Jarhyn
Wizard
- Joined
- Mar 29, 2010
- Messages
- 14,588
- Gender
- Androgyne; they/them
- Basic Beliefs
- Natural Philosophy, Game Theoretic Ethicist
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."