| There are a couple of important things to note here that I haven’t seen get much discussion. First, assuming that residential customers can understand the pricing dynamics that are going on is a really bad assumption. It is very complex because there is an interplay between their natural gas service and their electric service, both of which are buying gas from the market on the customer’s behalf. The agents for each company are contractually obligated to supply energy to their customers at any cost - and this is a real problem in this type of situation. In effect, the customer is bidding against themselves via the gas & electric companies. Even in some ideal world where the consumers have full real-time price transparency, it would be extremely difficult for the customer to understand the costs of their actions and the best balance between the two services. Second, it should be noted that the astronomical gas and electric prices in those markets did not really accomplish anything. They brought on very marginal amounts of additional energy (beyond about 10x average prices there is almost no meaningful additional capacity that can come online because nobody in their right mind would invest in infrastructure that could only operate at those prices). Those prices also did not provide useful information that residential customers could evaluate and act on on the demand side (price sensitive industrial and large commercial customers would shut down at far lower prices than was seen). Ultimately, what occurred was an emergency situation and disaster. Pricing and consumption controls should have been initiated when energy emergency alerts were declared in the gas and electric markets, as the market structure is not setup to operate effectively during these situations. It was a total failure. The only things that worked were the reliability plans that grid operators have in place to disconnect customers in order to prevent complete failure of the electric grid. Ultimately, in an emergency/disaster situation there should be a different set of rules that determines who gets the energy and caps the cost. Note that the winterization discussions going on elsewhere are also extremely important, but those problems are already being covered well. |