked this way. I think the cable television company would just send someone to the cable box on the back of your house and flip switches to enable the channels you were paying for. There was always some kid who claimed to get HBO for free because his older cousin worked for the cable company.
Now that I think about it, I recently got a car that's new enough to have Sirius XM satellite radio built in, and I've been wondering how their access control works. Surely the satellite doesn't beam down everyone's subscription status and make their receiver hardware respect that, right? Is my car using the built-in cell phone to check whether I'm subscribed to the satellite radio? Either way, where are the bootlegged satellite radio receivers?
- The stream channels themselves are encrypted or scrambled in a way that is hard to unwind unless you have the keys (keeping non-SiriusXM radios from working)
- Each radio has two important pieces of information: a decryption key from SiriusXM and a UUID (I'd guess 64bit, as that's a pretty standard size for hardware-baked-in UUIDs. It might be 128bit instead). You can look up the UUID for your radio. Both of those things, by the way, are bog-standard now in consumer embedded systems exactly because they help prevent bootlegging.
- Channel 0 is an ID channel that constantly streams out a list of valid UUIDs and other configuration data. An un-activated radio can only tune that channel. When it sees its own ID, it enables the rest of the channels.
Quick sanity check: Assuming they have 40 million subscribers and can pass UUIDs at roughly audio rate (to make the math easy, 16-bit, 50kHz), that makes it about an hour to sync all the users. That can probably be watched by your radio in the background, so it's only an issue for initial activation.
Satellite bandwidth is expensive... Activation time is annoying for customers... The above scheme saves either (or both).
Looking at teardowns of the current Onyx radio , the NXP LPC4078FET180 has both a unique ID and some mechanisms to make it very difficult to read the programmed code externally. One option would be to store the key there, and use that mcu to run all the audio decryption, processing, device activation, and protocol updates (under the control of the TMX570 running the UI etc).
SDG&E, in California, offers such a plan (layered on top of conventional TOU terms).
That way, those who would rather get through a blackout without paying insane bills can have an option to do so, while those who care about their pipes freezing can pay to keep the electricity.
2. Is it possible to subscribe to two (or n) energy plans? Imagine subscribing to a wholesale plan (e.g. Griddy) and a fixed-rate plan and switching between them whenever wholesale prices rise above the fixed rate. Are there legal or practical reasons this can't happen?
> Market still manages to function, and even without the individual mandate. How exactly?
The ACA tried to address this question with the individual mandate. It also has an enrollment period. You can't sign up on a whim.
Those two features were meant to prevent opportunistic purchases of health plans. Only buying the second you need it, rather than paying in consistently over many years.
It doesn't seem to be working well, because our healthcare market is hardly "functional" from the user's perspective.
I'd say that's because healthcare is something that fundamentally cannot be subject to market forces. Your life is literally priceless, and your health is worth more than you own. It is not a good or a service or a commodity, so it cannot be priced according to basic market theory.
In the US, our healthcare market isn't functioning. In other countries, they've solved for this by eliminating the market aspect, and treating healthcare the same as roads, fire, police, etc.
So they’d require exclusivity as a condition for service.
A) That would essentially be energy futures trading.
B) No sane power company is going to take on new customers when they can barely keep up with demand already.
First, assuming that residential customers can understand the pricing dynamics that are going on is a really bad assumption. It is very complex because there is an interplay between their natural gas service and their electric service, both of which are buying gas from the market on the customer’s behalf. The agents for each company are contractually obligated to supply energy to their customers at any cost - and this is a real problem in this type of situation. In effect, the customer is bidding against themselves via the gas & electric companies. Even in some ideal world where the consumers have full real-time price transparency, it would be extremely difficult for the customer to understand the costs of their actions and the best balance between the two services.
Second, it should be noted that the astronomical gas and electric prices in those markets did not really accomplish anything. They brought on very marginal amounts of additional energy (beyond about 10x average prices there is almost no meaningful additional capacity that can come online because nobody in their right mind would invest in infrastructure that could only operate at those prices). Those prices also did not provide useful information that residential customers could evaluate and act on on the demand side (price sensitive industrial and large commercial customers would shut down at far lower prices than was seen).
Ultimately, what occurred was an emergency situation and disaster. Pricing and consumption controls should have been initiated when energy emergency alerts were declared in the gas and electric markets, as the market structure is not setup to operate effectively during these situations. It was a total failure. The only things that worked were the reliability plans that grid operators have in place to disconnect customers in order to prevent complete failure of the electric grid.
Ultimately, in an emergency/disaster situation there should be a different set of rules that determines who gets the energy and caps the cost.
Note that the winterization discussions going on elsewhere are also extremely important, but those problems are already being covered well.
This is a very strong and compelling argument for maintaining some core baseload generation capacity that is completely independent of existing power generation. Batteries could be one solution. Nuclear is another. Geothermal could be a good solution to this problem.
But the "grid power" needed to run the reactor's control systems, etc., can almost surely be generated by the reactor itself while it's online, right?
A naval nuclear reactor needs external power only to get started; when the ship is in port, this will typically be shore power from the grid, and either in port or at sea the external power could come from the onboard emergency diesel generators. When the reactor is started up, it will eventually "go critical," i.e., achieve self-sustaining fission. After that happens, one or more in-plant, steam-turbine electrical generators will be started and brought online to provide electrical power for the ship, including the reactor control systems, etc.  A similar arrangement seems likely to be used for civilian power plants. 
 e.g., https://fas.org/man/dod-101/sys/ship/eng/reactor.html
 e.g., https://www.elprocus.com/what-is-a-nuclear-power-plant-worki...
In theory, yes. But in practice, most nuclear power plants are required by law to trip offline if their local grid goes down or even experiences a minor disturbance . Nuclear power plants always have onsite diesel generators to run pumps, operate control rods, and shut down the reactor if needed.
Nuclear plants are notoriously finicky about offsite power quality because they take a long time to ramp up and down and the consequences of e.g. losing cooling are potentially disastrous.
When demand exceed supply, given the real-time nature of the product speculators can come in a take you to the cleaner if they had any chance to beat you to foretelling this would happen.
As I understand it, ERCOT puts a $9000 per MWh to put a limit on speculation, but then what happens is you have to take people off the grid.
The desire to "maximize efficiency" by surfing the demand curve with real-time data is not worth worth the expense of smart meters and risks. Dumb demand curves have another advantage: the utility is forced to over-estimate demand, creating a built-in safety margin.
1. If you are on this plan, what is your visibility into current prices for electricity? e.g., are there any alerts that you could have signed up, even if you hadn't before?
2. Have you been bitten by unexpected high prices before, perhaps in the summer?
3. Prior to this event, would you say you saved money overall with Gridly?
2. Yep, my parents were, and they will never use a time-of-use plan ever again.
3. No. I made a spreadsheet and, based on my math their being bit by this in mid-2019 would have not paid off prior to this event.
Circling back to 2 for a moment, the problem is not so much with the plans, it is with all of the unmet caveats that the author lists in the article.
For my parents, they were pitched this plan on a visit to the State Fair of Texas where the salesperson told them they could "save thousands of dollars" every year by not "lining the pockets of big energy." Sure, they know how Griddy operates now, but what about some new clever scheme another provider comes up with that winds up biting them? That's why they're on fixed-rate plans forever.
Not a single person told them the downsides of this plan, the virtually-unlimited (sorry, but a $9/kWh cap when wholesale electricity is usually $0.02-$0.04/kWh and retail is around $0.115/kWh, is not a cap) cost exposure, and the near-impossibility of taking effective action (it is unreasonable to tell customers to go outside and hit the main breaker in a winter storm).
Texas came up with a system where retail electric customers are willingly offered plans in which they need to be near-experts in the price of natural gas derivatives and spot-generation electrical wholesale rates...and are not told in advance about this requirement.
Granted, if the cost savings were enough, a homeowner could install a battery/genset backup with the savings and have that automatically switch over when prices got nuts, but that's not within the abilities or even mindset of most people.
They probably are enough over long periods, or retailers wouldn't be profitable.
However that assumes you hedge properly. If you treat your savings from "good times" as extra cash to spend you're going to get burned to the ground by the bad times.
It also means you have to be extremely reactive, now you need a setup to quickly cutoff electricity if wholesale prices skyrocket, and you need to be on the ball checking wholesale prices like a whale checks their gasha.
Exactly, though to give a lot of customers of these plans credit, they don't have the extra cash. Griddy's own marketing says that "96% of the time," the wholesale rate is well under the average retail per-kWh rate.
This is yet another one of those hidden costs of how being lower-income is very expensive, both in actual money, and in time. Vanishingly few people have the time to be as on the ball as they'd need to for plans like this to work. And you can automate it, but that costs money many of these customers don't have.
I have no problems with plans like this existing; my issue is we set people up to fail by danging the large-print number being a very small value, while not warning people of how catastrophically it can go--and has gone--very wrong.
MISO's marginal cost to deliver a megawatt hour to my area is around ~$16-19 over the past hour or so; with those prices, I'd save ~200. That's nothing to sneeze at.
During the blackouts ERCOT's prices were around $7500 to deliver that mWh; at that cost I'd lose $18,483 by paying market rate.
I don't think the average person is equipped to properly price this risk. I don't think I'd know how to properly hedge it, either.
I would agree with that.
As a nerd-snipe for hyper-optimisers and misers, griddy would be a good if risky (to clients) business. Publicly advertised to the general population it's at best unethical and at worst unconscionable and insane.
> what is your visibility into current prices for electricity?
Very good price visibility. Phone notifications are great. Not only will they notify when it's high and you need to reduce consumption, but also when it's low -- meaning you can consume cheaply, and often they'll send out forecast notifications a day in advance, saying that prices are projected to be high (or projected to be low) the following day. It allows you to plan consumption easily.
> Have you been bitten by unexpected high prices before, perhaps in the summer? Prior to this event, would you say you saved money overall with Griddy?
I definitely saved money with Griddy, and if I moved back to Texas I wouldn't hesitate to sign back up with Griddy again.
To answer your question 2/3, when I tried to congratulate him on getting out of it before the storm, he was still pretty down on it. He's an analytical type but his conclusion was that he lost $600 by being on it and wished he'd left it sooner.
When I looked around in Texas for power, my findings were that A) pricing averaged about 11cents/kWh, but if you looked to find the best rates, you could get about 6 cents/kWh. Which, post-storm, seems not that different from the wholesale rates with no tail risk.
I am subscribed to text messages when prices go up and they provide a website with the time of use pricing.
But honestly, it boggles my mind that anybody would opt for these sorts of power plans with effectively unlimited downside and fairly marginal upside. Who wants this kind of stress in their life? Doesn't Texas already have pretty cheap power thanks to all of the wind and deregulation? Isn't that why they are in this mess in the first plate?
When I signed up I looked at the data for pricing and there wasn’t a time period in the data where I didn’t save. Now obviously that’s sort of the point of tail risk.
I’ve been looking for our regulators caps but haven’t found them yet.
The text is triggered if retail rates go above 14c per kWh for more than 30 minutes. That’s about 7x our normal peak rate.
Last week saw the highest prices I’ve seen going up to 40c at one point.
I’ll also note that I’m on budget billing which normalizes monthly fluctuations. No idea what the agreement is in the case of one of these tail events but I suspect it involves lots of publicity and regulators.
Edit: Not sure why I'm downvoted. I'm just saying some places allow consumers to buy a fixed rate plan. The parent comment was asking about how the process has varied in the past and I was pointing out that some people might be protected via a fixed rate contract.
Some plans are so-called variable rate where the per-kWh rate you pay changes per month based on the price of natural gas.
But an increasing majority are these time-of-use, rates-can-move plans, of which Griddy's is the logical extreme.
Whether or not they did it and gave their customers sufficient time to do the switch is another matter (i.e. close of business day timing, normal delays involved in new account enrollment, and so on).
EDIT: To be clear I'm not throwing Griddy under the bus for sending email late or without more time. I think they were doing what they could for their customers upon seeing the wholesale prices skyrocket. But the reality is that it takes time to switch services even under normal conditions, without thousands of others trying to do the same.
That said, I think it was bad advice from Griddy for a second reason.
I think they should have told their customers to just go to their house fuse box and shut off their power to avoid the inevitable huge bill.
I'm not sure why others haven't mentioned this but the customers did ultimately have that recourse. This is the unfortunate but logical thing to do when your 6c/kWh bill grows to $9/kWh. And at least you can intermittently turn it back on when needed to heat your house for a short bit, etc which is still better than being totally out for 3 days as many people here were.
Also, several people froze to death. It's a massive liability to tell people to shut their power off when it's below freezing; you could face civil liabilities. And you can't disconnect someone during freezing temperatures. I don't know whether a provider telling you to disconnect yourself would go over super well.
However, it has a 35p/kWh price cap (2-3x average rates).
I don't understand why Griddy didn't do something similar. Even a $1/kWh price cap would have really helped them.
It can't be long until we start to see value judgements about usage - 'your electricity usage for a heating or some such, is too high or beyond your allocation, so that has been charged to you at the regulatory tariff rate. Do you want us to send you a tutorial about how to better manage your energy usage? Would you like to move to a premium energy rate?'
What I would like to know, is are smart meter capable of refusing a demand for electricity for a device. So, say the company wants to use minimal electricity, will it allow energy for fridges and freezers, but not for A/C and TVs?
One major piece of this puzzle that is, IMO, missing, is the lack of any reasonable, standardized way for a hypothetical smart home to communicate with the grid. With a smart meter, a properly ZigBee certified (why? probably some silly reason involving “security”) end user device can get current usage data from a smart meter. (And this data is blatantly wrong in any nontrivial circumstance.)
But and end-user device has no way to negotiate pricing or load reduction with the grid short of going through some intermediary on the Internet. If I want to program my house to reduce consumption when prices are high, I can’t.
An an example, a car should be able to tell the grid that it wants to buy x kWh at a maximum power of y kW between now and 5 AM, and the grid should be able to tell the car when to buy it. I don’t mean Tesla negotiating this on behalf of itself or its customers - I mean the car or the house talking to the meter or the utility. No unnecessary or unavoidable intermediaries please.
It doesn’t help that PG&E does not accurately know the topology of its own grid. Oops.
Once the $/KWh passes some threshold, power either gets turned off, or they get some short grace period to figure out whether they want to continue or stop.
Price runs like these are things consumers will experience probably a handful of times in their lifetimes. If they run wild, they can financially ruin someone. In the grand scheme of things, these are black-swan events. There should be safety guards in place.
The safety guards tend to be laws saying, "you can't sell those". Consumer utilities should be boring and predictable, and need to be legally controlled to stay that way.
Note that everyone at risk of this even was told beforehand to switch providers now, so there was an "easy out" if you were paying attention (In theory easy, in practice, while it isn't never easy). Or you could have turned your own power off - When you get a time of use contract the point is you want to adjust your demand to fit the price, so anyone who got a large bill failed to do their end of the bargain.
> the amount of money they are due as a result of this market design ($50 billion!!!) is truly staggering and disproportionate to the value created
This is a screaming incentive for winterisation and energy storage. The premium is fine. It was mostly paid for by intermediaries.
For consumers: no, not generally. Some markets have schemes to sell leftover solar power at real time prices, but I believe these are being phased out. Both grids and markets are by and large not set up yet for full two-way markets between consumers and producers.
I haven't heard much about that last part; like you said, it would be great if the market works such that on the margin a player can exploit that price to make a quick buck (by, e.g. rigging some kind of battery up before a storm that's coming and making bank off the arbitrage when the storm hits by emptying the battery back in to the grid). Now maybe the transaction costs or economies of scale or whatever make that infeasible-- if so too bad-- but it's worth remembering this is half the benefit of a market system.
If you sold the power back for real-time pricing you'd need a much larger system than your annual consumption. Net metering basically lets you sell the power back at a retail price, not a wholesale price.
I would also be curious in how the Texas case works. Especially if the grid is down, would it be able to accept the energy you are producing?
When the grid is down you can't sell power back. The whole system shuts down. Though if you have a whole house battery backup you can use that instead of the grid (if it is built for it - solar gets weird if you aren't using exactly as much power as you make so you need something to use or make up the difference).
The Smart Grid can still deliver on its original promise of a dependable, bidirectional electricity generation and delivery system. But in order for it to do so we're going to have to get rid of all the decision makers who only care about squeezing short-term profit out of the idea. It's going to require thoughtful, long-term investment.
But those who had power are getting dinged with a ridiculous bill. Cascading failures, with no escape!
Hope everyone can recover!
Nonsense. There should be a price ceiling to consumers during natural disasters like this and regulations powerful enough to mitigate them more effectively.
People are not able to make rational financial decisions when reducing power consumption means your 11 year old child could freeze to death. I think the death count from exposure (freezing to death) in TX during that period is now 4, and I expect that will climb as we get a more full picture.
Meanwhile, many office buildings and rich neighborhoods had relatively uninterrupted power. What resulted in this class-stratification of power availability?
An energy exec was recorded on a call saying that the storm was "very good for them" in reference to the high profits made during the storm. Should these companies be allowed to rake in cash on one side of the system while passing thousands of dollars bills to their consumers on the other side to profit off human misery and misfortune?
On the other side, other energy companies skimped on winterization, leading to their gas lines freezing. Does anyone think "not being able to price gouge during the 4 most profitable days this year" is sufficient market-punishment to change behavior of these actors?
ERCOT and the energy players built a system that killed several people and made hundreds of thousands miserable. Author says "ERCOT is not evil", but I disagree: intent is irrelevant if greed motivated lack or risk management results in this scale of death, misery and destruction. Everyone working to make energy a "free market" in Texas has a share of the blood on their hands from building a system that led to this outcome. There should be a thorough investigation and several people deserve to end up in prison as a result. But, being that this occurred in "free market" loving Texas, I won't be holding my breath.
Perfect example of why basic human needs should not be run as a for-profit "free market".
NO, this is not an example of "Free Markets" failing.
This is Free Markets working exactly as designed.
Demand massively increased, due to the cold weather
Supply dramatically shrank due to the same cold weather
The market is dynamically priced
OF COURSE prices went hyperbolic
Why wasn't this tail risk/opportunity anticipated by the various suppliers, so they pre-built their systems to withstand such cold weather, to be able to take advantage of the windfall?
Because literally no one could afford to do so. The general market is a free-for-all low-cost race to the bottom. Invest more and you won't be competitive. Moreover, if enough people follow your strategy, you'll never see the windfall. No one can make the decision to invest in any quarter, so it never gets done.
Yes, intelligent regulation is a pain in the arse, but free markets really do only one thing well - dynamically allocate resources and adjust pricing. Important, for sure.
But a complex society also needs disaster planning and resource allocation, and to prevent Tragedies Of The Commons, both of which Free Markets(TM) will not only fail to solve, but will aggressively screw up.