A Failure of Governance in Texas

And a discussion of markets (and a warning about partisanship).

I want to start by noting that I am neither a climate scientist nor an expert on energy production. I do not even study energy policy, so this post is more a reaction to the ongoing disaster in the state of Texas. It also is about governance, which I do know something about, as well as an observation at the end about partisanship, which is closer to my wheelhouse.

I will stand by some casual comments I made in an open forum thread recently that it is not fair to assert that individual citizens who live in a particular climate ought to be just as prepared for any possible weather outcome as those who regularly encounter such weather (climate change or no). People in the South are not going to be prepared for prolonged ice and cold any more than folks in the Pacific Northwest are going to be prepared for the kinds of tropical storms and hurricanes the gulf coast deals with.

I am even going to say that it is not unreasonable to cut states some slack when they are in the midst of a disaster. Whether it is during massive fires in California, super storms in the northeast, or freezing cold in the deep south, the time to point fingers is not generally when people are suffering.

But (and here is where everyone who thinks I am excusing Texas can take a deep breath), it is also true that these events can reveal real problems to include negligence and profoundly poor choices.

First, a piece from WaPo earlier in the week underscores that power plant operators in Texas had ample recent warnings that they needed to better winterize their facilities (The Texas grid got crushed because its operators didn’t see the need to prepare for cold weather).

“But this is not the first time we’ve had this issue in Texas,” said Hirs, of the University of Houston.

There was a severe cold spell in the Southwest in 2011, and frigid weather in 1983, 1989, 2003, 2006, 2008 and 2010. A study by the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. of the 2011 event, which also led to widespread blackouts for much the same reasons, found that “the massive amount of generator failures that were experienced raises the question whether it would have been helpful to increase reserve levels going into the event. This action would have brought more units online earlier, might have prevented some of the freezing problems the generators experienced, and could have exposed operational problems in time to implement corrections before the units were needed to meet customer demand.”

I am sympathetic to arguments against adequate prepearedness based on the notion that a given state is dealing with a hundred-year level event. I am not sympathetic to a state/industry having very recent warning signs and not addressing them because it saves money.

Second, there is the whole matter of Texas’ grid being separate from the rest of the country so as to avoid federal oversight. And hence statements like this from a former governor/former Secretary of Energy Rick Perry:

“Texans would be without electricity for longer than three days to keep the federal government out of their business,” Gov. Perry said, partly rhetorically. “Try not to let whatever the crisis of the day is take your eye off of having a resilient grid that keeps America safe personally, economically, and strategically.”

Perry may want to ask some of his former constituents if they really are so sure about this philosophical proposition. Keep in mind this quote is from a write-up on Minority Leader McCarthy’s web page, meaning it is a sympathetic source.

Let’s face facts: the main beneficiaries of low regulations are the energy producers. Yes, costs are passed on to consumer, but the initial outlays and hassles are squarely on the shoulders of industry who would prefer to operate as cheaply as possible.

Third, there is this monstrosity via the NYT: His Lights Stayed on During Texas’ Storm. Now He Owes $16,752.

“My savings is gone,” said Scott Willoughby, a 63-year-old Army veteran who lives on Social Security payments in a Dallas suburb. He said he had nearly emptied his savings account so that he would be able to pay the $16,752 electric bill charged to his credit card — 70 times what he usually pays for all of his utilities combined. “There’s nothing I can do about it, but it’s broken me.”

Mr. Willoughby is among scores of Texans who have reported skyrocketing electric bills as the price of keeping lights on and refrigerators humming shot upward. For customers whose electricity prices are not fixed and are instead tied to the fluctuating wholesale price, the spikes have been astronomical.

[…]

The steep electric bills in Texas are in part a result of the state’s uniquely unregulated energy market, which allows customers to pick their electricity providers among about 220 retailers in an entirely market-driven system.

Under some of the plans, when demand increases, prices rise. The goal, architects of the system say, is to balance the market by encouraging consumers to reduce their usage and power suppliers to create more electricity.

This is one of those thing that may sound good in theory, but does not work out so well in practice when there is a natural disaster unfolding.

A system that incentives a customer to save electricity is one thing. A system that can result in a bill in the thousands of dollars in roughly a week’s time during a massive natural disaster is quite another.

This reminds me of calls for market-based medical fees. But as I have noted before, if my kid breaks his leg, I don’t have time to cost-compare various providers to determine the best deal.

The situation with Griddy is even worse, insofar as a disaster-level event can spike your bill before you have the chance to respond:

Many of the people who have reported extremely high charges, including Mr. Willoughby, are customers of Griddy, a small company in Houston that provides electricity at wholesale prices, which can quickly change based on supply and demand.

The company passes the wholesale price directly to customers, charging an additional $9.99 monthly fee. Much of the time, the rate is considered affordable. But the model can be risky: Last week, foreseeing a huge jump in wholesale prices, the company encouraged all of its customers — about 29,000 people — to switch to another provider when the storm arrived. But many were unable to do so.

On the one hand, at least the company issued a warning, but various reports I have seen noted that switching was taking up to a week, and by then the damage was done.

And, indeed:

Some lawmakers and consumer advocates said the price spikes had made it clear that customers did not understand the complicated terms of the company’s model.

“To the Texas Utilities Commission: What are you thinking, allowing the average type of household to sign up for this kind of program?” Tyson Slocum, the director of the energy program at Public Citizen, a consumer advocacy group, said of Griddy. “The risk-reward is so out of whack that it never should have been permitted in the first place.”

It is as if some kinds of regulations and consumer protections were needed, or something.

All of this is part of an ongoing ideological failure around the power of markets. Yes, markets work because supply and demand are real forces that drive human behavior. So, yes, it makes sense that as electrical supply dwindled in Texas at the same time that demand was surging that the spot market for energy would see a price increase.

But what a lot of people fail to see/understand is that just because markets work, doesn’t mean they produce the human outcomes that we might want, and that is where government often has to act.

It is not unreasonable, I would assert, for a citizen in a developed country to expect power to stay on and clean water to flow during most circumstances, and for the government to absorb the costs and responsibility to assure that outcome. I know it is not possible to always guarantee access to utilities, but we have the technology to keep the heat on and the water flowing when it is cold outside. This is not asking for power when a category-5 hurricane makes landfall. This is asking for something that happens in the northern parts of the country on annual basis.

We live in a society for a reason, after all.

To pick another example that some pro-market folks might not want to hear: illegal immigration is very much about supply and demand. There is a supply of labor that the market in the US has a demand for, and any attempt to curtail that flow of supply is an inteference in the market.

Another example is what we are seeing in the fragmentation of media. Nonsense sells on cable TV far more than does hard news and analysis. So, we get more infotainment and less news, even as we have more and more outlets. That is the market at work, giving people what they want, but to the broader detriment of society.

Heck, peasants in the Andes grow coca bushes and not food crops because supply and demand dictate that a pound of coca leaves pays more than a pound of bananas.

Those examples are to point out that markets working does not always mean producing unvarnished goods.

To put all of this starkly: is the end goal of human society to maximize market outputs or is the goal of human society the flourishing of its members? While it is possible that sometimes those two things align, they do not always. It is a fundamental reason that government is needed.

A side note on partisanship. I understand the impulse to say “Texans got the government they deserved because they vote for it.” Setting aside my ongoing discussions of the flaws of our electoral system, I would note that a lot of Texans didn’t vote for this. The notion that a red state is full of just red-voters is incorrect. I get the impulse to behave as many conservatives did, including Senator Cruz, regarding the California wildfires.

But keep in mind, if you were disgusted by reports that Jared Kushner and others in the Trump administration slow-rolled Covid aid because it was a “blue state problem” I would ask that you not tread the same immoral ground. At a bare minimum, it is not only hard-core Republican ideologues who fully understand the choices they made who are suffering in Texas.

The country is already polarized enough, and we need to treat our fellow citizens as citizens, and not enemies, lest we further go down that dangerous path.

Note that I am not saying criticisms aren’t in order; they very much are. The situation is a failure of basic governance and a failure of the ideology. (And in the case of Senator Cruz, specifically, a failure of leadership–to which I would add people like Governor Abbot making it sound like this was a failure specifically of renewables when it is clearly a systematic failure of the state’s entire approach).

On this final point, I would just caution us all to be mindful of when we find ourselves engaging in simplistic categorization of the “other side” as that way just leads the whole country in a very ugly direction.

FILED UNDER: Climate Change, Government, US Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Unsympathetic says:

    Why would Texas energy distributors ever shell out the expense and upkeep to actually winterize the grid? They’ll get bailed out if there’s a legal judgement against them, they’ll charge whatever they want whenever they want to customers, and as always the “rugged capitalism” response to citizens with assets less than Jerry Jones who suffer?
    FOAD.

    As a side note: This is the predicted response to austerity, and is thus applicable to BOTH democrats and republicans. Distribution grid in CA isn’t any better.

    The corruption isn’t just an issue of the energy industry.. this is downstream of the negative effects of money in politics and applicable to every facet of life. Of course regulations are antithetical to business profits — when population needs and business interest are inherently in opposition, government needs to stop business from moving too far. I’d argue that both killing people and allowing population to be without power& heat& drinkable water for weeks is too far. Unlike what that mayor said, the government is in fact directly responsible for providing things to citizens.

    2021’s 9 most terrifying words? I’m from Amazon, and I’m here to help you.

    7
  2. Raoul says:

    It is hard to pity those who worshipped the free market and now have high electric bills. They were literally playing the market and have to write a check to freedom. You know what they say about karma.

    7
  3. de stijl says:

    It’s almost as if laissez-faire capitalism fails in the face of unpredictable externalities. Who coulda predicted that?

    Most have power now. What they desperately need is potable water.

    It’s like when The Narrator was explaining the math of risk management to a co-passanger in Fight Club.

    “You wouldn’t believe.”

    They’re boiling snow melt for drinking water.

    If you have multiple folks using a toilet that does not flush, things get real in a hurry.

    And that supposes you have enough drinking water.

    These outcomes were predicted and flagged as nearly certain. Winterize, or the next knock will be catastrophic were the recommendations from ten years ago. The recommendations were ignored.

    Then, the let’s blame it on wind turbines fiasco. On the New Green Deal which is not in effect and on AOC. Crikey!

    Cruz and Abbott are gonna get slaughtered. People will remember these events extremely well even two years hence.

    3
  4. DrDaveT says:

    @de stijl:

    Cruz and Abbott are gonna get slaughtered. People will remember these events extremely well even two years hence.

    One can only hope that Beto O’Rourke’s organization keeps the memory fresh and stinging for long enough. “I left my state in the lurch to go get cozy while my worst political foes came and tirelessly helped the people who hate them” shouldn’t be something you can spin away or sweep under the rug.

    9
  5. de stijl says:

    @de stijl:

    I don’t even blame Griddy for the outrageous electricity bills. The did exactly what they said they would – electricity rates based on spot market prices. They warned their customers up front to bail and go to fixed rate providers early and before wholesale prices went crazy.

    But no one could switch over in the time frame.

    It looks like there will be abatements and adjustments for Griddy customers because of federal dollars already earmarked for utility bills. And that was even before emergency declaration by Biden.

    The Griddy CEO is practically begging for a bailout just to save face and to placate extremely pissed off people. I would short them.

    6
  6. Lounsbury says:

    Austerity has rather f- all to do with grid design by private operators.

    However, it is poor market design in a market which by its structural nature has strong barriers to entry and therefore tendency to oligopoly.

    Building a rate and other regulation which does not require pricing in of longer-term risks and (to be modestly simplistic) aims at lowest short-term prices will by its nature end up in a riskier, more unstable state as any operator so silly as to ‘over-invest’ and end up with higher short-term costs will be under-cut.

    It is rather than phenomena of Bad Money Drives Out Good.

    Now the problem very much goes to the Republican party degenerating into a kind of inverted (ideologically) Bolshie party where Randian inverted Marxism ideology trumps pragmatic evidence based market solutions. Ideology over pragmatism with strong whiffs of cults-of-personality.

    As for this silly Lefty cant: “money in politics and applicable to every facet of life. ”
    Money is always in politics, it’s naive idealist pablum to go on about money in politics.

    Regulation is not in fact antithetical to business profits, although bad regulation is – well regulated markets are the best in the end (well regulated being adaptive to changing technologies and market structure and not a fixed thing).

    The problem of Texas is simply a naive, simplistic inverted Bolshevik style understanding of economics and regulation.

    2
  7. Scott says:

    “To the Texas Utilities Commission: What are you thinking, allowing the average type of household to sign up for this kind of program?” Tyson Slocum, the director of the energy program at Public Citizen, a consumer advocacy group, said of Griddy. “The risk-reward is so out of whack that it never should have been permitted in the first place.”

    The average person does not have the time, experience, or even the knowledge to correctly assess risk. Especially the consequences when the risk is actually realized. What the free marketeers have done is transfer their risk to the consumers. Just like the Wall Streeters did in 2007/8.

    Even today, the electricity market proponents are saying that winterizing is not worth the cost for a once in 50 years event. Did they include the $19B consequence that we have today in their cost benefit analysis. Of course not, because that is not a consequence that they have to assume.

    BTW, let’s examine who is on the Public Utilities Commission and see where their investments are? I’m pretty sure it won’t be pretty.

    5
  8. Sleeping Dog says:

    @DrDaveT:

    Given how long it is going to take to recover from this and the cost, people won’t forget. Even if you get a plumber to the house (good luck with that), he’ll be days tracking down leaks and ripping out walls and ceiling, not to forget cabinetry, to do so. Then all that needs to be repaired… Then there are the fights with the insurance company. People will remember.

    3
  9. MarkedMan says:

    ” I would ask that you not tread the same immoral ground

    Fair enough. I was working in the Northeast when Sandy hit and the scumbag Trump States turned their back on us despite them having their hands in our pockets for their entire existence. So he’s, I’m angry. But Biden did the right then, and I donated to a local Texas food bank. I can be angry without being an *sshole.

    11
  10. MarkedMan says:

    At this point philosophy doesn’t matter. Republicans are simply not capable of writing meaningful regulations even if they wanted to. Starting with Reagan they have been letting the industries write the regulations. The GOP doesn’t have the experience to do otherwise.

    7
  11. Mimai says:

    @Scott: “The average person does not have the time, experience, or even the knowledge to correctly assess risk.”

    Do you say this as a general matter or are you specifically referring to the risk that TX would get hit by such weather?

  12. de stijl says:

    @Sleeping Dog:

    People remember hard times very well.

    We all will remember the Covid time until we die.

    Were I a staffer for Cruz (god forbid), I would have advocated that he volunteer at a warming center in Austin, Houston, DFW, wherever.

    Greet people. Lead them to a cot. Bring em a bottle of water. Wear a fucking mask. Stay the night on a cot.

    You know, just suck it up and present as if you are not a total prick for 18 hours.

    He screwed himself so badly and it was entirely predictable.

    I am beginning to think he is not a good person.

    5
  13. Kathy says:

    “Texans would be without electricity for longer than three days to keep the federal government out of their business,” Gov. Perry said, partly rhetorically.

    I don’t think saying “Let them not eat cake” is a winning strategy.

    3
  14. charon says:

    People can be unimaginative and slow to adjust to changed realities.

    What were once 50=year events and 100-year events are becoming pretty common now because of climate change. Not adapting is a human failure.

    (Note that 3,000,000+ lost power in 2011 but that lasted a few hours. In 2021 it went on for days).

    2
  15. Michael Cain says:

    A) Much of Texas’ wind power is built in the sparsely-populated western parts of the state. Significant new transmission lines were built to carry the power east to the Triangle, where the people are.

    B) One of the transmission projects debated for the Western Interconnect from time to time is the High Plains Express. If built, it would run fairly close (for western values of close) to many of those Texas turbines.

    C) I think it would be hilarious, and figure there’s a non-zero probability, that the wingnut Republicans could force ERCOT to abandon the wind turbines, at least part of the High Plains Express gets built, and the power ends up going to the Colorado urban corridor, Phoenix, Las Vegas, and Southern California*.

    * Southern California is not as outlandish as you might think. SC already gets natural gas from western Texas. Chances are good, I think, that when we get close to the Diablo Canyon nukes shutting down some of the replacement power will be wind power from east of the Continental Divide in Wyoming.

  16. wr says:

    @Lounsbury: “Now the problem very much goes to the Republican party degenerating into a kind of inverted (ideologically) Bolshie party where Randian inverted Marxism ideology trumps pragmatic evidence based market solutions. Ideology over pragmatism with strong whiffs of cults-of-personality.”

    My sister used to have a “magnetic poetry” set — a bunch of small magnets each bearing a word. You’d put them up on the fridge and use them to make poems. Or you could just toss the magnets towards the fridge at random and let them stay wherever they stuck. Which inevitably brought sentences that read exactly like the one above.

    9
  17. wr says:

    @de stijl: “We all will remember the Covid time until we die.”

    I wonder about this one in particular. A year after the 1918 flu was over, it had disappeared down the memory hole. Read the literature, see the movies and plays of the period — basically no mention. It’s like people just wanted to wish the whole thing away.

    I’m thinking the same thing could happen with Covid. This year and a half will just become a black hole of faint memories. “Remember when we had brunch outside in January and it was 23 degrees? Crazy!”

    Unless of course another pandemic hits within five years or so. Then it’s all coming flooding back.

    5
  18. de stijl says:

    I have ten days of shelf stable food and 10 gallons of water sitting in the back of my pantry. A spare propane tank in the basement. Camping gear.

    Things you could cook or warm up on a propane grill.

    Hurricanes, earthquakes, fires are not an issue here, but floods, ice storms, blizzards are. Derechos too after last spring.

    2
  19. de stijl says:

    @wr:

    Or perhaps the Roaring Twenties were a direct response to WW1 and the Spanish Flu?

    Live fast, love hard, go crazy was a adult reaction to the close possibility and proximity to death: that you could be dead next month if things went bad again and you have no control over it.

    Young men just a bit too young just dodged the chaotic happenstance that occurs when you are thrown into a meat grinder.

    Ask a person of a certain age about polio and they will share stories.

    We remember our local floods or earthquakes or fires or hurricanes or blizzards.

    Snowstorms changed the predicted course of Chicago and NYC elections in my lifetime.

    2
  20. Kurtz says:

    @Mimai:

    I’m going to jump in on this one. No, they don’t.

    I’m going to give an everyday example from a different domain that illustrates the point: Terms of Service agreements.

    We agree to terms all the time when we wish to access a service. Lets say I want to fully understand the terms I am agreeing to abide. A full understanding of it would likely require a Black’s Law Dictionary, knowledge of applicable laws, and probably a little case law research in addition to reading a massive fine print document designed to obscure some of the less attractive terms.

    Does this example go a bit overboard? Sure. Is it pedantic? Sure. But on the latter point, legal reasoning in disputes is largely pedantic.

    But it illustrates the complexity of something we do everyday reflexively. There is a reason why it took years before the general public understood the privacy impacts of using free online services.

    It’s because time is limited and fully understanding agreements is a serious time burden and requires expertise that itself requires investment.

    To bring it back to the specific topic, compare the customers who signed up with Griddy to two groups implicated in financial crisis, customers who took out ARM mortgages and investment firms whose entire job description is risk assessment.

    Griddy customers who truly wanted to weigh the risk of a severe spike in demand would need expertise in all the potential drivers of those spikes, the statistical knowledge to calculate EV, and that assumes that they accurately calculate the risk of demand spikes. Plus unknown unknowns.

    A couple takes out an ARM mortgage and buys a 4 bedroom house, anticipating having kids. They both have good jobs and have been promoted recently. One of them anticipates further promotion based on conversations with their boss. They also think that if the promotions don’t come as fast, they will be able to re-finance.

    Think about the amount of risk assessment that needs to be done there to make an informed decision. And that assumes their broker is scrupulous, that they have knowledge of mortgage markets, and any other sources consulted are trustworthy.

    And yet…

    Investment firms, insurance companies, and traders all of whom make money via accurate risk assessment inflicted massive harm on the world by–wait for it–failing to assess risk properly. Talk about moral hazard!

    And yet, we expect everyday people to make rational decisions? Even assuming that deception never happens, that’s a giant ask. Factor in bad faith actors and it makes an already difficult problem even more complex.

    16
  21. Kurtz says:

    @wr:

    I’m surprised you replied that way. @Lounsbury actually wrote a post unusually light on inflated self-regard, lacked direct insults, and made a point that many of us have made in the past.

    4
  22. Kurtz says:

    @Lounsbury:

    As for this silly Lefty cant: “money in politics and applicable to every facet of life. ”
    Money is always in politics, it’s naive idealist pablum to go on about money in politics.

    I’d rather have to deal with naked self interest than cloaked self interest.

    I’d rather have to deal with limited, transparent money in politics with strictly enforced, clear rules than a system that incentivizes monetizing influence.

    At some point, unchecked cash flow destabalizes the political system. But sure, money is always in politics so just pretend it doesn’t matter.

    8
  23. @Lounsbury:

    As for this silly Lefty cant: “money in politics and applicable to every facet of life. ”
    Money is always in politics, it’s naive idealist pablum to go on about money in politics.

    Recognizing that I did not raise the issue, do I remember properly that you are in the UK? I would note that campaign length and campaign finance are really very, very different in the US than in the UK. Usually, people talking about “money in politics” tend to be talking about campaign finance and the lobbying attached thereto.

    6
  24. @MarkedMan: There is plenty of room to be angry. There is definitely room to point out, in excruciating details, where the mistakes were made.

    3
  25. @Michael Cain: In re: SoCal, El Paso is closer to San Diego, CA than it is to Shreveport, LA, so SocCal is not outlandish.

    3
  26. de stijl says:

    @Kurtz:

    Griddy, had they been smart, should have proactively changed their pricing structure and capped the price per kilowatt hour at a certain price.

    In their defence, it appears they sent an email to their customers that market prices were going to get extremely distorted very soon and it is your best interest to switch your service now.

    That’s commendable.

    They missed the opportunity, but still fairly commendable. Not many companies explicitly push customers away because their bill is gonna be nasty stupid.

    Too late to recover from, but it appears they were not being actively evil.

    I worked for or consulted to mortgage banks in the mid aughts.

    If you received a refinance offer from a certain large mortgage lender in late 2007 or early 2008, my work and my team made that happen. I was the data person assigned to find borrowers with FICO>699 in these states who have not been late in the last n days and are Libras and their middle initial contains “m” or “s” in a waterfall ranked thusly.

    Btw, we’ll change our mind on criteria at 4:59 and expect the results at 8 AM.

    As far as I know it was to refi to a lower fixed rate and not to an ARM.

    I am still complicit. I was a dutiful soldier.

  27. @Kurtz: Exactly.

  28. Mimai says:

    @Kurtz: I appreciate you jumping in. Risks involve trade-offs. When the risk involved is primarily taken at the individual level, in most cases, I’m inclined to recognize the individual’s right/expertise to best weigh it. That does not mean an absence of safety nets in case things go terribly wrong. Of course, when the risk involved is primarily taken at the individual+1 level, it gets more complicated. This distinction was the driver of my initial question, because I don’t think we can have a productive discussion of risk, much less what constitutes the “correct” assessing of said risk, without being explicit about our boundaries.

  29. Michael Cain says:

    @Steven L. Taylor:

    In re: SoCal, El Paso is closer to San Diego, CA than it is to Shreveport, LA, so SocCal is not outlandish.

    Not for gas, and a considerable amount of gas flows that way (with drops for Arizona and Nevada along the way. Electricity is a somewhat different story. There is zero direct connectivity between ERCOT and the Western Interconnect today. The transmission links to move Texas Great Plains wind power to the Dallas/Austin/San Antonio line are much shorter than the links that would be needed to move power on a large scale into SoCal. A certain amount of coincidence and legerdemain would be necessary: ERCOT abandoning the wind power, a BIG transmission link, and some slight-of-hand to keep ERCOT out of the interstate commerce. Or Texas might decide to get connected. They originally supported Tres Amigas because they thought they could buy cheap wind power from New Mexico. I understand that they no longer support the Three Sisters because they are afraid they would end up bidding against SoCal utilities who pay much more for Texas wind power.

  30. David S. says:

    @de stijl:

    Were I a staffer for Cruz (god forbid), I would have advocated that he volunteer at a warming center in Austin, Houston, DFW, wherever.

    Greet people. Lead them to a cot. Bring em a bottle of water. Wear a fucking mask. Stay the night on a cot.

    You’ve probably seen the news by now, but he’s been doing photo opps. There are accusations that they’re staged, but I didn’t see anyone offering hard evidence yet and I just can’t care enough to look for any.

  31. Kathy says:

    I’ve a problem with prices based solely on supply and demand without any regard to cost. In particular when a business charges exorbitant prices that are many times the cost of production and distribution.

    2
  32. DrDaveT says:

    @Kathy:

    I’ve a problem with prices based solely on supply and demand without any regard to cost. In particular when a business charges exorbitant prices that are many times the cost of production and distribution.

    I have no problem with Gwyneth Paltrow charging whatever some idiot will pay for “goop”.

    I have a real problem with “all the market will bear” pricing for basic subsistence goods, or social infrastructure.

    Markets are very good at maximizing the average efficiency of delivery. They suck at ensuring universal coverage, or avoiding worst case short-term situations. Which of those you care about most varies hugely from one commodity to another. If you care about outcomes and the long term, that is.

    5
  33. de stijl says:

    @Kurtz:

    I worked with risk management folks a lot. They were crazy for data – the good and the bad. Designing an interface for them was crazy hard. Eventually, I conceded and walked some of their analysts thru SQL and mentored their queries. The joins and the WHERE clause is the tricky bit.

    Instead of trying to build a one size fits all query interface their’s was very very open. Dudes and dudettes were doing outer joins and writing to temp tables. It was freaking awesome.

    I found them delightful and also a bit of a handful. Good on them.

    In other orgs Risk Management was considered a joke and basically corp Internal Affairs killing all the fun stuff.

    I found that it mostly came down to whether head of RM reported directly to the CFO or not.

    US banks and affiliates have at least three federal agencies monitoring compliance so banks as a general rule have robust risk management practitioners and the smart banks listen to them closely.

    2
  34. Bill says:

    I live in the DFW area, it was cold an such and we lost power but we had a week to prepare for it. The hordes of people saying they had no idea are typically the freaks who wandered in from some other state expecting the gov’t. to “take care of them”. I went to work, helped those who were too dumb/inept to deal with anything….as a lot of us did. And it’s 70 today, out supporting businesses that need my money.
    Just another gossip topic as far as I can see, solar power didn’t help and wind turbines were as worthless as usual- we need more safe, reliable nuclear and natural gas plants.
    Granted, it was a once in a lifetime event- not overly worried about the Monday morning qb’s.

    1
  35. Modulo Myself says:

    I get the impulse to behave as many conservatives did, including Senator Cruz, regarding the California wildfires.

    Too bad there was no impulse. AOC just raised 5 million for Texans, and angry progressives aren’t attacking her. Point me to actual elected Democrats who are saying Texans deserve this.

    You guys are so far gone that you have to take a few blog comments and you have to equate them with how the Trump admin responded to Covid or the Texas wildfires.

    4
  36. Teve says:

    @Michael Cain:

    C) I think it would be hilarious, and figure there’s a non-zero probability, that the wingnut Republicans could force ERCOT to abandon the wind turbines, at least part of the High Plains Express gets built, and the power ends up going to the Colorado urban corridor, Phoenix, Las Vegas, and Southern California*.

    Indeed I think the biggest argument against letting the confederate states secede is that they would become a toxic environmental nightmare sharing a border with us.

    1
  37. Unsympathetic says:

    This storm wasn’t a “once in a lifetime” event – it has happened every 10 years in the past and will be happening more frequently moving forward.

    Running dirt on wind/solar is a red herring argument. 2/3 of the offline power plants are.. natural gas or coal. It’s the lack of winterizing the power source and grid that’s the problem – not the type of source.

    5
  38. steve says:

    “wind turbines were as worthless as usual”

    You can build wind turbines that will function in that weather, but if you dont want to do that then you are correct.

    https://minnesota.cbslocal.com/2021/02/17/minn-officials-say-blame-planning-not-green-energy-for-texas-power-catastrophe/

    Steve

    1
  39. Gustopher says:

    A side note on partisanship. I understand the impulse to say “Texans got the government they deserved because they vote for it.” Setting aside my ongoing discussions of the flaws of our electoral system, I would note that a lot of Texans didn’t vote for this. The notion that a red state is full of just red-voters is incorrect. I get the impulse to behave as many conservatives did, including Senator Cruz, regarding the California wildfires.

    Texas is a few points away from being a blue state. If we had direct voting for President, and non-partisan congressional maps, it would be a patchwork of blue and red. As it is, it’s close enough to tipping that being vindictive is a fool’s game.

    Plus, you know, basic humanity requires us to help those in need.

    Ted Cruz, of course, should be mocked. As should the state GOP.

    I hope Ted Cruz got covid in Cancun.

    3
  40. grumpy realist says:

    @Kurtz: A few years before the whole blow-up of the real estate CDOs, I was at one point looking into getting a mortgage in Omaha. Went and talked to the bank. They went through the variety of mortgages available. I quickly realised that if I, someone with a doctorate in theoretical physics, couldn’t understand their explanation of how an ARM worked, there was no way in the world that the average individual was going to be sufficiently informed about the possible risk.

    2
  41. Kurtz says:

    @de stijl:
    @Mimai:

    That risks involve tradeoffs isn’t really the point here. The thrust of my post was that properly assessing risk is difficult even for professionals.

    I can be even more narrow, risk management in large financial firms is highly specified. If you’re assessing the risk of a particular investment in the energy market, you don’t ask an expert in FOREX to assess your potential exposure.

    I suppose you could, as they likely have some knowledge compared to a random non-professional. But it wouldn’t be an optimal choice in most cases. And even then, no matter how much knowledge and experience one has, one will miscalculate risk some of the time.

    NFL franchises spend millions of dollars a year trying to determine what players to draft in which round. Yet Trubisky gets drafted before Mahomes and Watson. Football is complex. So is the rest of the world.

    The implication is that individuals make decisions daily that aren’t driven by contemplation. They do things without thinking about it. And they make agreements (sign contracts) that they don’t even read.

    Most of the time, it’s okay. I mean it can suck when that ad for a ball gag shows up in front of a colleague, but that’s a small price to pay for free social media.

    The salient point is that individuals have narrow expertise to the extent they have any at all. It’s fanciful to assume that individuals are capable of making rational choices about everything, all the time.

    One just doesn’t have time to gather enough data, understand it, and make an informed decision about more than a few things. This doesn’t even account for other potential rationality inhibitors–emotion, pride, hidden assumptions, facts we don’t think of, and shit we think we know, but don’t.

    And as you point out, it gets hairier than Charlie’s Point when we start evaluating institutions and organizations. Collectives of people introduce more layers to sift through.

    2
  42. Teve says:

    Just another gossip topic as far as I can see, solar power didn’t help and wind turbines were as worthless as usual- we need more safe, reliable nuclear and natural gas plants.
    Just another gossip topic as far as I can see, solar power didn’t help and wind turbines were as worthless as usual- we need more safe, reliable nuclear and natural gas plants.

    I have a friend who lives in Austin who pays virtually nothing for power because of his solar installation. And if you think nuclear is great you haven’t run the numbers.

    2
  43. Teve says:

    I was a big fan of nuclear power before I looked at the numbers.

    why nuclear power will never supply the world’s needs

  44. Michael Cain says:

    @Bill:

    …we need more safe, reliable nuclear…

    One of Texas’s four nuclear reactors took itself offline. The belief is that critical instrumentation froze and quit working. Haven’t seen if they’ve finished the usual several day process to verify the cause and bring it back online yet or not.

    1
  45. SC_Birdflyte says:

    While I’m certainly sympathetic with those who suffered during last week’s disaster, I have no sympathy for the utilities and their regulators. I’ve personally experienced ice storms in Ft. Worth in 1983 and 2010. They can’t say they weren’t warned.

  46. HarvardLaw92 says:

    @Unsympathetic:

    To wit, it has not happened every ten years in the past. Sure, Texas experiences freezes, but they tend to be regional, i.e. Houston froze this week. Dallas froze this week. In that scenario, power grid operators simply moved power from other areas of the state and ramped up generation there to compensate. The entire state freezing over is, as best I can tell, something that happens on a 40 year or so scale.

    It’s the lack of winterizing the power source and grid that’s the problem – not the type of source.

    Again, I’ll take issue. It is the utter isolation of the TX grid from every other available source of power in existence that is the problem. Had appropriately sized interconnects been in place, the grid operators could easily have called for replacement capacity from the rest of the country. Would it have been perfect? In a period when everybody else was experiencing demand spikes, not entirely, but you can bet it would not have been this apocalyptic scenario with much of the state left in in the dark and freezing. I am willing to bet that, aside from localized outages stemming from downed lines or disabled transformers, etc. that the bulk of the grid in TX would have remained energized.

    Spending a fortune on winterization, which entails steep upfront costs and steep ongoing costs for maintenance, to prepare for something that occurs on a timeline measured in multiple decades is the epitome of stupidity. It might, and I stress might, be economically justifiable to winterize a few key facilities around the state, but all of them? No. Utterly ridiculous. Spend the money on constructing proper interconnects, end this balkanized grid fantasy which arguably caused the problems in the first place, and the next time this happens, the lights will stay on.

    1
  47. Mimai says:

    @Kurtz: But tradeoffs are indeed the point – ok, they are one of many points. Of course there is asymmetric information, as you note. And, yes, it is too much to expect individuals to incorporate every single bit of relevant information when making all risk assessments (ie, decisions). And yet, the individual also has asymmetric information about their own circumstances, comfort level, etc. And that doesn’t “assume that individuals are capable of making rational choices about everything, all the time – indeed, I made no such assumption. I’m trying to flesh out the boundaries of risk assessment, mitigation, etc for individuals and individuals+1.

    You appear (please correct me if I’m mistaken) to err on the side of having risk assessments be conducted farther from the individual where I tend to err on the side of these being nearer to the individual. These priors are important to articulate.

    Relatedly and finally, when you say “it gets hairier than Charlie’s Point when we start evaluating institutions and organizations. Collectives of people introduce more layers to sift through” I can only say that I whole heartedly agree…..with the added caveat that these complications apply to both sides of the risk equation.

  48. Michael Cain says:

    @HarvardLaw92:

    It is the utter isolation of the TX grid from every other available source of power in existence that is the problem. Had appropriately sized interconnects been in place, the grid operators could easily have called for replacement capacity from the rest of the country.

    This demonstrates a certain lack of knowledge about how electric transmission works. Texas was short about 30GW of power. So not only would there need to be 30GW of inbound idle transmission capacity to Texas, it is unlikely in the extreme that neighboring states had that much reserve. So many GW of transmission built across those states normally sitting idle to carry the power from increasing distances.

    Consider the case of the LADWP (also serving many of the surrounding cities) whose grid is isolated to a considerable degree because of settlement patterns in the West. They have a 700+ mile HVDC link from the Columbia River dams so they can buy excess power when it’s available. (This is not the time of year when BPA has large excesses to sell.) They have a 500+ mile HVDC link to Utah where they own/operate a 2GW generating station. Within a few years there will be a privately owned 700+ mile HVDC link from the tip of Nevada (where LADWP can buy electricity) to eastern Wyoming to access the wind resources there. Texas would need that kind of arrangement several times over and since no one can afford to leave resources like that idle for long periods, Texas would also have to commit to buying out-of-state supplies on an ongoing basis.

    It can get even more complicated. I live in the Colorado urban corridor. The power suppliers here would very much like to participate in CAISO’s energy imbalance market so they could buy excess renewable power from elsewhere in the West when it’s available. Can’t do it, though, because critical parts of the transmission network are owned by the Western Power Administration, a federal quasi-government agency, which has zero interest in cooperating.

  49. Barry says:

    My belief is that the Texas system dumped most, if not all, of the risk on the consumer, in a very opaque system.

    And I’ll lay a pizza that if any of the big players did somehow lose money, then they’ll get bailed out.

  50. charon says:

    @HarvardLaw92:

    The entire state freezing over is, as best I can tell, something that happens on a 40 year or so scale.

    That statement projects the historical record into the future.

    Past performance is no guarantee … etc. Global climate change, ever hear of it?

    1
  51. HarvardLaw92 says:

    @charon:

    Sure, can you tell me with any specificity how often TX – the entire state – will freeze over in the future? If not, I’d say that you’re speculating based on the outcome that suits your agenda. That’s fine, but the hundreds of millions that would be required to fund this will probably require more than a guesstimate.

  52. HarvardLaw92 says:

    @Michael Cain:

    Sure. That having been said, TX has a maximum inbound capacity of 1.2GW for the entire state, however, and 400MW of that is from Mexico, so I think we can agree that there is a great deal of room for improvement in that regard. You’ll note that I said winterizing key facilities makes sense, but every single plant in the state? Ludicrous.

  53. charon says:

    @HarvardLaw92:

    Sure, can you tell me with any specificity how often TX – the entire state – will freeze over in the future?

    Of course not, is that supposed to be an actual point?

    If not, I’d say that you’re speculating based on the outcome that suits your agenda.

    No speculation involved.

    Just stating the well-known fact that the jet stream is becoming more “wobbly” and with that more frequent extreme dips and with them more frequent extreme events such as “100-year” events no longer merely every 100 years, etc.

    This is because fact the arctic is warming faster than the temperate zone, weakening the jet stream because of the decreased temperature differential.

    3
  54. Kathy says:

    @HarvardLaw92:

    Sure, can you tell me with any specificity how often TX – the entire state – will freeze over in the future?

    Did the entire state freeze this time?

    I can’t, but surely a competent climatologist can tell you what the odds are for an extensive freeze covering how much of the state, and surrounding states (including those in Mexico), for the next decade.

    For me, that would do.

  55. Lounsbury says:

    @Kurtz: wr has little ability to step away from personal dislikes and partisan political superficialities.
    @Kurtz: Well yes, but that is a different proposition than ‘get money out of politics.’ And for all the excuse making of Activists about their simple minded sloganeering, simple minded slogans end up driving people to simple minded conclusions (see Defund the Police). Now “regulate money for transparency and defending against corruption” – or something modestly pithier but of the same sense, well yes. Get money out is at best a simple minded distortion setting up unmeetable and deeply naive expectations.
    @Steven L. Taylor: I am in fact a rootless cosmopolitan (ha to entertain, the reference) resident lo these many years in the MENA region… but yes lacking the direct US detail.
    @Bill: Queer the assertion since your drop-off was due principally to natgas and other fossilfuel generation freezing.
    But a useful illustration of Bolshevization of the US right putting ideological precepts over fact and science – quite worthy of the old hard Left (who of course retain their own).

  56. HarvardLaw92 says:

    @charon:

    Sure, but if you’re going to come back with a policy proposal that involves spending hundreds of millions in upfront costs, with millions more each year in added maintenance costs, in order to be prepared for something that the best extant data tells us currently happens on a scale of multiple decades, you’re going to need to be a little more precise than “because global warming”.