The Texas thread

[gemima]

What I suggest is that the government act as the advisor for consumers, also preventing them from making ruinous mistakes. Like Dafluff said, the only reason to advocate for poor choices for consumers is because you believe you will profit from them.

Regulation could also ensure that supply interruption in unusually cold/ hot weather could be prevented (e.g. by winterizing the equipment and plants or having enough back-up powder for demanding situations). When the energy supply network is designed without regulations this sort of cost-cutting results. It's a race to the bottom. The weather wasn't even that unusual (there was a similar storm about 30 years ago...well within living memory). It just means everyone needs to pay a bit extra in their bills but American conservatives seem to think this is socialism.

 

[Hawk256]

It just means everyone needs to pay a bit extra in their bills but American conservatives seem to think this is socialism.

I have no problem if everyone pays a little more (if that's what they agree to) and I have no conservative agenda. I have nothing to gain or lose with my personal opinions. My whole and only argument was the people had a choice. How well informed that choice is up to individual to decide. As I stated, nobody was complaining about this business model when customers were paying below retail rates. It only became a problem after this unusual circumstance. The company even warned the customers that rates were increasing and to change providers. Of course it sucks to pay more for something than everyone else but there was a time when you paying less than everyone else too, all by your own decision. I guess some people are only happy when they can have their cake and eat it to.

 

[harryopal1]

"....... I don't get why people like to pretend that your average consumer has the time and energy to be perfectly informed on every decision they make. They clearly don't. The energy company has a whole team devoted to making a contract that is as profitable for them as possible and avoiding ruinous mistakes. ...."

Many businesses operate on the principal of making choice as complicated and difficult as possible for their clients to be on top of all the detail.

A friend in Australia had taken out the highest level of health insurance for his ageing mother. She became ill and was admitted to a private hospital. It is common for patients who do not recover within about five or so days to be admitted to a public hospital where costs are lower. In my friend's case his mother was kept at the private hospital for about two weeks and he was billed something more than $30,000 which the insurance company refused to pay. Evidently the insurance companies are perpetually altering the conditions of their insurance policies and had introduced some measure that absolved them from payment in the kind of case involving my friend. Their response to his anger was to say that "it behoved clients to stay abreast of the terms and conditions of policies" as if people would review the insurance policy adjustments every other day.

Fortunately my friend had the financial resources to take the matter to court despite the costs and happily won his case. The insurance company had to cover the medical bills and court costs.

With just profit driven policies without social conscience the modern trend has been to offer bonuses to executives who increase the company profits. Decisions are driven by this kind of incentive and greed without much regard to the implications of the least powerful in society who may be badly impacted.

The responsibility of governments is to oversee commerce to ensure some modicum of social justice and not just see growth and surpluses as the fundamental and sole aim of fiscal outcomes and business profit.

 

[HappyMan]

It just means everyone needs to pay a bit extra in their bills but American conservatives seem to think this is socialism.

I suppose it is a marker for how very far apart Americans can be on healthcare, education, and consumer protection that I when conservatives denigrate a progressive policy as “socialist ", all I hear is an advertisement promoting socialism.

 

[Hawk256]

Many businesses operate on the principal of making choice as complicated and difficult as possible for their clients to be on top of all the detail.

The responsibility of governments is to oversee commerce to ensure some modicum of social justice and not just see growth and surpluses as the fundamental and sole aim of fiscal outcomes and business profit.

I understand this story but I'm not 100% sure how it relates to to the situation in Texas. No one has accused any of the companies of changing the contract in any way. What they did was vary the rate that was already disclosed in the contract. There is no argument from me that the companies may have taken advantage of the situation but only to the extent that they were given by the contract. If you want a fixed rate, pay more and get the fixed rate. Case closed. You can't expect a discount, wholesale rate without also accepting the ups and downs that go along with that choice. There has to be a point where people are responsible for their own decisions, good or bad.

 

[HappyMan]

...With just profit driven policies without social conscience the modern trend has been to offer bonuses to executives who increase the company profits. Decisions are driven by this kind of incentive and greed without much regard to the implications of the least powerful in society who may be badly impacted.

The responsibility of governments is to oversee commerce to ensure some modicum of social justice and not just see growth and surpluses as the fundamental and sole aim of fiscal outcomes and business profit...

Health Insurance really is one of those topics where it is blindingly obvious how far astray companies can go in search of a buck. The results are often antithetical to the whole concept of "insurance" as the consumer sees it. We buy it so we don't have to constantly think about how we will pay for healthcare in the event we get sick. When we get sick, we discover it doesn't pay for what we thought it did. The insurance company responds by telling us we should have been constantly thinking about what would happen when we got sick, and thus reading and re-reading our policies. It is insane.

I recently heard an interesting story on a very successful mis-information campaign run by insurance companies in the States. Turns out I still remember some of their "facts" from listening to Rush in my childhood.

 

[harryopal1]

I understand this story but I'm not 100% sure how it relates to to the situation in Texas. No one has accused any of the companies of changing the contract in any way. What they did was vary the rate that was already disclosed in the contract. There is no argument from me that the companies may have taken advantage of the situation but only to the extent that they were given by the contract. If you want a fixed rate, pay more and get the fixed rate. Case closed. You can't expect a discount, wholesale rate without also accepting the ups and downs that go along with that choice. There has to be a point where people are responsible for their own decisions, good or bad.

As consumers we engage in a multiplicy of choices across a vast sprectrum of commodities. The revelance to the situation in Texas is the complexity of choosing a supplier.

http://www.energyshop.com/es/info/contract.cfm This is a link explaining the various forms of retail energy contracts. I daresay with many average families and with struggling to balance the family budget and day to day stresses there are few who are going to want to wrap their heads around all that. And is it really reasonable to have to deal with this level of familiarization when most just want to know what seems to be the price and a fair deal?

Rather naively when approaching a bank or utility and enquiring about a product we think that the company representative will assess our situation and offer what is in our best interest. We mostly tend to want to believe that others are fair and reasonable and will treat us accordingly. Certainly a major enquiry into crooked Australian banking activities has shown that our trust has been misplaced. The Texas incident seems to show that what we should be doing is trust no one and engage in due diligence about everything. Hey, at the end of the day most of us are too tired.

I take the point that people have to be responsible for their choices and it is important that full disclosure of information be available but the angry response in the USA to this story seems to suggest that on balance the ordinary "Joe" signing up for his contract was not well or fairly advised. Or is it the culture of manipulation that has made America "great"?

 

[Hawk256]

As consumers we engage in a multiplicy of choices across a vast sprectrum of commodities. The revelance to the situation in Texas is the complexity of choosing a supplier.

I take the point that people have to be responsible for their choices and it is important that full disclosure of information be available but the angry response in the USA to this story seems to suggest that on balance the ordinary "Joe" signing up for his contract was not well or fairly advised. Or is it the culture of manipulation that has made America "great"?

I agree that the choices could be construed as complex by someone who didn't want to take the time to fully understand their options. But just like with anything in life, you are the one ultimately responsible for your own well being and happiness. As noted before the company is Texas even took the extra effort to tell the customer ahead of time about price increases.

There are options for a lot of things when it comes to money. For example, you can put your money under a mattress and keep it at home, you can put your money into a savings account at the bank, you can buy gold, you can invest in the stock market. Each one of those choices has risks and rewards. When it come to your money and responsibilities, it literally pays to know what you are doing. The other side of that coin is to just take away all of those choices and let someone dictate to you what you can have and how much to pay for it.

 

[harryopal1]

So if we get the stiff end of a deal it might be argued we deserved it. At the heart of the issue is whether the prices charged were fair? And I mean fair in the sense that the price charged for the commodity was worth the service provided?

As pointed out there are many risks involved in speculating or gambling on stock prices or gold but in buying a utility service the consumer is seeking an essential commodity. That there has been such a strong reaction to the charges of $1000 a day suggests that a reasonable assessment is that those charges were not fair or reasonable.

 

[HappyMan]

There are options for a lot of things when it comes to money. For example, you can put your money under a mattress and keep it at home, you can put your money into a savings account at the bank, you can buy gold, you can invest in the stock market. Each one of those choices has risks and rewards. When it come to your money and responsibilities, it literally pays to know what you are doing. The other side of that coin is to just take away all of those choices and let someone dictate to you what you can have and how much to pay for it.

Interesting that two of the three examples you give here are things that are highly regulated, where the government has stepped in and said that "no, it isn't okay to just sell people anything they'll agree to buy."

People used to have their choice of banks and bank notes... and it was a disaster. The government stepped in and regulated things, removed some of the worst choices, and now it is better. https://en.m.wikipedia.org/wiki/Wildcat_banking

The SEC restricts choice by delisting stocks which are deemed unfit for purchase.

Really, the government regulates all sorts of things without people going around complaining about a lack of choice. There is no-one crying out for untested pharmaceuticals at the moment, but you can bet that if it was a currently unregulated field, we would have conservatives fighting for their right to sell and purchase unknown purple liquids for the elimination of assorted ailments.

 

[Hawk256]

So if we get the stiff end of a deal it might be argued we deserved it. At the heart of the issue is whether the prices charged were fair? And I mean fair in the sense that the price charged for the commodity was worth the service provided?

As pointed out there are many risks involved in speculating or gambling on stock prices or gold but in buying a utility service the consumer is seeking an essential commodity. That there has been such a strong reaction to the charges of $1000 a day suggests that a reasonable assessment is that those charges were not fair or reasonable.

I don't think I've ever said that the charges were fair or reasonable only that they were part of contract between two parties. As I've said many times, nobody was complaining when they were on the winning side of the contract.

 

[Hawk256]

Interesting that two of the three examples you give here are things that are highly regulated, where the government has stepped in and said that "no, it isn't okay to just sell people anything they'll agree to buy."

People used to have their choice of banks and bank notes... and it was a disaster. The government stepped in and regulated things, removed some of the worst choices, and now it is better. https://en.m.wikipedia.org/wiki/Wildcat_banking

The SEC restricts choice by delisting stocks which are deemed unfit for purchase.

Really, the government regulates all sorts of things without people going around complaining about a lack of choice. There is no-one crying out for untested pharmaceuticals at the moment, but you can bet that if it was a currently unregulated field, we would have conservatives fighting for their right to sell and purchase unknown purple liquids for the elimination of assorted ailments.

I have never said regulation was a bad thing and I certainly have never advocated for unregulated pharmaceuticals. The energy market in Texas is what it is. There is currently a choice. If people don't want that choice, that is their right but you have to adapt to environment you are in, not always expect the environment to adapt to you. I thought is was plain and simple, if you make an agreement, stick to it. But if it's OK with you to back out of a agreement just because you were on the losing side (in an odd situation and being told by the provider itself to change to someone else) then that is up to you as well. This power was sold wholesale so someone will pay for it. Maybe the company goes bankrupt or the taxpayers foot the bill but it will be paid by someone.

 

[HappyMan]

Actually, I realize that there are people crying out for a reduction in pharmaceutical regulations. Namely, me. The way that pharmaceutical companies are able to maintain parents and stifle the production of generic products through abuse of patent law is absurd. Add some micro-nutrients of questionable utility to an existing product and continue your monopoly indefinitely... great for consumers.

 

[Nimbus]

It’s a classic dilemma between individual freedom and survival of society. At one extreme if somebody get defrauded, it’s his own fault for not being smart enough to see it. At the other extreme a person isn’t trusted to make any decision, and the state would arrange everything for him. The reasonable approach lies somewhere in the middle.

I think Texas is skewed way to the right, where price gouging in a natural disaster is considered a normal course of business.

 

[Hawk256]

It’s a classic dilemma between individual freedom and survival of society. At one extreme if somebody get defrauded, it’s his own fault for not being smart enough to see it. At the other extreme a person isn’t trusted to make any decision, and the state would arrange everything for him. The reasonable approach lies somewhere in the middle.

I think Texas is skewed way to the right, where price gouging in a natural disaster is considered a normal course of business.

I agree with you 100% except about the price gouging. So technically not 100%, but still. There were price caps in place by the PSC and contract prices for variable rates were defined at the time the contract was made. No company has been accused of charging rates outside the price cap or their respective contract.

 

[HappyMan]

Maybe the company goes bankrupt or the taxpayers foot the bill but it will be paid by someone.

This is the crux of the issue. You keep saying that the customers used to be on the winning side, but they weren't bankrupting the energy company. The energy company, using their vast expertise, insulated themselves from losses as best they could. What rose was not the production cost of energy, but the selling cost. If the government steps in and says, "no, you can't charge 5x the price for energy production", the natural gas companies will still make a profit from their normal natural gas prices. The producer will not go bankrupt.

The customers, on the other hand, might well be bankrupted.

My argument is that these contracts should never have been in allowed in their current form. If you realize that you have unintentionally price gouged your customers, you should make them whole. If you have intentionally price gouged your customers and their customers, you should be taken to task by the government.

 

[Hawk256]

This is the crux of the issue. You keep saying that the customers used to be on the winning side, but they weren't bankrupting the energy company. The energy company, using their vast expertise, insulated themselves from losses as best they could. What rose was not the production cost of energy, but the selling cost. If the government steps in and says, "no, you can't charge 5x the price for energy production", the natural gas companies will still make a profit from their normal natural gas prices. The producer will not go bankrupt.

The customers, on the other hand, might well be bankrupted.

My argument is that these contracts should never have been in allowed in their current form. If you realize that you have unintentionally price gouged your customers, you should make them whole. If you have intentionally price gouged your customers and their customers, you should be taken to task by the government.

When I say winning, I mean that they were paying much less than retail prices with their wholesale variable rate contract. The system was working as designed. You get a lower rate than normal in most cases but take on the risk of paying more if the demand changes. Some people on variable rate wholesale contracts were paying less than half of what customers on fixed rates were paying. That's winning, IMO. Nobody had a problem as long as the consumer is getting the below retail price but when the other side of the contract swings in, it's an evil way of doing business that should never have been allowed to operate.

The government had already stepped in with price caps that have always been in place. These rates were inside that price cap.

In this case the company selling the power to the consumer is not the same company that generated the power. They buy power wholesale based on demand and pass the price to the consumer. One of a few things can happen,1. The generating company could change the rate they charged the selling company but that would go against their contract 2. The selling company could change the rate charged to the consumer but that would go against their contract. 3. If the customer doesn't pay the bill but the provider has to pay to the generating company then the seller has lost a lot of money, Possibly enough to bankrupt? Or the government comes in and pays all the bills and passes it on to the taxpayers. Some one owes and will pay the money, at this point we just don't know who it will be.

 

[Nimbus]

I agree with you 100% except about the price gouging. So technically not 100%, but still. There were price caps in place by the PSC and contract prices for variable rates were defined at the time the contract was made. No company has been accused of charging rates outside the price cap or their respective contract.

I understand that it’s within the contract, but the contract itself can be questioned.

As an example, any contract entered by a minor (under 18 years old) in USA is null and void, because kids are not deemed sophisticated enough to understand it, even if they sign it willingly.

A marriage contract that involves more than 2 persons is also null and void, because polygamy is illegal in America. It doesn’t matter if all the signing parties do it voluntarily.

 

[Hawk256]

I understand that it’s within the contract, but the contract itself can be questioned.

As an example, any contract entered by a minor (under 18 years old) in USA is null and void, because kids are not deemed sophisticated enough to understand it, even if they sign it willingly.

A marriage contract that involves more than 2 persons is also null and void, because polygamy is illegal in America. It doesn’t matter if all the signing parties do it voluntarily.

Agreed again. On those points. If the contact was unsound for some reason, take them to court but I haven't seen any evidence or any claims that the contracts weren't valid. People just don't like the contract when they pay the in demand price. They loved it when they were paying well below retail.

 

[Nimbus]

Agreed again. On those points. If the contact was unsound for some reason, take them to court but I haven't seen any evidence or any claims that the contracts weren't valid. People just don't like the contract when they pay the in demand price. They loved it when they were paying well below retail.

Society can and does decide if terms of a contract is in the best interest of the people. Price gouging during an emergency is already illegal in texas, even when the payer voluntarily pays the higher price. It strains credulity when one can be prosecuted for charging $5 per gallon of gas instead of the normal $3 during an emergency, but electric companies are free to charge thousands of dollars more during the same event.