WSJ: Texas Electric Bills Were $28 Billion Higher Under Deregulation (El Paso: insurance, houses)

[OutdoorLover]

"Texas’s deregulated electricity market, which was supposed to provide reliable power at a lower price, left millions in the dark last week. For two decades, its customers have paid more for electricity than state residents who are served by traditional utilities, a Wall Street Journal analysis has found."

https://www.wsj.com/articles/texas-e...on-11614162780

There are a few portions of Texas that are on conventional grids (e.g. El Paso and the panhandle), connected to much larger regional grids, that are regulated by the federal government. Apparently, not only did those customers have far fewer problems with the recent polar vortex, they also pay less as well.

So, aside from being able to accurately state that they have rigidly adhered to blind political ideology, what exactly can Texas' political leaders say they have achieved with their unconventional, go-it-alone approach to electrical power generation?

[txbullsfan]

Good article so far from all of the paragraphs I read (the rest is behind a paywall).

Insufficiently regulated capitalism (and a grid on top of that) and its detrimental societal affects is probably accurately applied here.

Dont tread on me and Mo money Mo money!.. I guess....

[jdhpa]

Here's electricity rates per state:

https://www.electricchoice.com/elect...ices-by-state/


You'll see Texas has among the lowest rates. The states with lower rates have a lot of hydro power.

[move4ward]

That's an interesting chart of states. Oklahoma, Arkansas, and Louisiana have lower rates than Texas. Independent grid is more expensive than our neighboring states and no winterization.

[jackalope48]

Originally Posted by OutdoorLover

So, aside from being able to accurately state that they have rigidly adhered to blind political ideology, what exactly can Texas' political leaders say they have achieved with their unconventional, go-it-alone approach to electrical power generation?

Well they created a profit center for their natural financial supporters where none existed before the same as they do for insurance. Insurance had the side effect of also screwing the other sides financial supporters.

Actual real economic theory posits that every product will eventually become an undifferentiated resource where profit due to wide availability will move to zero. As that happens economies of scale in production, distribution, finance or all of them will cause a monopoly to form as the largest actor gobbles up the rest. At that point you end up with an oligopoly or monopoly. If society doesn't want that monopoly to then start raising prices it either has to turn it into a regulated monopoly or take over the industry as a public utility.

Electricity already was a public utility when they did this because electricity was a commodity by the 1950's. It did it's job. It made power for everyone to use as they saw fit, there was subsidy to attach rural areas that weren't profitable in the short run because power was a necessity for economic growth and public health. Just like water utilities, just like gas utilities, just like streets. The first public power station happened 140 years ago. There just isn't a whole hell of a lot of innovation to be done that a privatized system brings.

A public utility system at this point would actually be better at buying innovative products in generating electricity(new plants) because government is almost always better at making long term pay back purchases(spending more upfront for long term durability and reliability). It also would be better at looking at old plants, their useful life, and making calls on when and whether they should get retrofitted, replaced, upgraded, or closed based on the costs and risks of creating new generation.

Distribution wasn't even really made competitive it was just sold off to lightly regulated regional monopolies that took the money for maintenance and put it into shareholder distributions and executive salary.

Retail was privatized but all that did was add a layer of cost for marketing(tv ads and stadium naming rights) and guys to work out and execute complicated hedging systems and negotiate bulk purchasing agreements. "Retail" for a public utility is just account signup people making 30-40k a year.

Production any gains in cost savings were at the cost of long term maintenance and care of the facilities in order to maximize profitability.

In the meantime all the human and financial capital it takes to make this system kinda work could have been used to pioneer truly new products and services for society. That's why capitalism is supposed to be good. Once the product is just a commodity the money and brainpower is supposed to move on to making brand new products. It's why we aren't all still farmers.

[EDS_]

Originally Posted by move4ward

That's an interesting chart of states. Oklahoma, Arkansas, and Louisiana have lower rates than Texas. Independent grid is more expensive than our neighboring states and no winterization.

None of those states are moving green as fast as TX either.

[move4ward]

Originally Posted by EDS_

None of those states are moving green as fast as TX either.

In 2018, Wind accounts for 32% of Oklahoma's power generation and 16% for Texas.

Source: EIA https://www.eia.gov/electricity/monthly/

[Westerner92]

Originally Posted by jackalope48

Well they created a profit center for their natural financial supporters where none existed before the same as they do for insurance. Insurance had the side effect of also screwing the other sides financial supporters.

Actual real economic theory posits that every product will eventually become an undifferentiated resource where profit due to wide availability will move to zero. As that happens economies of scale in production, distribution, finance or all of them will cause a monopoly to form as the largest actor gobbles up the rest. At that point you end up with an oligopoly or monopoly. If society doesn't want that monopoly to then start raising prices it either has to turn it into a regulated monopoly or take over the industry as a public utility.

Electricity already was a public utility when they did this because electricity was a commodity by the 1950's. It did it's job. It made power for everyone to use as they saw fit, there was subsidy to attach rural areas that weren't profitable in the short run because power was a necessity for economic growth and public health. Just like water utilities, just like gas utilities, just like streets. The first public power station happened 140 years ago. There just isn't a whole hell of a lot of innovation to be done that a privatized system brings.

A public utility system at this point would actually be better at buying innovative products in generating electricity(new plants) because government is almost always better at making long term pay back purchases(spending more upfront for long term durability and reliability). It also would be better at looking at old plants, their useful life, and making calls on when and whether they should get retrofitted, replaced, upgraded, or closed based on the costs and risks of creating new generation.

Distribution wasn't even really made competitive it was just sold off to lightly regulated regional monopolies that took the money for maintenance and put it into shareholder distributions and executive salary.

Retail was privatized but all that did was add a layer of cost for marketing(tv ads and stadium naming rights) and guys to work out and execute complicated hedging systems and negotiate bulk purchasing agreements. "Retail" for a public utility is just account signup people making 30-40k a year.

Production any gains in cost savings were at the cost of long term maintenance and care of the facilities in order to maximize profitability.

In the meantime all the human and financial capital it takes to make this system kinda work could have been used to pioneer truly new products and services for society. That's why capitalism is supposed to be good. Once the product is just a commodity the money and brainpower is supposed to move on to making brand new products. It's why we aren't all still farmers.

Oh wow, someone who actually remembers their economics course(s) and nuance, that private capitalism generally works for excludable goods but is incapable of making good long-term decisions on non-excludable goods. Too bad this will go over the heads of the voters who actually need to internalize it.

I’d love to eat my words, but I doubt there will be any meaningful change in Texas from this disaster. The kind of shortsightedness and negligence it takes to let Texas infrastructure get in such disrepair as what you see in much of the state is indicative of a deeper cultural problem, and it was a contributing factor in why I left. ERCOT said itself that it was minutes away from total catastrophic failure, as in no power for most of the state for months. Texas seems determined to surpass Argentina as the ultimate example of a wealthy area that ran itself into the ground.

[EDS_]

Originally Posted by move4ward

In 2018, Wind accounts for 32% of Oklahoma's power generation and 16% for Texas.

Source: EIA https://www.eia.gov/electricity/monthly/

You know what I owe you an apology I completely misread your post. That said I have some info. to add later.

[jackalope48]

Originally Posted by Westerner92

Oh wow, someone who actually remembers their economics course(s) and nuance, that private capitalism generally works for excludable goods but is incapable of making good long-term decisions on non-excludable goods. Too bad this will go over the heads of the voters who actually need to internalize it.

I’d love to eat my words, but I doubt there will be any meaningful change in Texas from this disaster. The kind of shortsightedness and negligence it takes to let Texas infrastructure get in such disrepair as what you see in much of the state is indicative of a deeper cultural problem, and it was a contributing factor in why I left. ERCOT said itself that it was minutes away from total catastrophic failure, as in no power for most of the state for months. Texas seems determined to surpass Argentina as the ultimate example of a wealthy area that ran itself into the ground.

Guilty, doubled in econ and government. Cursed to owning a business and having served in government.

Yeah I know. Hard to convince them that all bureaucracies are "inefficient" because they are large and build in safety measures for risk and that costs money. Private bureaucracies just measure risk by what it does to profits and earnings and public ones do so by minimizing bad **** happening that makes them look incompetent.

I always like to throw the old "Cheap, fast, or good, pick which one you want and a second to try for, you don't get all three".

Based on the positioning thus far I think the top Republicans are going for cheap(blame it all on ERCOT and defenestrate the out of state board members) and fast(make it an emergency item in this legislative session and slap some band aids on it that don't **** off the money guys).

I do think the piper is coming for them though. Lot's of business owners and residents are hitting the threshold of "I don't want to live in this squalor anymore and I'll pay more to not have to". Lots leave but lots have stayed and are changing their views. I know I rode that in politics to start getting our streets fixed in my town. The hope on the power thing is there were an awful lot of Republican legislators stuck in their houses freezing their asses off with their wives and neighbors chewing on their asses last week.
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