Interested in Utility Scale Renewables ? Delve into ERCOT

[SageBrush]

Sounds like the retail market is collapsing.

To put it mildly.

I don't have it handy, but I read a PUCT document the other day that I think directs ERCOT to authorize up to $90/kWh generator charges. The interesting detail was that retailers were capped at $10/kWh for a while, causing a massive systemic loss to the retailers if they sold electricity.

To you and me, both $10/kWh and $90/kWh are hard to fathom but I would not want to be on the losing side of that transaction.

----
That same PUCT document clarified that the $90/kWh cap was needed to bring supply back into alignment with demand.
REALLY ? I find that so hard to believe.

 

[David_Cary]

Not that I have any knowledge of grids beyond a basic understanding, but it seems that a larger network is more resilient by default. And while Texas is reasonably big, the grid there is probably something like 20% the size of the other grids.
So saying that ERCOT and an isolated Texas grid should go away is not really politics, it is just logic. Renewables are wickedly easier with a larger, weather variable grid. How does Texas manage that?

The most frustrating thing about the federal government is that it tends to pick up the pieces when states don't price in risk correctly. That kind of backup leads to ... states not pricing risk correctly.

So Texas has had the coldest snap in history and the wettest period in history - in the last few years. Will it change minds? Doubt it.

 

[mspohr]

To put it mildly.

I don't have it handy, but I read a PUCT document the other day that I think directs ERCOT to authorize up to $90/kWh generator charges. The interesting detail was that retailers were capped at $10/kWh for a while, causing a massive systemic loss to the retailers if they sold electricity.

To you and me, both $10/kWh and $90/kWh are hard to fathom but I would not want to be on the losing side of that transaction.

----
That same PUCT document clarified that the $90/kWh cap was needed to bring supply back into alignment with demand.
REALLY ? I find that so hard to believe.

How could it possibly cost generators $90/kWh to make electricity?

 

[SageBrush]

How could it possibly cost generators $90/kWh to make electricity?

I don't know, but that was not the PUCT point. They declared that $90/kwh was needed to balance supply with demand.

At their lowest, Texas was generating ~ 30 GW. Since it was cold, perhaps Texans would consume .... say 100 GW (double the usual) if price was not in play. So the question becomes, how much does electricity have to cost to get the state to use ~ 1/3 of their preference ?

The answer may turn out to be that no price is high enough
If Texans are unaware of the price, or are unaffected by the price, or do not understand the information provided, or think they can game the system

Almost certainly, the consumers on fixed price plans consumed much more liberally than those on wholesale plans. I think that it is a fair guess that the impending system-wide blackout Texas was facing was a result of consumption from the fixed rate plan payors since they had no price signal of scarcity. They were just hogs ... until the lights went out. And along the way they pushed the wholesale rates to the goofy PUCT maximum.

We can both agree that lack of climate mitigation measures was stupid, but I'm inclined to accept the argument that fixed rate plans broke the Texas back. People *need* scarcity signals, and they need motivation to respond to them appropriately. The PUCT/ERCOT market system failed because 80% of the retail market ignored them. The other 20% of the retail market were royally screwed, but of course not by any of the parties they are most angry with.

---
Let's fix Texas, shall we ?
Mandate climate mitigation hedges. That is the easy part, but it is not enough because there will always be times of scarcity. When scarcity happens, Texas has two choices:

1. Put everyone on a wholesale plan and expect consumers respond to price signals
2. Put everyone on a fixed rate plan, with the understanding that rolling black-outs will become their not so unusual experience. Call it the 'CA plan.'

 

[mspohr]

I don't know, but that was not the PUCT point. They declared that $90/kwh was needed to balance supply with demand.

At their lowest, Texas was generating ~ 30 GW. Since it was cold, perhaps Texans would consume .... say 100 GW (double the usual) if price was not in play. So the question becomes, how much does electricity have to cost to get the state to use ~ 1/3 of their preference ?

The answer may turn out to be that no price is high enough
If Texans are unaware of the price, or are unaffected by the price, or do not understand the information provided, or think they can game the system

Almost certainly, the consumers on fixed price plans consumed much more liberally than those on wholesale plans. I think that it is a fair guess that the impending system-wide blackout Texas was facing was a result of consumption from the fixed rate plan payors since they had no price signal of scarcity. They were just hogs ... until the lights went out. And along the way they pushed the wholesale rates to the goofy PUCT maximum.

We can both agree that lack of climate mitigation measures was stupid, but I'm inclined to accept the argument that fixed rate plans broke the Texas back. People *need* scarcity signals, and they need motivation to respond to them appropriately. The PUCT/ERCOT market system failed because 80% of the retail market ignored them. The other 20% of the retail market were royally screwed, but of course not by any of the parties they are most angry with.

---
Let's fix Texas, shall we ?
Mandate climate mitigation hedges. That is the easy part, but it is not enough because there will always be times of scarcity. When scarcity happens, Texas has two choices:

1. Put everyone on a wholesale plan and expect consumers respond to price signals
2. Put everyone on a fixed rate plan, with the understanding that rolling black-outs will become their not so unusual experience. Call it the 'CA plan.'

I think raising the price just encourages generators to limit supply, not increase it.

 

[SageBrush]

I think raising the price just encourages generators to limit supply, not increase it.

Except that did not happen. Not last week, and not every day when a Polar vortex is not in the 'hood

Texas has a plentiful and competitive generator landscape. Your paranoia over market manipulation is unfounded.

 

[mspohr]

Except that did not happen. Not last week, and not every day when a Polar vortex is not in the 'hood

Texas has a plentiful generator landscape. Your paranoia over market manipulation is unfounded.

Having been a victim of Enron, I am wary.

 

[SageBrush]

Having been a victim of Enron, I am wary.

By all means be wary, but remember S. Holmes' advice:
' Extraordinary claims require extraordinary evidence"

 

[papab]

---
Let's fix Texas, shall we ?
Mandate climate mitigation hedges. That is the easy part, but it is not enough because there will always be times of scarcity. When scarcity happens, Texas has two choices:

1. Put everyone on a wholesale plan and expect consumers respond to price signals
2. Put everyone on a fixed rate plan, with the understanding that rolling black-outs will become their not so unusual experience. Call it the 'CA plan.'

Why are these the only choices? Most of us in the US are on a fixed rate plan and do not have rolling blackouts.

 

[SageBrush]

Most of us in the US are on a fixed rate plan and do not have rolling blackouts.

The trigger is a rare, catastrophic event.
States that have freezes every year are prepared.
States that have heat waves every year are prepared

Moreover, only Texas is islanded, and Texas stands out for its laissez faire approach to regulation. Can you name other states that allow wholesale retail plans ? How about other states that do not mandate any mitigation ?

A perfect storm, if you will

 

[mspohr]

Texas is toast
Sunrise brief: Hit with a $1.8 billion bill, a Texas co-op files Chapter 11


The largest power cooperative in Texas filed for Chapter 11 bankruptcy protection on March 1, saying it received a $1.8 billion bill from the Electric Reliability Council of Texas (ERCOT) following last month’s winter storm that crippled the state’s electric power grid.
In a statement, Brazos said ERCOT sent it “excessively high invoices” with payment required “within days.” The company said that it “cannot and will not foist this catastrophic financial event” on its members and consumers.
In a related action, Fitch Ratings in late February placed all retail and wholesale electric utilities operating within ERCOT on Rating Watch Negative (RWN). The action followed what Fitch said was the “potentially severe, but uncertain” financial impact of the winter storm.

 

[mspohr]

Too Much Choice Is Hurting America Opinion | Too Much Choice Is Hurting America
The lesson of subprime mortgages, health insurance and now Texas electricity is that sometimes people offered too much choice will make bigger mistakes than they imagined possible. But that’s not all. Too much choice creates space for predators who exploit our all-too-human limitations.
What I’m suggesting is that a society that turns what should be routine concerns into make-or-break decisions — a society in which you can ruin your life by choosing the wrong electric company or health insurer — imposes poverty-like cognitive burdens even on the middle class.
It wouldn’t take much to protect Americans against being scammed by mortgage lenders or losing their life savings to fluctuations in the wholesale price of electricity.

 

[SageBrush]

In a related action, Fitch Ratings in late February placed all retail and wholesale electric utilities operating within ERCOT on Rating Watch Negative (RWN). The action followed what Fitch said was the “potentially severe, but uncertain” financial impact of the winter storm.

Read: Fitch is uncertain what bills will get paid, and by whom.

The generators and speculators windfall is looking a little more like IOU slips

 

[SageBrush]

Too Much Choice Is Hurting America Opinion | Too Much Choice Is Hurting America
The lesson of subprime mortgages, health insurance and now Texas electricity is that sometimes people offered too much choice will make bigger mistakes than they imagined possible. But that’s not all. Too much choice creates space for predators who exploit our all-too-human limitations.
What I’m suggesting is that a society that turns what should be routine concerns into make-or-break decisions — a society in which you can ruin your life by choosing the wrong electric company or health insurer — imposes poverty-like cognitive burdens even on the middle class.
It wouldn’t take much to protect Americans against being scammed by mortgage lenders or losing their life savings to fluctuations in the wholesale price of electricity.

That's a pretty good description of American "exceptionalism" : people no where near as smart as their self-image.

Merkins should change the spelling of 'freedom' to 'freedumb': free to be dumb, which of course carries the obligation by others to pick up the pieces.

 

[mspohr]

Executive Overseeing Texas’ Power Grid Is Forced Out From Within Executive Overseeing Texas’ Power Grid Is Forced Out From Within
HOUSTON — The Electric Reliability Council of Texas decided to force out its chief executive on Wednesday after the agency, which controls the flow of electricity through much of the state, became the target of blame and scorn for widespread outages during last month’s winter storm.
State officials, including Gov. Greg Abbott and other lawmakers, assigned blame for the outages to ERCOT, but the grid’s failure has also animated critics of Texas’ embrace of deregulation, including its desire to have a power grid of its own.

 

[SageBrush]

Executive Overseeing Texas’ Power Grid Is Forced Out From Within Executive Overseeing Texas’ Power Grid Is Forced Out From Within
HOUSTON — The Electric Reliability Council of Texas decided to force out its chief executive on Wednesday after the agency, which controls the flow of electricity through much of the state, became the target of blame and scorn for widespread outages during last month’s winter storm.
State officials, including Gov. Greg Abbott and other lawmakers, assigned blame for the outages to ERCOT, but the grid’s failure has also animated critics of Texas’ embrace of deregulation, including its desire to have a power grid of its own.

Abbott found a scapegoat.

Who wudda thunk !?!!

 

[CrazyRabbit]

he resigned, overbilled 14 billion

 

[Needsdecaf]

I think the idiots here are ERCOT. Why did they ignore warnings for 10 years?
I know, Profit! They missed the"Reliability" part.

LOL. As opposed to all the CalEdison deferred maintenance that's sparked wildfires that have destroyed tens of thousands of acres of the state of California? This despite having rates 2 and 3 times higher than Texas?

Let's not go out on a limb here and claim that any of these energy providers aren't trying to stuff as much money back in their pockets as possible.

 

[mspohr]

LOL. As opposed to all the CalEdison deferred maintenance that's sparked wildfires that have destroyed tens of thousands of acres of the state of California? This despite having rates 2 and 3 times higher than Texas?

Let's not go out on a limb here and claim that any of these energy providers aren't trying to stuff as much money back in their pockets as possible.

Not clear. What's your point?

 

[SageBrush]

he resigned, overbilled 14 billion

How little you understand.

The generators did not 'overbill', so the blame game is over who pays the bill.