[jandrese]

It strikes me that Texas is suffering the same sort of problems that companies that switch to just-in-time delivery do. When everything is working they're more efficient and can out-compete their neighbors, but since they're running with little to no safety margin it only takes one incident to cause immediate disruption to the line. Of course when the consequence of a disruption is you miss your production targets for the week it's not so bad. When the consequence is thousands of people freezing to death maybe you should step back and ask if this is really what you want. Is it worth saving a fraction of a penny per kWh if it means the system can't budget for extreme events or even long term maintenance?

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.

[thesuitonym]

The problem wasn't really the just-in-time nature of power generation--nearly all power grids operate this way, usually with little more than a flywheel on the generator to smooth out fluctuations. Sometimes you get a stored water battery, but that doesn't last more than a few hours at peak consumption. We don't really have the ability to store power in a way that's efficient enough to not rely on JIT generation.

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.

[thesteamboat]

I don't think the parent was talking about JIT power generation but rather using JIT (in other industries) as a comparison to to talk about the efficiency-reliability tradeoff. The analogy here is cost savings of avoiding winterization make the power companies more competitive (more efficient) but less reliable.

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.

[bluGill]

Companies that do just in time in fact are careful to manage their supply chain for this. I know my company orders steel 3-6 months in advance, in part because this eventually reaches all the way back to the miners digging the ore. They now can plan their work to ensure they don't have to pay overtime to meet our orders (compare to when we figured out the best price of the year and ordered a 1 year supply for delivery next week) which keeps costs down.

Insurance is a major part of any market, and insurance is very good to managing unusual events or externalities that matter.

[jandrese]

I wonder what the insurance payouts are like for power companies that let people freeze to death? Probably nothing because they'll claim they weren't to blame.

[RHSeeger]

There are laws in place to prevent the utility companies from cutting off heat in situations like this.

From: https://www.needhelppayingbills.com/html/utility_and_heating...

> 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.

[jandrese]

They aren't getting disconnected, the power is going out because the operator didn't add enough margin into their system to handle abnormal events. In the race to offer the lowest possible price per kWh they made the system unsafe for sensitive groups.

[freeone3000]

The issue was rolling blackouts caused by insufficient capacity and lack of winterization in generation stations. I know people who lost power for 48 hours in 14F weather. We have at least 21 dead.

[ivalm]

Right, but I guess many of the people who died chose to risk rather than be stuck with a bill they cannot afford. Being allowed deferred payment is not enough.

[bluGill]

Most, probably all, of the people who died didn't have a choice, their power was cut off for the entire neighborhood. The bill they can't afford for the most part hasn't even been mailed yet (bills are generally monthly, this event wasn't that long ago).

[zbrozek]

Let's say you're a cloud operator placing long-lead just-in-time orders for hard drives with three different suppliers. Thailand floods and your carefully planned-in-advance delivery schedule is hosed. Your competitor with some inventory runway now has an advantage.

In many ways inventory is better than insurance because you're going to use it and so the cost is limited to storage.

[bluGill]

No matter how much inventory you have on hand it can eventually run out so you haven't actually prevented any problems, just delayed them a little longer.

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.

[aqme28]

See also: hospitals running at close full capacity in a normal year[1], and then a pandemic comes along.

[1]: https://www.usnews.com/news/health-news/articles/2020-03-26/...

[bluGill]

Perhaps, but health care is so heavily managed nobody can call it a market. Most communities have a limit on how many hospital beds that are allowed which means that there isn't even an opportunity to do much better.

[jandrese]

That's kind of the core of the problem with healthcare in the US. We treat it like a market where you can't see the prices and where customer are forced to buy the product or die. Then we wonder why it's so expensive.

[renewiltord]

Perhaps if we call everyone in healthcare heroes and let them control the supply of healthcare things will get better.

[aqme28]

It seems more likely we'll call them heroes while laying them off.

[renewiltord]

So long as we can then claim there aren't enough heroes and it would take two decades to train more, I'm happy. It's the only possible thing we could try.