https://www.the-sun.com/news/2371047/tex...nd-freeze/
Someone help me understand this. I knew Texas had deregulated electricity, which I understood as it meant companies can compete for individual households and they are not locked into one option for power like we are. So what is this variable electric rate non-sense and why would anyone ever sign up for that?
How the hell is someone ever going to pay a $17,000 electric bill that’s insanity!
How the heck can you use 100kwH of electricity per day?
(02-19-2021, 11:16 PM)EricC85 Wrote: [ -> ]https://www.the-sun.com/news/2371047/tex...nd-freeze/
Someone help me understand this. I knew Texas had deregulated electricity, which I understood as it meant companies can compete for individual households and they are not locked into one option for power like we are. So what is this variable electric rate non-sense and why would anyone ever sign up for that?
How the hell is someone ever going to pay a $17,000 electric bill that’s insanity!
The companies with variable rates only advertise their lowest historical rates, and then they put it in the fine print that the rate might go up by a lot.
If a lot of people refused to pay their jacked up bills, they'll end up with liens on their houses. But the bills still won't get paid, and the variable rate power company will still go bankrupt. should be enough to make sure this stupid business model goes away for good.
(02-20-2021, 11:19 AM)mikesez Wrote: [ -> ] (02-19-2021, 11:16 PM)EricC85 Wrote: [ -> ]https://www.the-sun.com/news/2371047/tex...nd-freeze/
Someone help me understand this. I knew Texas had deregulated electricity, which I understood as it meant companies can compete for individual households and they are not locked into one option for power like we are. So what is this variable electric rate non-sense and why would anyone ever sign up for that?
How the hell is someone ever going to pay a $17,000 electric bill that’s insanity!
The companies with variable rates only advertise their lowest historical rates, and then they put it in the fine print that the rate might go up by a lot.
If a lot of people refused to pay their jacked up bills, they'll end up with liens on their houses. But the bills still won't get paid, and the variable rate power company will still go bankrupt. should be enough to make sure this stupid business model goes away for good.
The power still costs the same amount to generate, responsive pricing is based on the misguided idea that people will use less power if the price goes up during times of intense demand, thus moderating that demand. Of course it's the same reason that medical costs aren't responsive to price changes, if it's a matter of life and death (which intense cold can be) then a person will literally agree to any cost to avoid dying. This is another reason why strong regulation is a much better solution in many markets than laissez faire.
(02-20-2021, 11:54 AM)SeldomRite Wrote: [ -> ] (02-20-2021, 11:19 AM)mikesez Wrote: [ -> ]The companies with variable rates only advertise their lowest historical rates, and then they put it in the fine print that the rate might go up by a lot.
If a lot of people refused to pay their jacked up bills, they'll end up with liens on their houses. But the bills still won't get paid, and the variable rate power company will still go bankrupt. should be enough to make sure this stupid business model goes away for good.
The power still costs the same amount to generate, responsive pricing is based on the misguided idea that people will use less power if the price goes up during times of intense demand, thus moderating that demand. Of course it's the same reason that medical costs aren't responsive to price changes, if it's a matter of life and death (which intense cold can be) then a person will literally agree to any cost to avoid dying. This is another reason why strong regulation is a much better solution in many markets than laissez faire.
Because so many power plants had to shut down as their pipes and other components froze, there was real scarcity in the supply of power. Demand was actually fairly stable because most people heat their homes with natural gas. But supply cratered.
(02-20-2021, 01:04 PM)mikesez Wrote: [ -> ] (02-20-2021, 11:54 AM)SeldomRite Wrote: [ -> ]The power still costs the same amount to generate, responsive pricing is based on the misguided idea that people will use less power if the price goes up during times of intense demand, thus moderating that demand. Of course it's the same reason that medical costs aren't responsive to price changes, if it's a matter of life and death (which intense cold can be) then a person will literally agree to any cost to avoid dying. This is another reason why strong regulation is a much better solution in many markets than laissez faire.
Because so many power plants had to shut down as their pipes and other components froze, there was real scarcity in the supply of power. Demand was actually fairly stable because most people heat their homes with natural gas. But supply cratered.
Sure, but like I said, each amp of power still was being produced at the same cost that they were always being produced at by the generating facilities that were still online. The "surge pricing" is meant to try to moderate demand when there's more demand than capacity. Clearly it's not something that's going to work in life or death situations. It's for the same reason as when someone points a gun at someone and says give me everything you have, they usually get what they ask for. The whole idea that free markets can solve for scarcity of things required to keep living (like medical care) is obviously wrong.
(02-20-2021, 02:34 PM)SeldomRite Wrote: [ -> ] (02-20-2021, 01:04 PM)mikesez Wrote: [ -> ]Because so many power plants had to shut down as their pipes and other components froze, there was real scarcity in the supply of power. Demand was actually fairly stable because most people heat their homes with natural gas. But supply cratered.
Sure, but like I said, each amp of power still was being produced at the same cost that they were always being produced at by the generating facilities that were still online. The "surge pricing" is meant to try to moderate demand when there's more demand than capacity. Clearly it's not something that's going to work in life or death situations. It's for the same reason as when someone points a gun at someone and says give me everything you have, they usually get what they ask for. The whole idea that free markets can solve for scarcity of things required to keep living (like medical care) is obviously wrong.
I agree. A free market is best when certain condition are met - lots of alternatives, well informed customers, punishment for fraud, both parties willing to walk away from the deal, etc. But when you don't have those conditions, the free market scenario might actually be the worst.
(02-20-2021, 11:19 AM)mikesez Wrote: [ -> ] (02-19-2021, 11:16 PM)EricC85 Wrote: [ -> ]https://www.the-sun.com/news/2371047/tex...nd-freeze/
Someone help me understand this. I knew Texas had deregulated electricity, which I understood as it meant companies can compete for individual households and they are not locked into one option for power like we are. So what is this variable electric rate non-sense and why would anyone ever sign up for that?
How the hell is someone ever going to pay a $17,000 electric bill that’s insanity!
The companies with variable rates only advertise their lowest historical rates, and then they put it in the fine print that the rate might go up by a lot.
If a lot of people refused to pay their jacked up bills, they'll end up with liens on their houses. But the bills still won't get paid, and the variable rate power company will still go bankrupt. should be enough to make sure this stupid business model goes away for good.
It is my understanding based on reading other things on the internet about this that it is tied to either your CC or bank account and charged in real time. It's not like you get a bill at the end of the month that you can contest.
It's basically the same thing as getting a variable rate mortgage or an "interest free for 6 months" credit card. People are attracted to the lower rate during low or "normal" demand. When demand spikes and the price goes up they pay for it.
Rather than more regulation perhaps better education is the answer.
(02-19-2021, 11:16 PM)EricC85 Wrote: [ -> ]https://www.the-sun.com/news/2371047/tex...nd-freeze/
Someone help me understand this. I knew Texas had deregulated electricity, which I understood as it meant companies can compete for individual households and they are not locked into one option for power like we are. So what is this variable electric rate non-sense and why would anyone ever sign up for that?
How the hell is someone ever going to pay a $17,000 electric bill that’s insanity!
Basically a variable rate plan is kind of like a variable rate loan. If interest rates go up, the interest on your loan goes up. If interest rates fall, the interest on your loan falls. Regarding electricity it's all tied to an index that tracks supply and demand. If demand goes up for whatever reason, the price will go up. When demand is down the price will go down for you.
A variable rate plan might mean that you pay "dirt cheap" prices for your electrical service normally, but in a high demand situation you will pay through the nose.
Companies that offer a fixed rate plan are hedged against the fluctuation of prices tied to demand, thus they will charge a slightly higher rate for their service and the rate will stay the same.
People have a choice regarding whether to go with a fixed rate plan or a variable rate plan.
Regarding the $17,000 quote from the article, that's a bill for 3 different properties not someone's household. The average bill for that individual is roughly $600 per month so the price tripled. That means that a homeowner that pays say $200 per month on average saw their bill go to around $600 during the high demand period (roughly tripled). If the homeowner was on a fixed rate plan their average bill per month might be $250 and that won't change.
Just my opinion, but signing up for a "variable rate" anything is not a very good idea unless the person really knows and understands what they are doing.
(02-20-2021, 06:40 PM)jagibelieve Wrote: [ -> ] (02-20-2021, 11:19 AM)mikesez Wrote: [ -> ]The companies with variable rates only advertise their lowest historical rates, and then they put it in the fine print that the rate might go up by a lot.
If a lot of people refused to pay their jacked up bills, they'll end up with liens on their houses. But the bills still won't get paid, and the variable rate power company will still go bankrupt. should be enough to make sure this stupid business model goes away for good.
Source?
It's all different now, after the crisis.
About a month ago I had to investigate Texas electricity prices for work.
It was a jungle. you could get this many cents per kilowatt hour off if you signed up for that many months, but if you went over this other number of kilowatt hours then you had to pay a surcharge, different fees if you move before your contract is up, etc.
there were clearly companies competing with each other, but these companies were also clearly trying to confuse you and make it so you couldn't really compare them to each other.
(02-20-2021, 07:53 PM)mikesez Wrote: [ -> ] (02-20-2021, 06:40 PM)jagibelieve Wrote: [ -> ]Source?
It's all different now, after the crisis.
About a month ago I had to investigate Texas electricity prices for work.
It was a jungle. you could get this many cents per kilowatt hour off if you signed up for that many months, but if you went over this other number of kilowatt hours then you had to pay a surcharge, different fees if you move before your contract is up, etc.
there were clearly companies competing with each other, but these companies were also clearly trying to confuse you and make it so you couldn't really compare them to each other.
So in other words you just pulled your prior comment out of your behind.
(02-20-2021, 06:37 PM)jagibelieve Wrote: [ -> ]It's basically the same thing as getting a variable rate mortgage or an "interest free for 6 months" credit card. People are attracted to the lower rate during low or "normal" demand. When demand spikes and the price goes up they pay for it.
Rather than more regulation perhaps better education is the answer.
Yes, because power companies are going to be all, “Sure, we’ll make certain that our customers are educated in exactly the best ways to not give us more money.”
(02-20-2021, 08:14 PM)TJBender Wrote: [ -> ] (02-20-2021, 06:37 PM)jagibelieve Wrote: [ -> ]It's basically the same thing as getting a variable rate mortgage or an "interest free for 6 months" credit card. People are attracted to the lower rate during low or "normal" demand. When demand spikes and the price goes up they pay for it.
Rather than more regulation perhaps better education is the answer.
Yes, because power companies are going to be all, “Sure, we’ll make certain that our customers are educated in exactly the best ways to not give us more money.”
It's not up to power companies to educate.
(02-20-2021, 08:00 PM)jagibelieve Wrote: [ -> ] (02-20-2021, 07:53 PM)mikesez Wrote: [ -> ]It's all different now, after the crisis.
About a month ago I had to investigate Texas electricity prices for work.
It was a jungle. you could get this many cents per kilowatt hour off if you signed up for that many months, but if you went over this other number of kilowatt hours then you had to pay a surcharge, different fees if you move before your contract is up, etc.
there were clearly companies competing with each other, but these companies were also clearly trying to confuse you and make it so you couldn't really compare them to each other.
So in other words you just pulled your prior comment out of your behind.
In other words you didn't read what I wrote.
I wrote that the companies advertised the best case scenario rate with lots of complex caveats. And I observed it.