[twunde]

TX is __slightly__ different in that its fully deregulated and there's simply more knowledge about REPs/ESCOs and their pricing (because they customers HAVE to choose a REP). Also in what other state do you see billboard ads for REPs?

What is genuinely sad is that Griddy has a "price-lock" (ie a fixed rate) for the summer, which is exactly what you're talking about regarding tail risk. They just don't have it for the winter, which is normally the cheapest time in TX and clearly couldn't set up a decent fixed rate quickly after they understood the implications of the polar vortex. What they should have done is sent an email to their customers offering a fixed rate for the month even if it was expensive.

[leereeves]

I'm not sure they could have offered a reasonable fixed rate for the available power. When the federal DOE authorized the supply of emergency power that didn't meet the usual regulations, they required the price to be at least 10x the normal price ("no lower than $1,500/MWh"). I haven't been able to find out how much of the power supply that applied to, but at least some of the power during the disaster was legally required to be sold at outrageous prices.

> ERCOT shall ensure that such Specified Resource is only allowed to exceed any such limit during a period for which ERCOT has declared an Energy Emergency Alert (EEA) Level 2 or Level 3. This incremental amount of restricted capacity would be offered at a price no lower than $1,500/MWh.

https://www.energy.gov/sites/prod/files/2021/02/f82/DOE%2020...

[baldeagle]

It's ok... the Texas Public Utilities Commission decided to set the max rate to $9,000/MWh making the polluting power seem cheap by comparison.

I've read the Dept of Energy doc, and I think they were trying to make sure that power companies could pay for the pollution offset credits after the fact. Also, since Texas has a soldi market based power system, they wanted to make polluting power the least desired. Little did they know.....

[ashtonkem]

My understanding is that the energy markets started reacting to the polar vortex with days or weeks worth of warning, meaning that Griddy shouldn't have been that surprised that something was coming. Therefore it appears like Griddy was asleep at the helm, uninterested in doing anything about it, couldn't negotiate/hedge in time, or just internally confused.

[soylentcola]

Can't you say this for most things, though? People talked about the likelihood of a new contagious respiratory viral pandemic for years. Plans were drawn up, warnings were made, and the response was mostly "uh huh, that would suck for sure". Same could be said about anyone who's ever had their data lost to malware or hardware failure and didn't have a proper backup in place.

On some level I think it's human nature to underestimate some types of risk (and the nature of businesses to optimize for profit based on an understanding of this nature).

[ashtonkem]

There’s a big difference between “there might be a pandemic at some point in the indeterminate future” and “the price of 7 day gas futures is rising rapidly”. There’s also a difference between “Texas’ grid might fail in a future freeze” and “there will be a bad freeze next week”.

It doesn’t make sense to try and draw a parallel between a bad hypothetical that might happen in some indeterminate future and a negative possibility that will either come to pass or fizzle within a very short time horizon.

[readflaggedcomm]

The article says they told their customers to switch away. What it doesn't mention is that this was over a weekend, and many people couldn't manage the switch before the weather hit.