[tschwimmer]

You might imagine a world in which everyone knows that electricity prices are dynamic and frequently changing. In a regime like this and under the recent circumstances in Texas, yes, you would expect businesses and people to rapidly change their behavior in order to not incur a giant electricity bill. Under limited generation with hugely inflated prices, only those entities that both need and could afford it will use electricity. What you have under this regime is a much more efficient use of electrical power in constrained circumstances.

Since electricity prices are mostly fixed[1] this type of price discovery cannot exist and everyone pretty much goes on using electricity as per usual during periods of shortage, leading to blackouts.

On the face of it, it seems like the market price regime might be preferable, but one has to remember that economic efficiency isn't the only thing we're optimizing for a society. Instead policy makers have decided that having low electricity prices for everyone is more important than maximizing efficiency with respect to power generation. I'm inclined to agree with them. The downside to this approach is that you have to invest more into making sure that you never run into these shortage events - otherwise you end up with the disaster that happened in Texas. That said, I can't imagine a free-floating price regime would have left Texas better off; instead the real world outcome probably would have been about the same: most people would have voluntarily turned off their power (or would have been 'margin called' by their utilities when they ran up huge bills inadvertently). Better efficiency, but similar outcome.

[1] Apparently one of the providers in Texas was called Griddy, which had a novel model where they did charge floating rates for electricity. Not coincidentally, they advised their customers to switch providers or risk enormous energy bills.