Comment by jessaustin | Hacker News Reader

Comment by jessaustin | Hacker News Reader

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I wondered whether TFA would ever get to the cause of this waste, and eventually it did!

Once state regulators approve new plants or transmission lines, the cost is now built into the amount that the utility can charge electricity users — no matter how much or how little it is used.

Oh, so that's why they kept building natural gas plants that don't get used most of the time! If you've ever been to a PUC meeting, you've seen corruption at its most brazen. "Citizens' groups" entirely funded by utilities and telcos wait their turn to dutifully read the prepared statements, the commissioners dutifully thank them, and then they go to work with the rubber stamp. It doesn't actually matter that power plants get built in a timely fashion or actually operate more than a small percentage of the time, the rate-payers are already on the hook. The only way a utility executive gets a bonus is by saddling the public with CWIP charges, so that's what they scheme to do every working day.

No coal, gas, or nuclear plant should ever be built by forcing the public to do the job of investors. If investors can't be found to support a plant that supposedly will generate for decades, maybe we should listen to the market?

[EDIT:] Great article, though, because it tells the whole story, and that seems rare anymore.

In the case of natural gas power plants, aren't they (at least some of the time) built due to the need for 'peaker' plants? That is, if there's a sudden surge in demand (which solar can't react to, for obvious reasons) or an unpredictable drop in solar output (e.g. a cloud moves in between California and the sun), gas plants can quickly fire up to cover the output gap (much quicker than, say, coal or nuclear).

Wholesale electricity prices should naturally spike during these times as well. Demand is temporarily outpacing supply. That's the market in the very short-run, I guess. In the long run, I don't agree that we should 'listen to the market'. The market doesn't price in externalities like increased infrastructure costs (which are usually worn by taxpayers) or greenhouse gas emissions (a global negative externality) unless the government steps in to internalise these costs.

I honestly don't know much about California's electricity market, but it seems like no one has been 'listening to the market' for quite some time now: https://www.forbes.com/sites/realspin/2016/01/15/california-... , http://www.gosolarcalifornia.ca.gov/solarwater/index.php , http://www.gosolarcalifornia.ca.gov/about/nshp.php

That's the story we hear occasionally, but according to TFA "starting and stopping natural gas plants is costlier and more difficult than shutting down [and, presumably, starting up] solar panels" so they just leave those running without regard to daily peaks. I'm not sure how we ever got sold on a technology with those characteristics being a good "peaker", but hey! utilities execs are good at their jobs, when their jobs are correctly understood to be screwing over the customer.

Your anti-market bias is reversed in this case. The market [EDIT: for investments] doesn't want these new plants, because they're wasteful and bad for the environment. Therefore, they're bad investments that will only be made if the public is forced against its will to make them.

The turbines engines used for natural gas based electrical power production can be throttled up and down over a wide range. IIRC from maximum power down to about 15%. But, no you do not want to just shut them off. There are natural gas based diesel generators that can be turned on and off, but being Diesel engines they really only run efficiently over a small power output range and you control how much power is generated by how many you turn on. You need rows and rows of the Diesels to match the power from a gas turbine and each diesel needs to be individually matched into the power grid. So, there are reasons to go with gas turbine electrical power generation to meet peak power demands. OTOH, CA is tearing down recently built plants because of over capacity which is just crazy and obviously a boondoggle for the electric companies. But, building the plants was driven by the craziness that immediately preceded it; CA's NIMBY driven under capacity and being forced to meet peak power demands by buying outrageously priced power from out of state. Just bad planning, more bad planning, and certainly more bad planning to come.

Huh, well I definitely learned something today.

As for anti-market biases, I suspect we might disagree on the definition of the phrase 'the market'. Admittedly, I mentally put the word 'free' in-front of the word 'market' when I hear it used without qualification. I feel like it's the only safe assumption to make.

Otherwise, chances are, the regulated, distorted and interfered with market that I have in my head is very likely different to the one you have in yours. And unless we both explain what we mean exactly when we say 'the market', we're just kinda talking past each other.

No worries dude. It's cool to discuss, even if we don't agree. Markets may not be "free", but they can still function as we'd expect markets to function if there are multiple sellers and buyers. The market for utility bonds is like that, but the market for electricity often is not.

Unfortunately the free market is a purely theoretical concept and a model not unlike Newtonian physics - useful, but incorrect.

That depends on the type of solar power. Yes, there's photovoltaic power - though you'll note that the article was talking about mirrors - mirrors heating up something. That something often has quite a bit of heat capacity.

There are quite a few ways to store that thermal energy from solar ( https://en.wikipedia.org/wiki/Solar_thermal_energy#Heat_stor... ) The Ivanpah Solar Power mentioned in the article lacks any storage, but its possible to store steam - the PS10 plant ( https://en.wikipedia.org/wiki/PS10_solar_power_plant ) stores its steam at 50 bar and 285 C for an hour.

Its also possible to do molten salt ( https://en.wikipedia.org/wiki/Thermal_energy_storage#Molten_... ) which can store its heat for up to a week. Solar Two used this in the Mojave back in the late 90s.

The peaker plants aren't necessary when you can just grab some steam or other thermal energy from a tank and use that.

Hydroelectric power ( http://www.energy.ca.gov/hydroelectric/ ) also does a good job of being an instant on (recognizing the issue that California has had for the past few years with hydroelectric power...).

From https://www.forbes.com/sites/jonbruner/2011/10/20/the-high-s...

> Each generator housing contains a 280-ton turbine that looks like a ship’s propeller and a 430-ton generator rotor that spin in perfect synchronization with the grid’s alternating current. As large as these generators are, they’re among the nimblest big sources of power available: Duffus can bring a turbine online in under two minutes and, once it’s running, can summon as much electricity from it as he needs in as little as ten seconds. Each 60-megawatt generator can produce enough electricity to supply roughly 60,000 households, but all of that capacity isn’t needed most of the time.

I don't understand so when a natural gas plant is built they adjust rates upward? Isn't that the opposite of supply and demand?

No. In theory, that new gas plant is "planned" and replacing aging capacity, while meeting expected demand.

Rates are separate.

Many power utilities are granted a monopoly, especially the transmission (high voltage, long distance) and distribution ("last mile" / neighborhood wires) horizontals as they're true natural monopolies.

In exchange for that concession, their profits are capped. The cap is a function of their "rate base" -- i.e. qualifying capex -- and an approved rate. These rates are adjusted periodically, requiring public utility commission (State) or FERC (federal) rate setting sessions.

For example, "Total Revenue Requirement = Rate Base [assets] × Allowed Rate of Return + Expenses" [0]

Without having looked into this, it's easy to over-estimate how easy (hard) life as a public utility is.

[0] http://blog.aee.net/how-do-electric-utilities-make-money

This kind of regulatory response to natural monopolies can (and does) result in 'gold-plating'. It incentivises profit-maximising monopolists to over-invest in qualifying capital: even though their ROI remains the same, their absolute profit grows larger.

However, there's no easy solution here: natural monopolies are a genuinely tricky public policy issue. Alternative solutions that come to mind are more direct price controls or public ownership. I'm not suggesting these are superior alternatives; just throwing them in there to provide more grist for the conversational mill.

California is an expert at this.

https://en.wikipedia.org/wiki/California_electricity_crisis

There is very little competition in electrical utilities. The theory is that in order to prevent competing electric lines from being built, government must control prices. However, many utilities still have private investors, who want prices to go up. Since existing prices already pay these investors a fair return, they have to find a more objective reason than "we want more money". Often this takes the form of unnecessary capital spending, the costs of which can be inflated and passed on to captive customers. After all, if the capital spending (e.g. on a power plant) were necessary, it would itself generate a return (e.g. by selling power) that would attract investors. The public is victim of the principal-agent problem when public utilities commissions approve such arrangements. This has led to a situation in which California and other states have more generation capacity than they need.

Yes, but, this is not an open market, this is the CPUC and they have a captive audience they can force to pay whatever they want to force them to pay.

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