Michael Giberson
@MichaelGiberso3
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Economics, Electric power markets, US energy policy. Pro-market. Senior Fellow, Energy @RSI. Prior: Texas Tech U, Potomac Economics, GMU PhD.
West Virginia, USA
Joined November 2018
When you ignore the considered views of scholars in a field, you rarely reach a well-considered view. But experts can be wrong, so let us consider @ZephyrTeachout ‘s Atlantic article.🧵1
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ERCOT prices are $5,000 MWh and in nearby SPP prices are $108 MWh. If only there were some sort of technology, some kind of "pipeline to carry electricity" or something available, so that Texans in SPP could share with their family and friends downstate.
ERCOT wholesale prices have now maxed out at $5,000/MWh. @knowledgeprob @MichaelGiberso3 can we get a quick explanation?
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Solar critics try to make a big deal over hurricane damage to a solar PV plant, but Duke Energy Florida's solar output is down less than 10% after Milton. Meanwhile, Duke took coal plants down for safety prior to Hurricane Helene and they remain out of service.
Milton takes out big solar! @windaction
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This article blaming higher electricity prices on deregulation is making a really odd argument, and doing it badly. A🧵.
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Krugman: Harris is reasonably aiming to regulate grocery store prices because 24 years ago a badly designed government-restructured power system in California was readily taken advantage of by shady traders.
Harris’s gouging proposal looks mild compared with the price-control hysteria. But some are writing as if gouging never happens. Has everyone forgotten about the California electricity crisis of 2001, in which power operators deliberately cut production to raise prices?.
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NY case: Hardware store in Chazy NY had 1 generator in stock when ice storm left area without power, they bought 54 generators from out of state, sent a truck to get them (increasing supply!) and sold at prices intended to cover costs. State sued them.🧵8
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@AlexNowrasteh Who is he assuming would be deciding whether or not 20,000 Haitians can move into the town? In a libertarian town presumably each property owner would decide for themselves who they would rent to and hire or whatever.
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Now that the ship blocking the Suez canal is moving again, we should guarantee nothing like this ever happens ever again. Here's my $8 billion solution: a reserve canal for use in emergencies.
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The judge commended the hardware store for its community service, but said the law compelled a judgment against it. Teachout says stores can recover costs, but in practice states pick and choose, as here when the costs of retrieving and selling the generators were discounted.🧵9.
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@rdaneel_eth @rockydaddy @patrickwitty @cehoskinson @StuartAFranklin @TIME Surprisingly, “Tank Man” is the one person in the photo who doesn’t have a tank. 🤔.
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A common claim is temporary price controls means everyone has a equal chance to get goods, but it just means whoever gets to the store first wins. Consider: Suburban stay-at-home parent with an SUV vs poor parent with two jobs relying on public transportation. 🧵16
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Anyone in US electricity circles knows the (continental) US is served by three separate grids: eastern, western, and Texan. Did you know that for a while the US operated as one large grid? Great history on development of the interconnected system(s).
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Bloomberg reports the new common view: "The almost overnight surge in electricity demand from data centers is now outstripping the available power supply in many parts of the world.".Yet the data shows the surge began 15 years ago, contrary to the common view. This is good news.
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Contrary to her concern about barriers to entry and high concentration, the history of price gouging law enforcement in NY is a history almost entirely devoted to penalizing small businesses. Hardware stores, motorcycle dealers, gasoline stations, and convenience stores.🧵7
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Before you complain about rising electricity prices, check the data to make sure you aren't just complaining about inflation. Here's a starting point.
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@matloff @dremilyportermd Harris is a common surname, Kamala is better branding for a candidate. The campaign chose to promote the usage. Not disputing that female professionals sometimes don’t get the respect they deserve, but this isn’t one of those cases.
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I have written on price gouging laws and I am an economist—I may be exactly the sort of expert that our law professor-essayist wants you to ignore. You are warned. 🧵2
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I don’t think I’m being merely pedantic in pointing out the Texas CREZ $6.9 billion transmission buildout was a larger investment in American transmission than DOE’s $3.5 billion spend.
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@BrianGitt Offshore wind in the US and UK is not the whole of the wind industry. Your enthusiasm for wind’s demise is not supported by the data.
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Days like today I think about Tres Amigas project. Would have interconnected SPP, ERCOT, and West just north of Clovis, NM (see arrows). SPP price in area now around $30/MWh; ERCOT price at nearest node $1,416/MWh. #ERCOT #SPP #TresAmigas
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Speaking of antitrust, so far as I know no price gouging enforcement action has put any substantive effort into defining the relevant market to establish the possibility of even temporary market power. Who needs evidence when “you know it when you see it”? 🧵11.
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@JimRobbDC Your argument is US wages are better than anywhere else in the world, and you think that is a problem?.
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Claims about price regulation being needed because of market concentration are essentially irrelevant to price gouging law as actually enforced. Enforcement is, almost without exception, prosecution of small retailers & other companies with well less than 10% of the market.
Price controls are ubiquitous in modern economies. The case of extending them to groceries is based on the extent of market power there. Martin Sandbu is almost the only high-profile economics commentator making these obvious and sensible points.
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One of the big businesses targeted by New York was egg producer Hillandale Farms, with about 6% of the national egg market. Antitrust economists tend to think of a 6% market share as no big deal. Is this “poor man’s antitrust,” or just poor antitrust?🧵10
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You have to read deep into the story to discover that the bitcoin operator was actually only paid $7.4 million by ERCOT for demand response. The rest of the $24.2 million came from energy the company sold to Texas retail suppliers who were underprepared to meet their obligations.
Here's a report on how ERCOT paid a single bitcoin operation $31.7 million in August to decrease it energy use to help stabilize the grid. Wonder how much tonight is going to cost.
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Teachout says a “problem with price-gouging laws is that they exist only at the state level,” but it is also an opportunity. The variation makes testing claims empirically easier to do. Before rolling out the laws nationwide, maybe advocates should find out if they work.🧵18.
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@just_opin1ons @paulkrugman @JeffMerkley @repblumenauer @RepBonamici @RonWyden I’ll be more impressed when Congress takes action to prohibit this behavior. A sternly worded letter is great, but Congress created the agencies and authorizes funding. Step up.
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Quality King settled with NY to end litigation. Settlements are common. Litigation can be more expensive than state's penalties, making it prudent to buy off the state. In the Hillandale case the company donated 1.2 million eggs to food banks and the AG gets to claim credit.🧵13
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Another big business NY has gone after was Quality King, a wholesaler. While case was dismissed by the first court, the dismissal was overturned on appeal. It is “actually a well-developed body of law” where some judges “know it when they see it,” but others don’t.🧵12.
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Complaining about high electricity prices? After adjusting for inflation average retail prices were lower in 2023 than they were in 2008.
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I haven’t said anything about Kamala Harris’s proposal because so far as I am aware there is no real plan yet. She said: “I will work to pass the first-ever federal ban on price gouging on food.” I wonder if she has reasons to think it will work.🧵END
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A study of post-earthquake shopping found households able to shop right away purchased much more right after the event than households facing costs of shopping. High income earners have high time shopping costs, but they can pay someone else to shop. 🧵17
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“Eek, Arizona based solar plants may serve out of state customers!” —some politicians. This kind of argument that we should only produce for ourselves and refuse to buy from elsewhere contradicts 250 years of economic thinking and the vast experience with international trade.
I’m also not following the argument that we shouldn’t build solar somewhere if the power goes elsewhere. That’s how the grid works. That’s true of every utility scale resource. #energytwitter.
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The standard price gouging story is a few folks and a truck selling ice brought into a town where power was out. These folks are increasing supply. Price spikes don’t always trigger supply increases, but should the law penalize folks increasing supply?🧵6
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Some claim there is not much potential in residential demand response. Here is my personal rejoinder in chart form. I'm on a TOU plan with a peak rate nearly 4x offpeak and also enrolled in a demand response program though my utility. (Some details on chart in 🧵). #energytwitter
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In brief, Teachout makes several claims, not entirely self-consistent, which do not reflect the ways prices against price gouging get enforced in the states that have them. A few responses to the article.🧵3.
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A USA Today article says the EPA says 17 states have “fully deregulated electricity markets.” The claim is wrong. The article doesn’t link to a specific source, but I found this description on the EPA website.
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There a more objections to be made against price gouging policy, some I wrote about in an article appearing in Regulation magazine.🧵19
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The “know it when you see it” quality emerges because some states use vague prohibitions against unconscionable price increases and leave it to judges to decide whether a price increase was, in retrospect, too much. (Some states do state an exact % increase allowed).🧵4
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Currently prices in ERCOT are over $5,000 MWh, while further west in Texas power is selling for under $19 MWh. #txlege @puctx @ERCOT_ISO
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In TN, 16 gasoline retailers charged with price gouging settled immediately. One chain resisted any admission they gouged their customers but after a year settled, saying paying $57,000 to state would be well below the costs of continuing litigation.🧵14
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In some states the laws are triggered by an official declaration of emergency. New York is vaguer, referencing an “abnormal disruptions of the market.” Ultimately judges decide when disruptions begin and end. Exact dates sometimes matter, but businesses in NY can only guess.🧵15.
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The issue gets a little clear if we discard the misleading term "deregulation." What several states did 25-ish years ago was to switch from a regulated monopoly industry structure to a regulated market-based industry structure. Experts tend to use the term "restructuring.".
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About 25 years ago the electric power industry was deep into debates over competition and monopoly. The debate over structure is heating up again. This time we have two decades of experience to consider. What does that record say?
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Teachout says the laws have four common features. Legal scholarship has identified eight points of interest. This Skarbek & Skarbek law review article provides a good review.🧵5
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A lovely essay on the limits of our AI chatbots. Really it’s an essay about the limits of words and sentences and paragraphs to represent knowledge and of the roles of physical bodies in providing essential context for knowledge.
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@jmhorp To clarify a bit, the US is a net importer of crude oil but net exporter of petroleum (summing crude, petroleum products, and other hydrocarbons).
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Hey #energytwitter, we are 60 days past the February freeze in Texas which means #ercot 60-day disclosures are are available for the event. What can we find there that we don't already know? Anything?
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Locational marginal prices (LMP)—uniform clearing prices reflecting the opportunity costs of sellers and values of buyers, subject to grid capacity—are the best way to coordinate use of scarce generation and transmission resources.
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Nearly everyone agrees more & better interregional transmission capability boosts reliability and can save consumers money. The Texas PUC just denied a request to build such a line, saying they lacked authority to approve it. One commissioner disagrees.
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I also recommend @Mattzwolinski's work which tackles the ethics along with the economics. Here is one paper: 🧵20.
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I was looking at EIA data yesterday and took another look at avg electric rates in states with retail choice vs states with monopoly. As most know, states with retail choice have higher prices than states that stuck with monopoly. The interesting question is "Why?" #energytwitter
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@Astoll15 Right, how many critics of wind energy would look at a dairy barn destroyed by a tornado and conclude dairy farming is pointless and unsustainable?.
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MISO has a Texas hub with prices under $100 MWh. Your electric pickup truck could charge on one side of The Woodlands and sell on the other side of town, while stopping at Whataburger on your way.
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Higher bills (and a dampener on competition, and unknown effects on reliability of the bulk power system in ERCOT). None of these bills would benefit consumers.
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@AlexNowrasteh He says immigration is pushing low skilled workers out of the workforce, but labor force participation by workers without a HS diploma doesn’t show the effect.
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Zephyr Teachout wants everyone to stop calling Harris's anti-price gouging proposal price controls. The proposal, says Teachout, is merely a national version of the anti-price gouging laws that 37 states already have.🧵1/17
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@duncan__c @QuincyEdmundLee The battery buys power to resale: wholesale. A factory buys power to consume: retail. The distinction comes with a host of legal and regulatory consequences not easy to avoid.
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@TKavulla That it is a major technical achievement in science, but still a few decades from commercial relevance. Energy industry folks have about 40 years of practice being just a few decades away from economical fusion energy.
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A study published last year in an economics journal estimated effect of implementing ERCOT's nodal market design (locational pricing). A valuable study given recent concerns over LMP. (Gated link, ungated link follows.) 🧵1/8 #energytwitter #ERCOT #FERC
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The article claims that grid spending "often gets minimal review by state and federal regulators" but "officials in areas that have not deregulated . maintain much greater control over utility spending." This is speculative nonsense: grid spending has remained fully regulated.
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It’s not working if I read Utility Dive for fun, which I do.
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@pwrhungry Take a closer look at California, it isn’t “treating electricity as a commodity” that is pushing up rates. It’s more due to treating ratepayers as captive ratepayers for various environmental and other policy issues.
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Vernon Smith explaining how economics experiments and Adam Smith’s two major books combined to lead him back to classical economics to understand price discovery. @TexasTech @FMI_TTU
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How much money could one make by charging up an electric Ford 150 "Lightning" in SPP and driving cross the border into ERCOT for resale?
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Grid infrastructure--mostly transmission and distribution lines--remained part of traditionally regulated monopolies. So (1) deregulation is blamed because of rising costs in the part of the industry that has remained under traditional regulatory control.
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In other words: All y'all complaining about high power prices? Cut it out. (Except Californians, who have justified concerns, and a few other places.).
Before you complain about rising electricity prices, check the data to make sure you aren't just complaining about inflation. Here's a starting point.
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@LinowesLisa @windaction The damage apparently limited. Max daily solar production two weeks ago was around 11,500 MWh and after Milton it is around 10,500 MWh. Meanwhile Duke took two coal units off prior to Helene and they are still not back. Coal was about 25,000 MWh daily and now is 0 MWh.
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RTOs are quasi-autonomous non profit entities the boards of which have vast influence on the pace of progress. @AriPeskoe digs into RTO governance challenges in this thread.
Last century’s power players have too many seats at the table. Their outsized influence creates bureaucratic inertia that can keep out-of-date rules in place and constrains the industry’s technological potential.
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Empirically false, some people willingly choose variable price rates. How about instead of telling people what they want, we allow people to make up their own minds?.
Nobody wants the Uber-isation of household electricity prices. It’s 40C today and you turn on the AC - oh, sorry, you’re on $5/kWh surge pricing today. Of course they won’t tell you, they’ll just let you rack up the bill - and you need electricity in your home when you need it.
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It is an interesting question as to why reforms haven't worked as expected. The NYT article does not get us any closer to understanding what happened, when, or why.
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Post has same vibe as critics of oil and gas fracking. As early as 2008 critics said fracking could not survive because of steep decline curve, yet here we are with record production 15 years later.
This is a sobering thought. All of the windmills currently installed will need to be replaced before our net zero target date of 2050 💀. Welcome to the Red Queen effect.
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Switch powerplant from ERCOT to MISO to help out during winter storm Heather. 👍🏼. Build HVDC link between ERCOT and MISO and output from every powerplant in both systems becomes “switchable” between the two. 🔥🔥🔥.
I mean this seems pretty innovative to me even after 23 years. Sharing thanks to a recent tweet on ERCOT switchable generation helping MISO during storm Heather:.
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@russellgold @loiskolkhorst ERCOT charts showed Bitcoin responded fairly promptly to high prices during Winter Storm Elliot, allowing power to support residential and other customers instead. Seems like miners have been “good neighbors” on the grid.
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The “Greedy Griddy” headline indicates the headline writer does not know what the company did or who was responsible for the high power prices in ERCOT in February.
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The article actually explains good reasons for added grid spending including connecting customers to distant renewable resources and hardening the grid against consequences of a changing climate. Neither one of these things are "deregulation.".
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Occasionally wind power drops off at the same time as solar. If, like ERCOT, you have a lot of wind and solar capacity and they drop off together, then you pump the accelerator on natural gas and coal. Today, over about 4 hours, wind and solar dropped by about 25 GW.
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@robinhanson People understand Congress has an “other people’s money” problem. Here evidence for an “other people’s children” problem.
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This discussion should shake up your thinking and may lead you to change your mind. In other words: highly recommended listening for people in clean energy, climate action, public policy, politics, and philanthropy.
Today on Volts: the "effective altruism" movement seeks to apply logical & empirical rigor to philanthropic giving. What does it have to say about climate change philanthropy? I talk with someone who's been puzzling through that question.
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On (2) we see claimed that regional markets peg energy prices to the cost of "a relatively high-cost supplier," but that misstates how RTO markets work. Instead, the price is the lowest possible price that balances supply and demand in the region.
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To me the quote reads, "Because regulated monopolies do still act like monopolies we need to pay them more so they won't act like monopolies."
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You might not need a Marxist analysis of interconnection queues, but you can read a Marxist analysis of interconnection queues. According to it the answer is a single well-organized, publicly oriented planning administration. Conflict resolved! Waste avoided! All so obvious. 1/6.
Are you "outraged about the the interconnection queue"? Me too! There is more energy in the queue than we consume today! And most won't even be built! Madness! . Well, the masses are clamoring, & I'm gonna deliver:. A Marxist analysis of the interconnection queue problem. 1/x 🧵
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Why should every Texan be outraged that bitcoin miners shut down and sold off the power they had under contract during tight grid conditions?. Literally this tweet suggests bitcoiners should have just kept grinding out bitcoin and residential power consumers be damned.
Every Texan facing higher energy bills this summer should be outraged that crypto companies are making twice as much money from @ERCOT_ISO than they are from their *actual product*.
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@slabbyd73 @sternbergh @NYTmag I don’t spend a lot of time on Twitter. Is it common for people to openly declare their personal prejudices and intellectual limits like this?.
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Consumer-based, market-oriented demand response taking off in the competitive retail market in Texas. Here @ohmconnect is mentioned.
Texas is experiencing record breaking heat. @ohmconnect Energy customers showed up in a big way — adjusting thermostats, delaying the start of their appliances, and generally saving energy for an hour and then another one. Amazing work by @mattduesterberg and the team.
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Locational pricing is vital in efficient electricity market design because it more fully reflects the operating capabilities of generators and the transmission system while matching supply and demand. Non-LMP systems ignore relevant grid info, and not surprisingly do worse. 7/8.
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@duncan__c Pay-as-bid provides horrible incentives to generators: bidding strategy gets divorced from unit costs and hence no reason to expect centrally-coordinated bid-based dispatch to be efficient.
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@WalpurgaMueller @GregAbbott_TX Local lines down are the responsibility of the regulated local transmission company, not the fault of ERCOT.
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“The most recent move toward a form of power market, in a group of Western states, has saved nearly $3 billion since 2014, according to the market operator.” via @NYTimes
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