Yearning for Cozumel weather

[cozcharlie]

One women got a $9000 electric bill when her normal billing is $40.00....is that possible!?

Yes it is possible, though during the middle of this Centerpoint had a computer glitch and sent people $200,000 gas bills.

Normal wholesale electricity prices probably average 30-40 dollars per megawatt hour. However, the low during the year is usually substantial negative price and the high can be ~$9,000/MWh. Prices usually just hit the max for a few minutes if they get there at all during a year, if prices go there and stays for days you can get energy bills a few hundred times normal. Market just wasn’t really designed for days long fuel and generation shortages. Most people use a fixed price electricity plan for their electricity, so they will not see too large of an increase month over month. People that opted for a variable hourly pass through rate will like see astronomical bills.

As I mentioned a few days ago, natural gas production plummeted causing gas prices to skyrocket to 100-300 times normal, so the cost to produce electricity shot way up even aside from the fact the market was way short electricity.

As I said a few days ago , while I recently left the industry I still know way more most people about this. Even I still don’t know how much blame to assign where but most of what I have seen from all sides is generally not particularly accurate. I still think reasons for the very tight natural gas market are not really understood by the general public. We saw a massive decline in production. We normally see declines in production in the south when the weather gets cold. The colder it gets and the longer the cold lasts, the greater the decline in production. This is the coldest it has been in decades so not surprising to see the biggest production decline in decades. These declines are usually spread across tens of thousands or hundreds of thousands of wells owned by hundreds or thousands of companies. Southern producers don’t spend the money that northern producers do on cold protection measures since it usually only matters a little on the margin a few days a year. Kind of tough to blame a natural gas producer for a weather related production decline causing a shortage in the electricity market. Kind of like trying to yell at wheat producer for a spike in the price of bread because they didn’t spend the money to install irrigation that they would need once every 30 years.


Anyway , that jump from 40 to 9000 is possible , but I wonder if that might be the weekly amount as opposed to a monthly. Wouldn’t have thought entire month would go up 200x for a week long event. (Could see cost for the week going up 200x ).

 

[DandyDon]

One women got a $9000 electric bill when her normal billing is $40.00....is that possible!?

I keep seeing multiple stories like that. The Railroad Commission has managed electricity for a century now, and deregulated pricing on utilities is coming back to bite. The Panhandle-South Plains is on a different grid than most of Texas, but I am taking my utilities off of the convenience of auto-pay. I tried to do it just now, but I can't go it online, have to call the office Monday, which I have at the top of my list. I bet I get a long hold time.

Yes it is possible, though during the middle of this Centerpoint had a computer glitch and sent people $200,000 gas bills.

Wow, but how much are they really getting hit with uncontrolled spending on supplies passed on to customers. Utilities are not like shopping for plane tickets.

 

[cozcharlie]

I keep seeing multiple stories like that. The Railroad Commission has managed electricity for a century now, and deregulated pricing on utilities is coming back to bite. The Panhandle-South Plains is on a different grid than most of Texas, but I am taking my utilities off of the convenience of auto-pay. I tried to do it just now, but I can't go it online, have to call the office Monday, which I have at the top of my list. I bet I get a long hold time.


Wow, but how much are they really getting hit with uncontrolled spending on supplies passed on to customers. Utilities are not like shopping for plane tickets.

The Railroad Commission regulates oil and gas production. The Public Utility Commission of Texas regulates the electric utilities and ERCOT. PUCT commissioners are appointed by the Governor.

Natural Gas is a pass through cost for gas utilities. Most employ a mixed hedging strategy where the buy most of their average expected gas usage in advance and then use a mix of storage and spot purchases/sales to balance their needs. Peoples furnaces automatically turn off and on based on temperature (not price ), so if demand is there utilities have to find the gas The only way to avoid buying on the spot market is to buy way way too much gas/storage and wind up being stuck with too much gas 9,999 days out of 10.000. People would scream about over buying and wasteful purchases if they did that for years at a time.

My general view on all of this is that you have a 1,000 people saying they knew better and they would have some things differently. Hindsight is 20/20. The truth is they probably wouldn’t have done much better. A lot of the “solutions “ proposed border on irrelevant to people who actually understand gas and power. Things obviously can and need to be improved in the future but the will to spend those dollars is only around because of the disaster we just had (and may still disappear as memory fades ). Note I am not really defending the politicians who are playing the game of who can pass the buck the fastest —I just believe very few people would have done better without benefit of hindsight

 

[DandyDon]

The Railroad Commission regulates oil and gas production. The Public Utility Commission of Texas regulates the electric utilities and ERCOT. PUCT commissioners are appointed by the Governor.

Right, my mistake, altho they are connected.

My general view on all of this is that you have a 1,000 people saying they knew better and they would have some things differently. Hindsight is 20/20. The truth is they probably wouldn’t have done much better.

Surely the Great State of Texas can produce new leaders with the sense to winterize equipment. Hedging gas reserves would indeed be a challenge for any tho.

 

[gopbroek]

I know mine is and keeping the pipes clear contributes to that. Lot of well water "dripped" over the past week. That being said, I prefer an electric bill to a plumber and to associated damage to burst pipes.

If you were under a variable rate plan you are possibly in for a rude awakening.
Texas winter storms: Some residents see electric bills skyrocket | wfaa.com
This is not new and occurs on a smaller scale every few years during summer peak loads. What I found interesting is that the power company Griddy who itself was forced to buy power on the inflated spot market tried to warn its customer to get a fixed rate plan with another provide to avoid getting socked with the exploding cost.
I have been helping my friends and co-workers for years in finding decent electrical rates and and have always warned them against variable rates. The power companies that were supplying fixed contract still had to buy power at any rate they could but can't pass the costs back down the line, they were caught in a squeeze.
What I haven't heard of so far is of anyone trying to take advantage of their naibors, may just be a lack of reporting. I am sure there are a few scumbags out there but so far I think Texans are handling this the best they can. Most of the outrage I hear is from those that don't live here.

 

[ggunn]

Surely the Great State of Texas can produce new leaders with the sense to winterize equipment.

As gopbroek says, even now, hindsight notwithstanding, it's going to be a hard sell for entities that operate on yearly budgets to spend a lot of money now to protect against something that will occur once in 50 or 100 years. Yes, it got very cold 10 years ago, and in 1987, and in 1982, but in the 40 years I have lived in Austin it hasn't gotten this cold and been this cold for this long, not even close. All the cold snaps I have experienced here were pretty much over with the next day.

You cannot insure anything to 100% invulnerability. You can insure to 90%, or 99%, or 99.9%, or... How many nines would you like to buy?

 

[gopbroek]

As gopbroek says, even now, hindsight notwithstanding, it's going to be a hard sell for entities that operate on yearly budgets to spend a lot of money now to protect against something that will occur once in 50 or 100 years. Yes, it got very cold 10 years ago, and in 1987, and in 1982, but in the 40 years I have lived in Austin it hasn't gotten this cold and been this cold for this long, not even close. All the cold snaps I have experienced here were pretty much over with the next day.

You cannot insure anything to 100% invulnerability. You can insure to 90%, or 99%, or 99.9%, or... How many nines would you like to buy?

It would be like Don buying a full fared unrestricted airplane ticket that could be modified without melodrama.

PS, late edit disclaimer, as an airline employee I have bought one ticket in 35 years and yes we were a$$holes about it. Probably worse than the variable rate power providers

 

[lionfish-eater]

It would be like Don buying a full fared unrestricted airplane ticket that could be modified without melodrama.

Or like buying an emergency generator that you keep in the garage just in case the power goes out.
Like the one I bought years ago and haven't had to use yet, because my state invests in decent infrastructure.

Or on the otherhand, the entire state can get on a plane and go to Mexico for a luxury vacation.

 

[cozcharlie]

Or like buying an emergency generator that you keep in the garage just in case the power goes out.
Like the one I bought years ago and haven't had to use yet, because my state invests in decent infrastructure.

Or on the otherhand, the entire state can get on a plane and go to Mexico for a luxury vacation.

As someone who flew from TX to Coz today , maybe I should take offense at this remark (I don’t, my trip was planned days ago ).

Btw, Gasoline generators probably would not have done that much good because If many people used them you would have run out of gasoline as I gather many gas stations did. Try thinking about the logistics for keeping 4 days of gasoline on hand for a whole house generator. Gasoline storage is tricky without blowing your house up , and difficult to store well even with stabilizer.

Pretty much doesn’t matter where you live in the US, someone who knows gas and power can imagine a scenario where you are out of power for days unless you have a a diesel generator and a 500 gallon storage tank (which is probably illegal in 95 percent of homes in the US).

EDIT, btw I am truly not trying to criticize you individually. This stuff is complicated. 15+ years ago , First Energy Ohio was doing a lousy job of tree trimming and knocked out a huge chunk of the Eastern Interconnect. Think people were blaming Canada for days until they realized problem originated in Ohio. Has nothing to do with anything, but in slightly related matter the last great pandemic “Spanish Influenza” probably started in Kansas.

I am really not trying to start an argument. I am talking about all this from the standpoint of an electricity and gas markets expert who has given this some thought because he has an elderly mother who is difficult to evacuate for various logistics purposes.

 

[cicopo]

"15+ years ago , First Energy Ohio was doing a lousy job of tree trimming and knocked out a huge chunk of the Eastern Interconnect."

My area (going from memory) was out for 4 days that time. May have been 5 though but I think it was 4. It was quite a surprise & my generator saw lots of run time keeping my fridge & freezer cold. I didn't need to run it non stop to do that & used gas in cars that were here for servicing or restoring. Most however came from my own vehicles or gas kept on hand for lawn mowing.