[altcognito]

> If their teams of Ph.Ds had figured out a way to avoid the signaling inherent in the price changes due to supply/demand swings, they wouldn't be wasting their time in a specialized energy firm. Instead, they would be making trillions of dollars by robbing blind every financial institution in the world.

Detecting signaling is a financial game, not a concern of power companies. If capitalism requires you to hire PhD's who specialize in detecting complex financial bets against your company, the system is inefficient.

> Here's what it looks like to me: The smart PhDs figured out that the energy firm was performing too little maintenance. The energy firm was not willing to employ them to learn this for itself but it was willing to bet against them. The PhDs won and the power company lost.

Oh, btw, the power company serve human beings, the financial traders represent the worst of everything about capitalism.

[tedunangst]

The power companies are not required to detect complex bets against them. They could decline to offer the bet in the first place. Why is DC Energy to blame for accepting a bet that was offered to them?

[rmc1]

NYISO pays Potomac Economics specifically to detect and help prevent this type of trading: http://www.potomaceconomics.com/index.php/markets_monitored/...

[jjoonathan]

> If capitalism requires you to hire PhD's who specialize in detecting complex financial bets

It doesn't. That's the point. That's why the power company is selling these financial instruments, not buying them: so that somebody else does the hard thinking.

The price is the signal. You don't need a PhD to determine the message implied by the fact that energy traders are willing to give good odds (i.e. pay more than expected) to bet that your grid will fail in a certain locale on a certain date.

> the power company serve human beings

The power company not only dropped the ball but dropped the ball after someone told it in no uncertain terms that it would drop the ball in the time and place that it eventually did.

If they clean up their act they stand to make good money by selling similar securities.

> the financial traders represent the worst of everything about capitalism

Correct incentives are the best part of capitalism.