Now I'm curious and since you know this stuff I'll ask: An economist would say "spiking prices means incentive to bring more power online because the value of power increments increases." It sounds like you're saying "spiking prices do not counter the peril of participating in a volatile grid." Do I have the gist of it? Could you elaborate either way?
That's exactly it. Everywhere else they pay for enough capacity. It's basically break-even costs and only enough generation up to the expected demand (plus a margin). The peril of not having frequent enough or high enough real time prices discourages long term generation investments. And if you want to assume they're being shitty about it, not having enough generation means more frequent high prices for all of your other generation. Enron got in trouble for withholding generation, but what if you simply don't build enough generation? Same thing but you can't get in trouble.
Yeah Ferrari famously limited their output back in the late '90s when Enzo died so they could scalp more per car. You could bid your way to the front of the line, etc. Scarcity is definitely a business model. Lookin' at you, Pappy Van Winkle, you overrated Tennessee-tastin' asshole. Every time Republicans decide to profit off something on Maszlow's Heirarchy it ends badly. It might not crash immediately, but the crash is profound. I guess it makes a select few steenking rich until the cards blow over so it was all worth it in the end.