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Comment by oompydoompy74 | Hacker News Reader

It’s almost like market forces aren’t what you want for a utility.

Too bad gas and oil didn't have trillions in subsidies over the past 100 years. Maybe had we listened to Jimmy Carter we would have continued to lead the world instead of now being firmly in the back.

Works perfectly for the electricity market. Negative prices is just an opportunity waiting to be exploited.

The transmission should of course be state owned due to being a natural monopoly.

Very few people realize that for most of the US, cheaper electricity costs for the utilities means lower profits, because most are regulated utilities that take a fixed profit on costs. Models for this vary greatly, sometimes they only take fixed profit on necessary grid investments (where necessary is determined by the utility, then stamped for approval by a Public Utility Commission, which has a board that might be elected and susceptible to bribing/election malefeasance, such as in Arizona...)

So-called "natural" monopolies are quite difficult to regulate correctly. And the solution we chose as a society a century ago might not be the right one for today.

Utilities tend to make most profit as a fixed rate of return on infrastructure built, not really based on electricity costs. Build a new substation, some poles & wires to distribute it to the new subdivisions, and bammo, regulator grants you a fixed rate of return on that from your ratebase (paying customers) over the lifetime of that infrastructure.

You get a fixed return on that infrastructure, but you need to keep pace with inflation in all other areas of the business. Storms, errant vehicles, animals, fires, all sorts of things cause that same infrastructure to require maintenance personnel and equipment, and that equipment needs its own maintenance, as do the offices for the personnel, and so on. It becomes a balancing act because you only get to adjust the rates every so often, and with regulator approval.

Regulator approval really isn’t market forces, to tie this to comment above.

>cheaper electricity costs for the utilities means lower profits

You say that like it's a bad thing. Maybe electricity generation shouldn't be a profit seeking enterprise?

I don't say it as a bad thing at all, I say it as a thing that's in contrast to the rest of the companies and proprietors and corporations we deal with. (And my last comment also hinted that I think it's time to reevaluate this social relationship with the utilities...)

Typically, if a person/corporation is clever and figures out a way to reduce costs, they are incentivized heavily to do so because they take the gains, at least for a while until others figure it out too and compete.

With utilities, they are actively incentivized to increase prices as much as possible. This is a crucial distinction for people asking why cheaper electricity generation methods are not resulting in cheaper utility bills: because the regulatory structure is not operating the way it should, and they need to get involved democratically to change the system!

Sounds like you're saying it's a bad thing.

Well I'm not. Which of my words are giving the other impression to you?

A century isn't very long. I guess things have changed somewhat since then, but age isn't a very convincing argument against these regulations imo. Having to update all of this every hundred years sounds exhausting to me.

Fortunately, we pay people who are called "legislators" who pass laws and are paid to pass legislation to fix problems like this and update laws when they become outdated.

Updating laws every 100 years to keep up with technology sounds perfectly reasonable and actually, like, super cheap.

I wouldn't expect most things from 1920 to still apply today. I can't smoke inside and I don't have to drink ethanol.

There's nothing techy about cigarettes, and you can still vape inside in lots of places, so 100 years really is either too much or not enough anyways. Maybe we shouldn't regulate things that are so flimsy?

Ah yes, the classic solution: it's slightly challenging so let's do nothing instead and hope for the best.

This usually doesn't work out.

I never said to do nothing, so this is a pretty lame strawman.

Yes you did, you said "let's not regulate things that are flimsy" and your example was smoking (???) because we have vapes now (???) and so effectively people still smoke inside (???)

Really? We can't even regulate smoking? That's too far for you? Jesus Christ.

If this isn't "we tried nothing and we're all out of ideas" then I don't know what is.

Yes, regulations are not perfect and do have to be updated. That doesn't mean theyre worthless and we shouldn't bother. Thats stupid.

Solar also offers the possibility of grid defection, as is occurring on a large scale in Pakistan. At some point (and particularly if that thermal storage thing I've been touting matures) electric utilities may see dramatic shrinkage, particularly in less populated areas with ample unused land.

of course they are. market forces are what you want for everything. granted, you may want to internalize a negative externality like the climate change induced by greenhouse gas emissions, but that's literally correcting market forces.

I kind of agree in the sense that utilities at least need regulation. You can't leave it all up to the market. (I've lived through the winter storm days-long blackout that lies down that path.)

But, I don't think this particular thing proves that point. What we have here is a chaotic shift to a new equilibrium. Technology has changed and needs/priorities have changed.

People wouldn't overbuild solar if they could forecast that it wouldn't be profitable. The issue is they can't forecast.

The reason we aren't allocating resources optimally is not about who is in control or what their motives are. It's that we don't have the information we would need in order to be able to.

TLDR: growing pains, not misaligned incentives.

Couple of years with occasional negative prices and that market you so detest will cover the place with batteries, solving both the negative prices and reducing load on the grid.

And all it cost was a 6th major extinction event! I don’t believe we have the luxury of letting the market figure this out. We should have started turning the ship decades ago.

Solar didn't get this cheap magically. It’s in big part a consequence of public policy.

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