- William W. Hogan, considered the architect of the Texas energy market design, said in an interview this past week that the high prices reflected the market performing as it was designed.
The rapid losses of power — more than a third of the state’s available electricity production was offline at one point — increased the risk that the entire system would collapse, causing prices to rise, said Mr. Hogan, a professor of global energy policy at Harvard’s Kennedy School.
“As you get closer and closer to the bare minimum, these prices get higher and higher, which is what you want,” Mr. Hogan said.
So Texas has net metering. Under net metering, Gregg Abbot's emergency order would permit the owner of a whole house generator to recoup their expenses in 36 hours. A resilient grid would be entirely feasible due merely to market prices - yeah, the typical use case would be "burning fossil fuels with zero emissions controls in order to run the air conditioning higher" but this is a free market we're talking about here.
But Texas does not require any of its privateers to honor federal net metering requirements.
So this isn't about independence. This isn't about resilience. This isn't even about fossil fuels. This is just criminality.
WanderingEng prove me wrong.
My opinion? This is Enron 2.0. Enron manipulated California markets by artificially withholding or limiting generation capacity. Texas learned their lesson. The lesson wasn't "don't manipulate energy markets," what they learned was "change the rules so the market collapses to your advantage." Energy markets are a little out of my experience, but I understand the market is supposed to pay the marginal price to everyone. If the market is humming along at $20/MWh and needs more power, it looks for the next cheapest available unit. Maybe that unit has bid in at $21/MWh. It get turned on and everyone gets paid $21 instead of $20. What I'd like to know is, what unit drove a $9000 price? Is that bid realistic? In my part of the country we saw prices around $700-$800. A bargain against $9000 in ERCOT, sure, but much more than typical $20-$40. Why the difference? Gas price. So, was selling $2/MMBTU gas for $500/MMBTU a real reflection of cost, or was it price gouging? I suspect gas market rules allow for this kind of gouging. The markets need to change. Using MMBTU also needs to change because has there ever been a more antiquated measurement system? MM is million because M is the Roman numeral for thousand, so MM is thousand-thousand.