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Texas in Crisis

Keith&Co.

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His Lights Stayed on During Texas’ Storm. Now He Owes $16,752

SAN ANTONIO — As millions of Texans shivered in dark, cold homes over the past week while a winter storm devastated the state’s power grid and froze natural gas production, those who could still summon lights with the flick of a switch felt lucky.

Now, many of them are paying a severe price for it.

“My savings is gone,” said Scott Willoughby, a 63-year-old Army veteran who lives on Social Security payments in a Dallas suburb. He said he had nearly emptied his savings account so that he would be able to pay the $16,752 electric bill charged to his credit card — 70 times what he usually pays for all of his utilities combined. “There’s nothing I can do about it, but it’s broken me.”

Mr. Willoughby is among scores of Texans who have reported skyrocketing electric bills as the price of keeping lights on and refrigerators humming shot upward. For customers whose electricity prices are not fixed and are instead tied to the fluctuating wholesale price, the spikes have been astronomical.

The outcry elicited angry calls for action from lawmakers from both parties and prompted Gov. Greg Abbott, a Republican, to hold an emergency meeting with legislators on Saturday to discuss the enormous bills.

Is this how Texas turns blue, when the folks whose lights stayed on get burned too?
No, the relief package for the emergency? Those funds will be used to pay off those bills. Rewarding the power companies for their unpreparedness, sating their investors, and making no changes necessary.
 

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all face at least several weeks to resume normal operations, people familiar with the situation said. Gasoline prices at the pump could reach $3 a gallon in May as long outages crimp supply ahead of the driving season, said Patrick DeHaan, head of petroleum analysis for retailer tracker GasBuddy.

WTF?

Right now, in the depths of Trump virus epidemic, we're paying around 2.60/gal. That's with tons of people out of work, or working from home, or whatever.

If the Biden administration manages to boost us out of the Trump administration's mess, I fully expect gas to be $1 more per gallon by May, and the driving season.
And I live in "low cost of living" southern Indiana.

$3.60/gal. by May is a fairly optimistic guess. Unless, of course, you're a Texan oil man. Maybe Trump and Cruz can take better care of their big donors and gas will be $4 something.
Tom

Yeah, it feels strange but high gas prices are actually a good sign.
 

Shadowy Man

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I guess in Texas it is one’s own personal responsibility to find out what the going rates are for electricity because you can then decide if you want to turn off your power before getting charged.
 

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His Lights Stayed on During Texas’ Storm. Now He Owes $16,752

SAN ANTONIO — As millions of Texans shivered in dark, cold homes over the past week while a winter storm devastated the state’s power grid and froze natural gas production, those who could still summon lights with the flick of a switch felt lucky.

Now, many of them are paying a severe price for it.

“My savings is gone,” said Scott Willoughby, a 63-year-old Army veteran who lives on Social Security payments in a Dallas suburb. He said he had nearly emptied his savings account so that he would be able to pay the $16,752 electric bill charged to his credit card — 70 times what he usually pays for all of his utilities combined. “There’s nothing I can do about it, but it’s broken me.”

Mr. Willoughby is among scores of Texans who have reported skyrocketing electric bills as the price of keeping lights on and refrigerators humming shot upward. For customers whose electricity prices are not fixed and are instead tied to the fluctuating wholesale price, the spikes have been astronomical.

The outcry elicited angry calls for action from lawmakers from both parties and prompted Gov. Greg Abbott, a Republican, to hold an emergency meeting with legislators on Saturday to discuss the enormous bills.

Is this how Texas turns blue, when the folks whose lights stayed on get burned too?
No, the relief package for the emergency? Those funds will be used to pay off those bills. Rewarding the power companies for their unpreparedness, sating their investors, and making no changes necessary.

If I had money to invest, I would short the stocks of these companies that suckered people into doing business with an electrical supplier that had variable rates. After this, nobody in his or her right mind will do business with any company with that business model. Maybe federal money won't be going to bankrupt companies after all.
 

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Wow, I did not know it was even a thing. I understand variable rate throughout a day. But unlimited rate? That's just stupid.
They should at least have upper limit after which you turn thing down.
 

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In CT I can choose my supplier from a dozen or so sources. Variable rate or fixed and the duration, and whether there are fees attached. I just got locked-in for 3 years at $0.0759/KWH and no cancellation fee if it should go down and I want to switch. That doesn't include the delivery charge which can also vary. But I think that wouldn't be related to demand.
 

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Wow, I did not know it was even a thing. I understand variable rate throughout a day. But unlimited rate? That's just stupid.
They should at least have upper limit after which you turn thing down.

Yes, it is stupid. Yes, there should have been an upper limit. But there wasn't. This is going to linger on for years in Texas. Right wing Texas: "Government regulation baaaaaaaad!". And what did we learn from all of this?
 

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all face at least several weeks to resume normal operations, people familiar with the situation said. Gasoline prices at the pump could reach $3 a gallon in May as long outages crimp supply ahead of the driving season, said Patrick DeHaan, head of petroleum analysis for retailer tracker GasBuddy.

WTF?

Right now, in the depths of Trump virus epidemic, we're paying around 2.60/gal. That's with tons of people out of work, or working from home, or whatever.

If the Biden administration manages to boost us out of the Trump administration's mess, I fully expect gas to be $1 more per gallon by May, and the driving season.
And I live in "low cost of living" southern Indiana.

$3.60/gal. by May is a fairly optimistic guess. Unless, of course, you're a Texan oil man. Maybe Trump and Cruz can take better care of their big donors and gas will be $4 something.
Tom

Yeah, it feels strange but high gas prices are actually a good sign.
What? High gas prices can mean a couple things, but usually it means supply is tight to demand and there is little wiggle room for more supply.
 

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Wow, I did not know it was even a thing. I understand variable rate throughout a day. But unlimited rate? That's just stupid.
They should at least have upper limit after which you turn thing down.

Yes, it is stupid. Yes, there should have been an upper limit. But there wasn't. This is going to linger on for years in Texas. Right wing Texas: "Government regulation baaaaaaaad!". And what did we learn from all of this?
Texas: we may not have heat, electricity, or water in the winter, but we have freedom the rest of the year.
 

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Texas, demonstrating Isolationism working most of the time isn't as good as things working all of the time.
 

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lpetrich

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Sheldon Whitehouse on Twitter: "All this shows how deeply the Republican Party is controlled by the fossil fuel industry. Think puppets on a string. Expose dark money, and you expose this link, which is why Republicans fight disclosure. (link)" / Twitter
noting
Texas Gov. Greg Abbott falsely blames wind turbines, Green New Deal for power grid outages - The Washington Post
Like many other Republicans, Perry also falsely blamed frozen wind turbines for the mass outages, when a widespread failure to invest in winterizing power sources and frozen natural gas pipes played a far bigger role. ...
Gov. Abbott
The governor’s arguments were contradicted by his own energy department, which outlined how most of Texas’s energy losses came from failures to winterize the power-generating systems, including fossil fuel pipelines, The Washington Post’s Will Englund reported. But Abbott’s debunked claims were echoed by other conservatives this week who have repeatedly blamed clean energy sources for the outages crippling the southern U.S.

In fact, typically mild winters and a lack of state regulations in Texas combined to leave electricity providers unprepared for the extreme cold that has suddenly hit the state, The Post reported. Nearly every source of energy — from wind turbines to natural gas to nuclear power — have failed to some degree following a harsh storm that covered the region with thick layers of snow and ice.

...
The governor was not the only prominent Texas Republican to blame clean energy for the historic power outages. After Fox News host Tucker Carlson inaccurately told viewers that the state’s power grid had become “totally reliant on windmills,” Perry joined Carlson in railing against the Green New Deal, which has not been enacted in Texas or nationally.

“If this Green New Deal goes forward the way that the Biden administration appears to want it to, then we’ll have more events like we’ve had in Texas all across the country,” Perry said in another Fox News segment.
Rep. Dan Crenshaw, R-TX
“Bottom line: Thank God for baseload energy made up of fossil fuels,” Crenshaw tweeted. “Had our grid been more reliant on the wind turbines that froze, the outages would have been much worse.”
 

lpetrich

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Mira Kamdar on Twitter: ""The horrors currently unfolding in Texas expose both the reality of the climate crisis and the extreme vulnerability of fossil fuel infrastructure in the face of that crisis. So of course the Green New Deal finds itself under fierce attack." @NaomiAKlein https://t.co/JPPEEtn8ef" / Twitter
noting
Opinion | Why Texas Republicans Fear the Green New Deal - The New York Times - "Small government is no match for a crisis born of the state’s twin addictions to market fixes and fossil fuels."
Since the power went out in Texas, the state’s most prominent Republicans have tried to pin the blame for the crisis on, of all things, a sweeping progressive mobilization to fight poverty, inequality and climate change. “This shows how the Green New Deal would be a deadly deal,” Gov. Greg Abbott of Texas said Wednesday on Fox News. Pointing to snow-covered solar panels, Rick Perry, a former governor who was later an energy secretary for the Trump administration, declared in a tweet “that if we humans want to keep surviving frigid winters, we are going to have to keep burning natural gas — and lots of it — for decades to come.”

...
A fateful series of decisions were made in the late-’90s, when the now-defunct, scandal-plagued energy company Enron led a successful push to radically deregulate Texas’s electricity sector. As a result, decisions about the generation and distribution of power were stripped from regulators and, in effect, handed over to private energy companies. Unsurprisingly, these companies prioritized short-term profit over costly investments to maintain the grid and build in redundancies for extreme weather.

...
This energy-market free-for-all means that as the snow finally melts, many Texans are discovering that they owe their private electricity providers thousands of dollars — a consequence of leaving pricing to the whims of the market. The $200,000 energy bills some people received, the photos of which went viral online, were, it seems, a mistake. But some bills approaching $10,000 are the result of simple supply and demand in a radically underregulated market. “The last thing an awful lot of people need right now is a higher electric bill,” said Matt Schulz, chief industry analyst with LendingTree. “And that’s unfortunately something a lot of people will get stuck with.” This is bad news for those customers, but great news for shale gas companies like Comstock Resources Inc. On an earnings call last Wednesday, its chief financial officer said, “This week is like hitting the jackpot with some of these incredible prices.”
So much for the self-regulating market. Markets succeed in some things, but not so much in others.
 

Loren Pechtel

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I guess in Texas it is one’s own personal responsibility to find out what the going rates are for electricity because you can then decide if you want to turn off your power before getting charged.

It depends on what power provider you sign up with. The people that are getting really burned are the ones that signed up with one that simply passes on market rates--of course they are typically cheaper because they offload the market risk onto the consumer.
 

Loren Pechtel

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Yeah, it feels strange but high gas prices are actually a good sign.
What? High gas prices can mean a couple things, but usually it means supply is tight to demand and there is little wiggle room for more supply.

But demand goes up when people feel like using their cars more--it's a sign of better economic times.
 

lpetrich

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Author Naomi Klein continues,
Large-scale shocks — natural disasters, economic collapse, terrorist attacks — become ideal moments to smuggle in unpopular free-market policies that tend to enrich elites at everyone else’s expense. Crucially, the shock doctrine is not about solving underlying drivers of crises: It’s about exploiting those crises to ram through your wish list even if it exacerbates the crisis.

To explain this phenomenon, I often quote a guru of the free market revolution, the late economist Milton Friedman. In 1982, he wrote about what he saw as the mission of right-wing economists like him: “Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”
"Never let a crisis go to waste"

NK thinks that Gov. Abbott is running scared at the prospect of a Green New Deal, "which promises to create millions of union jobs building out shock-resilient green energy infrastructure, transit and affordable housing."
All that Texas’s Republicans have to offer, in contrast, is continued oil and gas dependence — driving more climate disruption — alongside more privatizations and cuts to public services to pay for their state’s mess, which we can expect them to push in the weeks and months ahead.

Will it work? Unlike when the Republican Party began deploying the shock doctrine, its free-market playbook is no longer novel. It has been tried and repeatedly tested: by the pandemic, by spiraling hunger and joblessness, by extreme weather. And it is failing all of those tests — so much so that even the most ardent cheerleaders of deregulation now point to Texas’s energy grid as a cautionary tale. A recent article in the Wall Street Journal, for instance, called the deregulation of Texas’s energy system “a fundamental flaw.”

In short, Republican ideas are no longer lying around — they are lying in ruin. Small government is simply no match for this era of big, interlocking problems. Moreover, for the first time since Margaret Thatcher, Britain’s former prime minister, declared that “there is no alternative” to leaving our fates to the market, progressives are ready with a host of problem-solving plans. The big question is whether the Democrats who hold power in Washington will have the courage to implement them.
I'm reluctant to conclude that Gilded Age II has ended. But it has certainly been battered by a lot of crises, with no hint of how to solve them within its dominant political, economic, and social paradigm. Donald Trump's Presidency, the coronavirus pandemic, and now the Texas great freeze are only the latest of them.

Crises have produced political upheavals over US history, and I think that we are headed for one.

Slaveowner overreach led to the Civil War and the destruction of slave-plantation society.

The industrialization of the first Gilded Age wasn't working out for many people, and that led to the Progressive Era.

The Great Depression was not ended by staying within the capitalist paradigms of the Roaring Twenties. That led to the New Deal.

The New Deal itself had trouble in the 1970's, with stagflation and the New Left vs. organized labor. That led to Reaganism and Gilded Age II. Across the Atlantic was Thatcherism, something similar.
 

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The Washington Post on Twitter: "Some Texans got electric bills up to $17,000 after the storm. How does that happen? (link)" / Twitter
noting
Why are Texas electric bills high? Prices surge after winter storms. - The Washington Post
“Everyone in Texas is about deregulation, and Griddy as a wholesale electricity provider is the most deregulated you can get,” said Nicholas Milazzo, who received a $3,000 bill. “And this just goes to show why regulation is important, because, sure, in the short term it’s great, but then situations like this arise where it just gets out of control.”

People with exorbitant bills have demanded solutions. Texas Attorney General Ken Paxton (R) announced that he is opening an investigation of the power failures, including the high prices.

Alexandria Ocasio-Cortez on Twitter: "Heat in winter and running water should not be privileged commodities for the wealthy.

In a modern society, they should be rights. And we will have to fight for these rights as climate change gets worse.

That means standing up to climate crisis profiteers to protect the public." / Twitter
 

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Houston Chronicle on Instagram: “U.S. Rep. Alexandria Ocasio-Cortez (NY-14) visited Houston…”
U.S. Rep. Alexandria Ocasio-Cortez (NY-14) visited Houston at the invitation of fellow congresswoman Sylvia Garcia (TX-29) on Saturday, February 20, 2021 as Houston defrosts from a winter storm earlier that started earlier in the week. Ocasio-Cortez raised more than $3Million for Texas relief in less than a week. She and Rep. Garcia were joined by other representatives as they visited the Houston Food Bank and toured homes in Garcia’s district that were damaged by the storm. (Photos by @egconley / Houston Chronicle) #aoc #winterstormuri #winterfreeze #houstonweather #eastend
Alexandria Ocasio-Cortez on Twitter: "One last update (I think!): We just hit $5 million raised for Texans across the state.

Thank you ALL for your collective action when people need it most.

Charity can’t replace policy, but solidarity is how we’ll face climate change and build a better world. 💪🏽🌎

Thank you 🙏🏽 (link)" / Twitter


With this response:
ShaziaJ on Twitter: "@AOC (pic link)" / Twitter
The picture:
  • AOC: raises millions in aid
  • Beto O'Rourke: organizes help for seniors
  • Joaquin Castro: mobilizes food & water drive
  • Ted Cruz: flees to Cancún
 

lpetrich

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Alexandria Ocasio-Cortez on Twitter: "From the Texas Freeze & Midwest floods to California wildfires & Hurricane María, the climate crisis impacts us all.

We must come together and act boldly to stem climate change, AND we can create 20 million+ jobs in the process.

*That’s* what a #GreenNewDeal is all about. 🌎⬇️ (vid link)" / Twitter

Then a speech from her at a press conference.


Texas pauses electric bills as some get hit with thousands in costs | The Texas Tribune - "Electric bills are likely to rise for everyone, experts and consumer advocates say, but some Texans on variable rate contracts have been hit with immediate, massive price spikes. Lawmakers and the governor have promised to help, but haven't said how."
 

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Alexandria Ocasio-Cortez on Twitter: "There are remarkable public servants throughout the state of Texas - just look at Houston!

Thank you @RepSylviaGarcia, @JacksonLeeTX18, & @RepAlGreen for your tireless leadership and warm welcome.

And thanks to the @HoustonFoodBank for their commitment to serving *all* people. (link)" / Twitter


Ted Cruz stayed at this luxury 5-star hotel during his trip to Cancun
  • Sen. Ted Cruz visited a Ritz-Carlton hotel amid the Texas storm last week.
  • The five-star resort has 9 dining options and a panoramic ocean-front view.
  • Amid backlash, Cruz stayed at the hotel for one night before returning home.
Accommodations at the five-star luxury hotel start at over $300

The Mexican resort has a sweeping ocean view. All the rooms at the hotel look out on the Caribbean sea and feature private balconies and terraces.

The luxury resort also has one of the largest hotel beach fronts in Cancun - 1,200 feet of prime beach real estate.

Forbes' Travel Guide ranks the Ritz-Carlton as one of the top luxury hotels in Cancun.

...
The resort has one of the top spas in Cancun
Beto O'Rourke, Alexandria Ocasio Cortez helped Texans in crisis while Ted Cruz was traveling - CNNPolitics
While Cruz was facing criticism, his fellow Republican Sen. John Cornyn was tweeting and retweeting news and guidance for Texans to follow, including a message from the right-leaning R Street Institute, which at one point during the height of the scandal Thursday tweeted, "Meanwhile, @JohnCornyn's Twitter feed is full of helpful news and resources for Texas." Cornyn's office denied that it was trying to draw a contrast with Cruz's handling of the crisis.

The stunning political power of AOC - CNNPolitics
"But it's also extremely important -- in terms of AOC's political future -- to note how incredible it is for a second-term House member to be able to raise so much money so quickly for a cause she chose to advocate for." - $5 million for Texas aid
 

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Texas faces water shortage as many are still without power - YouTube

Also, some electric-power companies are recommending that their customers disconnect to avoid grotesquely high power bills. If they have to put in a request like that, then what's going on in their electricity pricing? Is there some software that sets it -- software that is too difficult to override without causing a lot of trouble?

1 million meals raised: How Alexandra Ocasio-Cortez’s fundraiser is already benefitting Central Texas | KXAN Austin
The Central Texas Food Bank said so far it’s received $297,303.55 from the fundraiser she launched last week. It can provide four meals for every dollar it receives, which translates to 1,189,214 meals.

“We are so grateful to the Congresswoman and all those who have contributed to these relief efforts,” the food bank said in a statement.
The TV station didn't get numbers from other charities.

But AOC did an impressive feat: raising $5 million for Texas.
 

T.G.G. Moogly

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I seriously don't get their electricity thing. Where I live you call the utility and they connect/disconnect/troubleshoot/etc. Sure sounds overly complicated and fucked up in texas. So customers are supposed to disconnect so that they don't get bills that are astronomically high? Something seriously stinks.
 

Keith&Co.

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I seriously don't get their electricity thing. Where I live you call the utility and they connect/disconnect/troubleshoot/etc. Sure sounds overly complicated and fucked up in texas. So customers are supposed to disconnect so that they don't get bills that are astronomically high? Something seriously stinks.
That company charges you what THEY pay for power. So, when they make power, you get it cheap.

When they sell excess power to other distributors, they keep the profits.

When there's unexpected demand, and they have to buy back the power they sold, at probably the same sort of extortionist markup they charged, they pass that along to you.

If this system does not work for you, change power providers.

Or legislatures.
 

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lpetrich said:
Also, some electric-power companies are recommending that their customers disconnect to avoid grotesquely high power bills.
That looks like a really bad system. Do you have a link?
 

Angra Mainyu

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lpetrich said:
Also, some electric-power companies are recommending that their customers disconnect to avoid grotesquely high power bills.
That looks like a really bad system. Do you have a link?

The 2nd post in this topic has a link to a good summary

Thanks, though it does not seem to say anything about companies recommending that their customers disconnect to avoid very high power bills. Or do you mean the video, not the text? I'll see if I can watch the video. Nope, nothing in the video, either.
 

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Texas, demonstrating Isolationism working most of the time isn't as good as things working all of the time.

The real issue seems to be weatherization. It had also been cold in Alberta, but Alberta kept the power on despite the surge in demand.

Frigid weather sees Alberta break power demand record

Albert is 43% coal and 49% natural gas. Texas is 23% wind, and 17% coal and 52% natural gas. But the Texas plants froze. Alberta shows coal/gas is just fine, so long as your plants are weatherized. Obviously, no one in Texas had thought it'd get that cold.
 

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Honduran family in Texas is not wasting any time before they called a hearse-chasing lawyer.

Family of boy who died during Texas winter storm sues ERCOT and Entergy for $100 million

CBS News said:
The family tried to wake up Pavon on Tuesday afternoon but he was unresponsive.

They waited until the afternoon before they tried to wake him up?

The family told KHOU that they tried calling 911 but were waiting on a Spanish-language operator.
I guess learning English in two years was too much to ask for.
 

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lpetrich said:
Also, some electric-power companies are recommending that their customers disconnect to avoid grotesquely high power bills.
That looks like a really bad system. Do you have a link?

The 2nd post in this topic has a link to a good summary

Thanks, though it does not seem to say anything about companies recommending that their customers disconnect to avoid very high power bills. Or do you mean the video, not the text? I'll see if I can watch the video. Nope, nothing in the video, either.

Texas Power Retailers to Customers in Face of Freeze: Please, Leave Us

Bloomberg said:
Some retail power companies in Texas are making an unusual plea to their customers amid a deep freeze that has sent electricity prices skyrocketing: Please, leave us.

One power supplier, Griddy, told all 29,000 of its customers that they should switch to another provider as spot electricity prices soared to as high as $9,000 a megawatt-hour. Griddy’s customers are fully exposed to the real-time swings in wholesale power markets, so those who don’t leave soon will face extraordinarily high electricity bills.

“We made the unprecedented decision to tell our customers -- whom we worked really hard to get -- that they are better off in the near term with another provider,” said Michael Fallquist, chief executive officer of Griddy. “We want what’s right by our consumers, so we are encouraging them to leave. We believe that transparency and that honesty will bring them back” once prices return to normal.

There was a follow-up Letter from Griddy about the storm and prices sent on the 15th that indicated other power companies weren't going to accept new customers right away, so some folks were going to be paying jacked up rates for a while.
 

T.G.G. Moogly

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This is a galactic level stupidity I have never heard before.

You've obviously never experienced the greatness that is Texas. It's the only state I've ever lived in that left me with the impression that something must be in the water there. It's probably the best example we have of Libertopia in action.
 

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That looks like a really bad system. Do you have a link?

The 2nd post in this topic has a link to a good summary

Thanks, though it does not seem to say anything about companies recommending that their customers disconnect to avoid very high power bills. Or do you mean the video, not the text? I'll see if I can watch the video. Nope, nothing in the video, either.

Texas Power Retailers to Customers in Face of Freeze: Please, Leave Us

Bloomberg said:
Some retail power companies in Texas are making an unusual plea to their customers amid a deep freeze that has sent electricity prices skyrocketing: Please, leave us.

One power supplier, Griddy, told all 29,000 of its customers that they should switch to another provider as spot electricity prices soared to as high as $9,000 a megawatt-hour. Griddy’s customers are fully exposed to the real-time swings in wholesale power markets, so those who don’t leave soon will face extraordinarily high electricity bills.

“We made the unprecedented decision to tell our customers -- whom we worked really hard to get -- that they are better off in the near term with another provider,” said Michael Fallquist, chief executive officer of Griddy. “We want what’s right by our consumers, so we are encouraging them to leave. We believe that transparency and that honesty will bring them back” once prices return to normal.

There was a follow-up Letter from Griddy about the storm and prices sent on the 15th that indicated other power companies weren't going to accept new customers right away, so some folks were going to be paying jacked up rates for a while.

Thanks for the links, and yes, that's a pretty serious design flaw.
 

Loren Pechtel

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There was a follow-up Letter from Griddy about the storm and prices sent on the 15th that indicated other power companies weren't going to accept new customers right away, so some folks were going to be paying jacked up rates for a while.

Duh! A company that doesn't pass on market rates to customers at present is going to be bleeding heavily. Of course they won't take on any new clients now.

Fundamentally, this comes down to a form of insurance. A company like Griddy is not providing any insurance against market rate shock, some other companies do. As always with insurance you pay not only the average cost of claims but something of a premium to get someone else to take the risk. (Normally there are also overhead costs to insurance but in this situation the business relationship and billing already exists, the additional overhead is tiny.)

This is not a case of the company being unfair, it is a case of consumers not realizing the risk they were assuming. Of course, being Texas, I'm sure they weren't required to point out how badly things could go.

Consider another common example of who assumes the risk: Fixed-rate mortgages vs adjustable-rate mortgages. Fixed-rate mortgages are a form of insurance against interest rate increases, ARMs have much less insurance (but since they normally have a maximum rate there is still some insurance involved.)

In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.

(Note, however, that there are some edge cases. I used to buy dental insurance from my employer because I could pay for it with pre-tax dollars but I would have to pay the dentist with post-tax dollars. The insurance company's cut was less than the tax bill would have been. There is also the issue that insurance companies are often in a position to negotiate a better deal--but note that this doesn't actually require insurance to exist. Before the ACA I was wishing someone would come up with health "insurance" with an infinite deductible--there definitely would be a value to the negotiation and crap filtering the health insurance companies provide even if they weren't willing to actually insure you.)
 

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There was a follow-up Letter from Griddy about the storm and prices sent on the 15th that indicated other power companies weren't going to accept new customers right away, so some folks were going to be paying jacked up rates for a while.

Duh! A company that doesn't pass on market rates to customers at present is going to be bleeding heavily. Of course they won't take on any new clients now.

Fundamentally, this comes down to a form of insurance. A company like Griddy is not providing any insurance against market rate shock, some other companies do. As always with insurance you pay not only the average cost of claims but something of a premium to get someone else to take the risk. (Normally there are also overhead costs to insurance but in this situation the business relationship and billing already exists, the additional overhead is tiny.)

This is not a case of the company being unfair, it is a case of consumers not realizing the risk they were assuming. Of course, being Texas, I'm sure they weren't required to point out how badly things could go.

Consider another common example of who assumes the risk: Fixed-rate mortgages vs adjustable-rate mortgages. Fixed-rate mortgages are a form of insurance against interest rate increases, ARMs have much less insurance (but since they normally have a maximum rate there is still some insurance involved.)

In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.

(Note, however, that there are some edge cases. I used to buy dental insurance from my employer because I could pay for it with pre-tax dollars but I would have to pay the dentist with post-tax dollars. The insurance company's cut was less than the tax bill would have been. There is also the issue that insurance companies are often in a position to negotiate a better deal--but note that this doesn't actually require insurance to exist. Before the ACA I was wishing someone would come up with health "insurance" with an infinite deductible--there definitely would be a value to the negotiation and crap filtering the health insurance companies provide even if they weren't willing to actually insure you.)

Not every municipality or customer may choose who they pay for electricity. Some people only have one option. Sometimes that option is the usurous one.

I would hazard that for some in this situation, the choice was "accept usury or have no heat/light."
 

Jimmy Higgins

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In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.
Insurance is a waste of money... until you need it. And when you need it, you can't afford to not have it.
 

ZiprHead

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In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.
Insurance is a waste of money... until you need it. And when you need it, you can't afford to not have it.

It can be expensive to be poor.
 

Jarhyn

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In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.
Insurance is a waste of money... until you need it. And when you need it, you can't afford to not have it.

It can be expensive to be poor.

It IS expensive to be poor. There's a certain dividing line, a financial escape velocity. If you get past a certain point, you can go anywhere you want, financially speaking. You just have to beat the gravity well of poverty first.

Ideally, we would accept a world wherein we all have a responsibility to work on bringing each other, at a bare minimum, to the edge of the gravity well, and then judge people on their decision to stay there at the threshold, or go out and do things.
 

Loren Pechtel

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In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.
Insurance is a waste of money... until you need it. And when you need it, you can't afford to not have it.

You failed to understand my point--insurance often is not worth it--think about extended warranties you're offered when you buy an awful lot of products. That's insurance with a low payout ratio, why do you think they push them so hard?

You insure against the risks that are too big for you to foot the bill, not against all risks.
 

Loren Pechtel

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It can be expensive to be poor.

It IS expensive to be poor. There's a certain dividing line, a financial escape velocity. If you get past a certain point, you can go anywhere you want, financially speaking. You just have to beat the gravity well of poverty first.

Ideally, we would accept a world wherein we all have a responsibility to work on bringing each other, at a bare minimum, to the edge of the gravity well, and then judge people on their decision to stay there at the threshold, or go out and do things.

An awful lot of the people in there jumped in themselves by having children they weren't financially prepared for.
 

Treedbear

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It can be expensive to be poor.

It IS expensive to be poor. There's a certain dividing line, a financial escape velocity. If you get past a certain point, you can go anywhere you want, financially speaking. You just have to beat the gravity well of poverty first.

Ideally, we would accept a world wherein we all have a responsibility to work on bringing each other, at a bare minimum, to the edge of the gravity well, and then judge people on their decision to stay there at the threshold, or go out and do things.

An awful lot of the people in there jumped in themselves by having children they weren't financially prepared for.

People find meaning and purpose in the darnedest places. Some find it in financial success and tend to have fewer kids. When that's not a viable option there's just family. Women can always have kids. When men can't make enough to benefit the family they leave. I believe anyone in a similar situation would act in the same way. There needs to be a minimum wage increase that provides enough for every family to have some savings. That's the heart of what it takes to function as a capitalist society. If that's too big a burden for businesses then the government needs to step in to make up the difference. It's an endemic problem and that's the only way to fix it.
 

T.G.G. Moogly

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It can be expensive to be poor.

It IS expensive to be poor. There's a certain dividing line, a financial escape velocity. If you get past a certain point, you can go anywhere you want, financially speaking. You just have to beat the gravity well of poverty first.

Ideally, we would accept a world wherein we all have a responsibility to work on bringing each other, at a bare minimum, to the edge of the gravity well, and then judge people on their decision to stay there at the threshold, or go out and do things.

An awful lot of the people in there jumped in themselves by having children they weren't financially prepared for.

Many of my parents' generation had lots of kids so they would be cared for in old age, or at least that's what many say. My father certainly believed that.
 

Jarhyn

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It can be expensive to be poor.

It IS expensive to be poor. There's a certain dividing line, a financial escape velocity. If you get past a certain point, you can go anywhere you want, financially speaking. You just have to beat the gravity well of poverty first.

Ideally, we would accept a world wherein we all have a responsibility to work on bringing each other, at a bare minimum, to the edge of the gravity well, and then judge people on their decision to stay there at the threshold, or go out and do things.

An awful lot of the people in there jumped in themselves by having children they weren't financially prepared for.

A lot of people were dragged there by the people you WOULD be describing if not for the fact that they were already inside the gravity well anyway.

A lot of people are in the gravity well because this might describe their parents.

It doesn't matter what put someone there. The problem is the fact that once they are inside, they can never leave, and neither can their children.
 

Jimmy Higgins

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In the big picture insurance is virtually always a bad deal--we only buy it because we might be the unlucky one. You normally should only buy insurance if you can't afford to be the unlucky one.
Insurance is a waste of money... until you need it. And when you need it, you can't afford to not have it.

You failed to understand my point--insurance often is not worth it--think about extended warranties you're offered when you buy an awful lot of products. That's insurance with a low payout ratio, why do you think they push them so hard?

You insure against the risks that are too big for you to foot the bill, not against all risks.

And the topic was at one point about the energy crisis in Texas where not enough importance was put on keeping the power grid from near collapse.

That level of failure is unacceptable.
 
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