There is a New York Times story that talks about how some Texas utility consumers faced 5 digit bills during the recent storm. They are painting the utility as being greedy, and the state government as inept, because of the steep rise in costs.

Of course, I have a different opinion. The culprit here is consumers and their lack of understanding of fundamental economics. Texas has a largely unregulated, pure supply and demand system. One provider, Gridly, charges consumers a flat $9.99 monthly fee and allows consumers to pay the wholesale rate for electricity. This results in cheap electric bills in normal times.

During abnormal times, like a blizzard or hurricane, wholesale prices skyrocket as utility providers shutdown because of the disaster and what power is left comes at higher prices due to its scarcity. That is supply and demand at work. Gridly even warned its customers that the prices were going to increase, and advised them to switch to another provider.

Many didn’t, for whatever reason. The power for them stayed on, but at prices that were up to 100 times more than normal. They claim that they could see the bill climbing, but could do nothing about it. Bullshit.

Turn off the breakers.

You ALWAYS have choices. You were told to switch providers, and you didn’t. You knew the prices were climbing, and knew you could turn off the power, but you didn’t.

Instead, you complain about “price gouging” AFTER the fact, and demand that mommy and daddy government come bail you out of the results of your own bad choices. Everyone warned you, and you ignored the warnings.

So now the government will likely pass laws preventing this from happening again. All this means is that companies like Gridly who were able to keep the lights on during a disaster, thus giving people an option (admittedly a higher priced option), will not be there next time.

Categories: economics

1 Comment

it's just Boris · February 21, 2021 at 3:16 pm

Same-old, same-old during and after any natural disaster.

I’m not making light of it – some people died, many more were miserable and terrified. But I’m getting very tired of two related complaints / whines:
– my bad choices led to a bad outcome and that’s someone else’s fault, and
– something bad happened and it has to be someone’s fault (other than mine).

I agree, there will be howls for blood and demands for far greater regulation of electricity pricing, none of which will address the real issues with the infrastructure that were brought to light. And we’ll hear the same baying when it happens again.

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