“This seems a little crazy. During these negative price periods, suppliers are paying ERCOT to take their power…. You could … build a giant toaster in West Texas and be paid by generators to operate it.”

Some 15 years ago, Michael Giberson at Knowledge Problem commented on a strange phenomenon–negative pricing by wind power, where operators with very low marginal costs (the wind is free) were paying takers per KWh to gain big tax credits, mostly federal.

Giberson’s analysis (reposted below) identified the malinvestment and ‘big anti-conservation incentive’. But he did not focus on what cumulatively would result from this distortion: a wounded Texas grid from chronic low prices/margins knocking out thermal generation. The unreliables–via government privilege– knocking out the reliables (what Bill Peacock would call predatory pricing).…

“Much of the generation named by ERCOT as qualified under their latest RFP is generation units that were recently retired, many because they could not compete with the artificially low prices that heavily subsidized wind and solar can offer, so they are still operational.”

The Electric Reliability Council of Texas (ERCOT), the planning agency for 90% of the state’s grid, has a wind/solar tiger by the tail. As the agency does not exchange power with its out-of-state neighbors to avoid federal (FERC) jurisdiction, it is looking at home for able, firm generation that wind and solar unfairly (via government intervention) put out of operation.

Background

ERCOT is (in)famous because its grid almost collapsed during Winter Storm Uri in February 2021. The Texas electricity grid had lost so many generators due to the storm that it was only 4 minutes and 37 seconds from collapsing, which would have required a restart from a “black start.”…

” … we have to acknowledge that property rights in climate *cannot* be defined fully and we thus have to find some shared institution for governing the climate commons and managing emissions.” (Kiesling)

“One can think humans are causing the planet to warm but logically and humanely conclude that we should do nothing about it.” (Horwitz)

Lynne Kiesling is an electricity specialist who describes herself as working in the classical liberal tradition. Problem is, she refuses to define what classical liberalism or a free market is in regard to electricity. She instead endorses central government planning for the wholesale grid, among other Statist proposals. [1] In so doing, she ignores how the traditions she espouses argue against her positions (Hayek on central planning, Coase on transaction costs, Public Choice on politicization, etc.).…

“The actions of Alaska policy makers, led by the governor, are eradicating the free-market principles in our state. A media blackout on the problem has left only citizen-led initiatives driving the train to truth. We the People Alaska publishes an eye-opening substack on many of these topics.”

Alaska’s economy runs on oil and gas. Additionally, oil revenues have accounted for up to 90% of our General Fund revenue. Amid its resource abundance, however, Alaska has a big and growing governmental problem—mostly in Washington, D.C., and increasingly, in local governments trying to appease their federal masters.

Alaska has been in a production decline trend since 1988 when the state accounted for 25 percent of U.S. domestic production. Presently, the Trans-Alaska Pipeline System (TAPS) is running at a quarter of its capacity (485K barrels per day).…