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Comment by Night_Thastus | Hacker News Reader

To me this situation has always seemed backwards.

Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage.

Yes, this doesn't encourage reducing electricity usage, which isn't as great for the environment.

But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar.

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> based on the actual costs to the electric provider

They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.

> They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.

That's not necessarily because grid costs + generation costs were separate.

If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).

It sounds like you’re literally describing what companies already do. They charge you a fixed rate or sometimes variable rate that isolates you from the volatility of the actual real time pricing market. What is different here? The power companies are essentially self insuring. Which generally is cheaper than buying a third party insurance product, all else equal.

No, what they did in Texas was to price it on demand, like a marketplace. That is very different then pricing based on cost.

when supply is limited, there isn't really a difference between demand and cost. when supply went low, demand, and thus cost to the middlemen went way, way up. the middleman was just applying a markup and passing their cost on to consumers.

Equivocating cost from the middleman based on a markup and cost to produce the electricity is quite a move.

No, it wasn't cost "from" the middleman. I said cost "to" the middleman. The middleman was just passing along the higher cost.

A fair amount of the EU market is also on it, it's not a special Texas company thing.

That's a very extreme example not representative of day-to-day operation.

I’m not sure you would have such a cavalier answer if you had suffered the same consequences as those people in Texas. The situation has to be accounted for.

Yes but there is no universe where I want to expose myself to capped upside and unbounded loss.

Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.

The situation is backwards because instead of taxing the sh*t out of everyone (including non solar homeowners) and give incentives to select few, people can simply afford solar (or whatever solution they want) if the government hasn't robbed them.

Sorry couldn't resist a side nitpick:

> if the government hasn't robbed them

Since dawn of times government robbed people (aka taxes). That's basically the definition of a state. It's actually the first and most important task of any state -- collecting tribute (the second is preventing other states doing the same).

So, if we're looking for a state that doesn't rob it's people, we should look for another universe perhaps.

If the money earmarked for upkeep goes to upkeep, that sounds like a nice plan. Unfortunately, PG&E has a history of collecting upkeep fees and paying them out as shareholder dividends.

FYI, this creates a perverse incentive for the utility to create as high costs as they can plausibly get away with.

It’s a big issue with military contracts too, or any ‘cost plus’ arrangement.

They are not incentivized to be efficient anymore, rather the opposite.

> Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage.

California recently adopted a version of this.

> But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar.

California has adopted mandates for solar on new construction; reducing separate incentives is not a decision “to stop putting up solar”.

I think it makes sense for peak electricity usage to have to pay more for upkeep and infrastructure. Building everything out for peak usage is where the higher costs come from. If my usage during peak is 1kw and my neighbor's is 10kw, our local grid will have to be able to support 11kw. How should those costs for infrastructure be split?

New Zealand has recently directed distributors to change to cost reflective pricing, which resulted in big increases in the fixed daily charge, and moderate decreases in the variable charge. Lots of people hated it, but it's clearly the right thing to do.

There's a similar issue with water usage, lots of locales have been so successful in lowering water usage in their communities that previous usage based fees don't cover the minimum operating cost of the utilities.

It's also happening with gas. Especially because switching to entirely electric is an alternative (and being pushed). So gas prices have to raise to make up for infrastructure cost, incentivizing individuals to move off gas to save money, repeat.

Isn’t that the case everywhere? I get charged per day and per kWh separately.

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