Comment by eigenvector | Hacker News Reader

Comment by eigenvector | Hacker News Reader

FTA:

> Exacerbating and prolonging this sticker shock is a decision on Tuesday by the state’s Power Utility Commission, which regulates the nonprofit ERCOT’s operations. The order from the gubernatorially appointed PUC asserted that, even with a hike coinciding with cold weather and increased heating use, ERCOT had been undercharging consumers for the cost of energy and directed it to raise its rates.

Not really, ERCOT does not have anything to do with consumer energy rates, only the wholesale market. The vast majority of consumers buy energy through retail providers that in some way isolate them from spikes in wholesale pricing. A handful willingly decided to buy at spot prices through providers like Griddy, and they are feeling the consequences.

I don't know what to say, really. If you decide to play at being an electricity trader with your home energy bill, there is no way you are going to win in the long term.

You can't contract to buy a commodity at the spot price then ask to be bailed out when you end up on the wrong side of the trade.

What percentage of people do you think had any idea of the maximum risk they were taking on?

I get emails from my power provider on occasion asking me to opt-in to some program that charges based on usage rather than at a fixed rate. The email basically just says "most people see lower rates" and "use less power at peak times to save money" and says precisely nothing about tail risk. Could my bill go up 100x? I would have no idea.

Yes, buying using the wholesale price incurs risk. But these programs aren't marketed like short selling or options trading - risky decisions for professionals. They are marketed as cost savings measures.

I can’t speak to Griddy or their marketing, but the here in NY the market for alternate provider “ESCOs” seems to have attracted some really shady players. Their sales tactics range from a little deceptive to outright fraudulent, with door to door and telemarketing sales people going so far as to pretend to be ConEdison employees to get your account number and process the provider change behind the scenes.

I see the Griddy homepage has a graphic showing that they beat the other providers on price 96% of the time...how many of their customers knew at signup time just how bad it could get 4% of the time?

I think there's definitely a "responsible consumer product marketing" angle to this. Companies shouldn't be able to market products deceptively, and some products are too risky to be offered to the general public rather than qualified professionals.

But it seems that in the United States as long as the only thing you are harming is your own bank account you can take on as much risk as you want? I mean people are trading options on Robinhood with their last $500.

As cost saving measures? Maybe partly, but I thought they were heavily marketed as virtuous too, as good for the environment. I wonder if you could make the case that the price spikes wouldn't happen if more (percentagewise) people were exposed to the current price and thus more people incentivized to conserve. Then again, maybe there is no way for enough people to shift demand in an unusual situation like this.

> You can't contract to buy a commodity at the spot price

No, no, the problem is that they can. It shouldn’t be possible for consumers to do that.

Nor for wholesale prices to reach $9k/MWh, but that’s a different thing.

When spot rates were low, they were laughing and tell you how smart they are and how the know the market.

Now they'll be queuing up to tell us all how they were defrauded and no one told them

Surely "nobody" was saying such things?

I feel like I've read lots of stuff about how paying the instant cost of power is a socially useful and environmental thing to do, apart from saving money. Like for instance, people would say that if we're going to have electric cars then people have to be incentivized to charge them when the cost of power is low.

Relating this to financial speculation and irresponsibility seems like a very strained post hoc imposition of a narrative, when surely it was previously considered largely about altruism and social responsibility; "doing well by doing good".

I'd rather see them bailed out than some greedy trader on wall street or a banker.

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