[gpm]

This being wholesale doesn't somehow make it not price gouging. Raising prices on a product (electricity) that you were already selling during an emergency is widely considered to be highly immoral, and is illegal almost everywhere, including Texas [1]. There does not appear to be any exception for "wholesale" goods, or b2b transactions, nor should there be morally since that would defeat the whole purpose of keeping necessities flowing.

The fact that ERCOT sets the prices makes this whole situation complicated, I have no clue if anyone actually broke the law here. But certainly setting the price this high was immoral, useless, and just a transfer of money from people buying electricity to the people who were already producing as much electricity as they could at 1/10th the price. The fact that these people participated in the wholesale market assuming that that market operated under the normal norms of western civilization is not particularly their fault, but an entirely reasonable thing for them to have done. The solution to this problem is not to not let people participate in markets, but to make markets actually follow the normal norms of civilization and not engage in unethical price gouging during emergencies.

[1] https://www.texasattorneygeneral.gov/consumer-protection/dis...

[gruez]

>But certainly setting the price this high was immoral, useless, and just a transfer of money from people buying electricity to the people who were already producing as much electricity as they could at 1/10th the price.

Not really, raising the prices also increases supply (eg. hiring workers to work overtime to get it fixed, or renting out expensive equipment to get it fixed faster), as well as discouraging non-essential use (if electricity costs $5/kWh you sure as hell are going to do everything in your power to cut your usage, rather than blasting the space heater to a comfy 75 degrees).

Most economists are also against price-gouging laws. https://en.wikipedia.org/wiki/Price_gouging#Opposition_to_la...

[gpm]

There is a point to which this is true, and there is a point at which this is no longer true because everyone is already doing everything they already can.

Texas was quite obviously well beyond that second point during this crisis.

Moreover that only excuses the people who actually had those extra expenses of charging more. The rest of the producers of electricity are morally (and under normal circumstances legally) obligated to not also raise their prices just because they can.

[gruez]

> There is a point to which this is true, and there is a point at which this is no longer true because everyone is already doing everything they already can.

Are they? I'm sure if the electricity rate was high enough it'd be worth it to airlift diesel generators across the country to make up the shortfall. Hell, you can probably fly in temp workers from europe/asia to do the necessary fixes.

[nrmitchi]

> it'd be worth it to airlift diesel generators across the country to make up the shortfall. Hell, you can probably fly in temp workers from europe/asia to do the necessary fixes.

This event lasted 3 days. You think these private entities had the ability to coordinate airlifting generators (for what it's worth, IIRC fuel was the problem, not generators), and bringing in foreign skilled labor, to address a situation that will last a couple days?

If your next argument is going to be "The US Government/Military can do it" expect my response to be "If the US government can solve this problem for it's citizens during a crisis, it should be doing so whether the set price of electricity is >$9/kWh or not"

[unishark]

Someone did this in the aftermath of hurricane Rita I believe. They rented a uhaul and bought some generators, and drove halfway across the country to sell them to people the very next day. Then they got charged with price gouging.

Restricting them to a maximum 25 percent markup for all that effort (i.e. making them eat a loss) will obviously prevent people doing it. It's still just another example of the economic rule that price fixing creates shortages.

[salawat]

Price gouging is when you're you're trying to maximize value extraction for minimum effect.

People can deal with propping up a profit for someone going out of their way to get something done as cheaply as they can. Where they get annoyed is when you have the help there, but hold it hostage because you aren't feeling like people are willing to pay you enough. Not once on showing justifiable expenses has anyone ever argued at me being unreasonable.

Further, there's a point of diminishing returns where individual action is best avoided or at least organized to increase effectiveness.

Have your town pool money to hire tankers to run down instead of filling your pickup with gas cans. Force multipliers.

Price gouging laws are there to hedge civic stability. You can't organize people to solve a problem peacefully and efficiently if they're taking up torches amd pitch forks against those greedy haves. Everyone has to still be set, plus a bit extra to give to get community driven force multiplication.

[nrmitchi]

I believe there is an exception to price gouging laws if the cost of producing the direct item/product/service is impacted. In this case Griddy's cost went way up as well, which makes them not-clearly-in-the-wrong.

For the power producers on the other hand, it seems exceptionally clear (to me anyways) that this was just state-sponsored price gouging: https://theintercept.com/2021/02/23/texas-winter-storm-gas-p...

[salawat]

Do you have any idea how much damage can be done to the grid if there is a great disparity that forms between demand and supply?

You literally had machines running on redline to keep up with demand because so much generation capacity went offline at the same time, and the weather precliuded deployment of either the personnel or equipment to handle it safely and quickly.

That is why the statutory max price was set. If you were going to use that power, and put that generating capacity at risk, so PUC thought, you were going to pay for it. They figured the pricing signal would control demand.

Well... They were wrong.

"Your debt collection stops being my concern when my and my dependent's survival is on the line." --Every human being in the back of their head, in the lizard brain, ever.

Sure, it feels bad afterward, and you try to follow what guidance you can at the end of the day, and reach out to those you're in a position to reasonably help, but that was a demand inelastic situation. Be able to pump a certain threshold of BTU's into your environment by money, barter, burning, or retaining via insulation... Or die.

I'll give ERCOT and PUC the benefit of a assumption of reasonability given info at the time; but I really can't forgive the human nature centric myopia that the homo economicus model has foisted on the world.

[gruez]

>They figured the pricing signal would control demand.

>Well... They were wrong.

I don't think they ever thought it would reduce demand, they just thought it would increase supply. The reasoning for not reducing demand is simple: most consumers pay fixed rate plans, so if you were at home and had power, there really wasn't any incentive for you to reduce power consumption.

[gruez]

>I believe there is an exception to price gouging laws if the cost of producing the direct item/product/service is impacted.

nope.

https://www.natlawreview.com/article/don-t-mess-texas-price-...

>Unlike many state price gouging statutes, [Texas’ Deceptive Trade Practices Act] does not contain an exception for increased costs.

[OJFord]

(Not American) this all seems very left-wing for Texas?

And what're you supposed to do, sell at a loss because there's a disaster on? Or is it not just during disasters?

Presumably you're allowed to close business instead, but why's that better; no widgets are better than expensive widgets?

[gpm]

Yes, definitely wasn't trying to accuse Griddy of price gouging here, they're just a middle man. I am accusing the people who set the price of doing so (at least morally), and perhaps even the producers of the electricity who didn't set the price (as well as those who were involved in setting it) since they are going along with selling it at that exorbitant price.

[Dma54rhs]

The market price is literally there for them as a signal when to generate and when to not. That's the whole point of the market.

[orwin]

A market is extremelly inneficient at managing a pwer grid, unless you install HFT computers at each power plant.

[fastball]

What is more efficient, and do you have numbers to back that up?