Price gouging in a second language

Research on differences between decisions made in a person’s native tongue and decisions made in a second language reminded me of an unexplored idea in the social dynamics surrounding price gouging.

I’ve devoted a few posts to the question of whether or not price gouging laws get applied in a discriminatory fashion against “outsiders,” primarily thinking of immigrants or cultural minorities. My evidence is slim, mostly the casual reading of a handful of news stories, but consider these prior posts and possible examples from Mississippi, New Jersey, and West Virginia.

In the New Jersey article I speculated it was possible that “outsiders” were more likely to engage in price gouging behaviors, and observed, “Social distance between buyers and sellers can work both ways.”

Some support for my speculation comes through communication research by Boaz Keysar of the University of Chicago, who has documented the view, as the subtitle of an article in the journal Psychological Science puts it, “thinking in a foreign tongue reduces decision biases.” Part of the explanation Keysar and his coauthors offer is the “foreign language provides greater cognitive and emotional distance than a native tongue does.” (The work was mentioned in a recent Freakonomics podcast.) An immigrant hotelier or retailer may not connect as emotionally as a native does with laws expressed in the native’s language or with customers when transacting in that language. When exchange is seen as impersonal rather than personal, price-setters are less constrained in their pricing decisions.

Interestingly, Keysar is also coauthor on a study concluding that moral judgments are markedly more utilitarian when problems and responses are conducted in a second language. Economic analysis tends to support the view that “price gouging” in response to sudden shifts in demand is the correct utilitarian response (as flexible prices help goods and services move toward those who value them most).

The spin on wind, or, an example of bullshit in the field of energy policy

The Wall Street Journal recently opined against President Obama’s nominee for Federal Energy Regulatory Commission chairman, Norman Bay, and in the process took a modest swipe at subsidies for wind energy.

The context here is Bay’s action while leading FERC’s enforcement division, and in particular his prosecution of electric power market participants who manage to run afoul of FERC’s vague definition for market manipulation even though their trading behavior complied with all laws, regulations, and market rules.

So here the WSJ‘s editorial board pokes a little at subsidized wind in the process of making a point about reckless prosecutions:

As a thought experiment, consider the production tax credit for wind energy. In certain places at certain times, the subsidy is lucrative enough that wind generators make bids at negative prices: Instead of selling their product, they pay the market to drive prices below zero or “buy” electricity that would otherwise go unsold to qualify for the credit.

That strategy harms unsubsidized energy sources, distorts competition and may be an offense against taxpayers. But it isn’t a crime in the conventional legal sense because wind outfits are merely exploiting the subsidy in the open. The rational solution would be to end the subsidies that create negative bids, not to indict the wind farms. But for Mr. Bay, the same logic doesn’t apply to FERC.

The first quoted paragraph seems descriptive of reality and doesn’t cast wind energy in any negative light. The second quoted paragraph suggests the subsidy harms unsubsidized competitors, also plainly true, and that it “distorts competition” and “may be an offense against taxpayers.” These last two characterizations also strike me as fair descriptions of current public policy, and perhaps as mildly negative in tone.

Of course folks at the wind industry’s lobby shop are eager to challenge any little perceived slight, so the AWEA’s Michael Goggin sent a letter to the editor:

Your editorial “Electric Prosecutor Acid Test” (May 19) ignores wind energy’s real consumer benefits by mentioning the red herring of negative electricity prices. Negative prices are extremely rare and are usually highly localized in remote areas where they have little to no impact on other power plants, are caused by inflexible nuclear power plants much of the time, and are being eliminated as long-needed grid upgrades are completed.

Wind energy’s real impact is saving consumers money by displacing more expensive forms of energy, which is precisely why utilities bought wind in the first place. This impact is entirely market-driven, occurs with or without the tax credit, and applies to all low-fuel-cost sources of energy, including nuclear.

The tax relief provided to wind energy more than pays for itself by enabling economic development that generates additional tax revenue and represents a small fraction of the cumulative incentives given to other energy sources.

Michael Goggin
American Wind Energy Association
Washington, DC

Let’s just say I’ll believe the “impact is entirely market-driven” when someone produces a convincing study that shows the exact same wind energy capacity build-out would have happened over the last 20 years in the absence of the U.S. federal Production Tax Credit and state renewable energy purchase mandates. Without the tax credit, the wind energy industry likely would be (I’m guessing) less than one-tenth of its current size and without a big tax credit wouldn’t be the target of much public policy debate.

Of course, without much public policy debate, the wind energy industry wouldn’t need to hire so many lobbyists. Hence the AWEA’s urge to jump on any perceived slight, stir the pot, and keep debate going.

MORE on the lobbying against the Bay nomination. See also this WSJ op-ed.


Did ERCOT’s shift from zonal to nodal market design reduce electric power prices?

Jay Zarnikau, C.K. Woo, and Ross Baldick have examined whether the shift from a zonal to nodal market design in the ERCOT power market had a noticeable effect on electric energy prices. The resulting article, published in the Journal of Regulatory Economics, and this post may be a bit geekier than we usually get around here. I’ll try to tone it down and explain the ERCOT change and the effect on prices as clearly as I can.

The topic is important because the shift from zonal to nodal market structure was controversial, complicated, expensive, and took longer than expected. Problems had emerged shortly after launch of the initial zonal-based market and the nodal approach was offered as a solution. Some market participants had their doubts, but rather quickly ERCOT began the move to a nodal design. Note that phrasing: “rather quickly ERCOT began the move.” It took several years for ERCOT to actually complete the process.

In part the shift was promoted as a more efficient way to run the market. Zarnikau, Woo, and Baldick looked at the effect on prices as one way to assess whether or not the resulting market has worked more efficiently. They conclude energy prices are about 2 percent lower because of the nodal market design.

Don’t get hung up on the 2 percent number itself, but think of the shift as having a modest downward pressure on prices.

The result is consistent with an understanding one would gain from the study of power systems engineering as well as with what power system simulations showed. The point of the Zarnikau et al. study was to investigate whether data analysis after the fact supported expectations offered by theory and simulation. Because there is no better empirical study (so far as I am aware) and because their results are consistent with well-founded expectations, I have no reason to doubt their result. I will contest one interpretation they offer concerning the current resource adequacy debate in Texas.

Some background (which beginners should read and others can skip).

The delivery of electric energy to consumers is a joint effort between the generators that create the power and the wires that bring it to the consumer. The wires part of the system are not simple links between generators and consumers, but rather complicated network of wires in which consumers and generators are connected in multiple ways. The added flexibility that comes with networking helps the system work more reliably and at lower cost.

The network also comes with a big coordination problem, too. Power flows on the network are not individually controllable. With many generators producing power for many consumers, parts of the power grid may become overloaded. One key job of the power system operator is to watch the power flows on the electric grid and intervene as needed to prevent a transmission line from being overloaded. The intervention generally takes the form of directing a generator (or generators) contributing to the potential overload to reduce output and directing other generators to increase output. In areas outside of regional system operators, this function is done on a piecemeal basis as problems arise. A significant benefit coming from full-scale regional power markets integrated with system operations (such as ERCOT in Texas after the switch to a nodal market and in other similar ISO/RTO markets) is that such coordination can be done in advance, with more information, mostly automatically, and more efficiently than piecemeal adjustments.

Described in simpler terms, the regional power system operator helps generators and consumers coordinate use of the power grid in the effort to efficiently satisfy consumer demands for electric energy. A zonal market design, like ERCOT started with, did minimal advance coordination. The nodal market design and related changes implemented by ERCOT allowed the market to do more sophisticated and efficient coordination of grid use.

About data challenges.

In order to assess the effects on prices, the authors couldn’t simply average prices before and after the December 1, 2010 change in the market. The power system is a dynamic thing, and many other factors known to affect electric power prices changed between the two periods. Most significantly, natural gas prices were much lower on average after the market change than during the years before. Other changes include growing consumer load, higher offer caps, and increasing amounts of wind energy capacity. In addition, the prices are generated by the system has been changed, making simple before and after comparisons insufficient. For example, rather than four zonal prices produced every 15 minutes, the nodal market yields thousands of prices every 5 minutes.

One potentially significant data-related decision was a choice to omit “outliers,” prices that were substantially higher or lower than usual. The authors explain that extreme price spikes were much more frequent in 2011, after the change, but largely due to the summer of 2011 being among the hottest on record. At the same time the offer caps had been increased, so that prices spiked higher than they could have before, but not because of the zonal-to-nodal market shift. Omitting outliers reduces the impact of these otherwise confounding changes and should produce a better sense of the effect of the market change during more normal conditions.

Their conclusion and a mistaken interpretation.

Zarnikau, Woo, and Baldick conducted their price analysis on four ERCOT sub-regions separately so as to see if the change had differing impacts resulting from the changeover. The West zone stood out in the analysis, largely because that zone has seen the most significant other changes in the power system. The two main changes: continued sizable wind energy capacity additions in the zone, and more substantially, dramatic electrical load growth in the region due to the recent oil and gas drilling boom in west Texas. Because the West results were a bit flaky, they based their conclusions on results from the other three zones. Across a number of minor variations in specifications, the authors found a price suppression effect ranging from 1.3 and 3.3 percent, the load-weighted average of which is right around 2 percent.

So far, so good.

But next they offered what is surely a misinterpretation of their results. They wrote:

[T]he reduction in wholesale prices from the implementation of the nodal market might be viewed by some as a concern. In recent years, low natural gas prices and increased wind farm generation have also reduced electricity prices in ERCOT which has, in turn, impaired the economics of power plant construction. … It appears as though the nodal market’s design may have contributed to the drop in prices that the PUCT has now sought to reverse.

Strictly speaking, the goal of the Public Utility Commission of Texas hasn’t been to reverse the drop in prices, but to ensure sufficient investment in supply resources to reliably meet projected future demand. Lower prices appear to be offer smaller investment incentives than higher prices, but there is a subtle factor in play.

The real incentive to investment isn’t higher prices, it is higher profits. Remember, one of the most important reasons to make the switch from a zonal to a nodal market is that the nodal market is supposed to operate more efficiently. Zarnikau, Woo, and Baldick notice that marginal heat rates declined after the shift, evidence consistent with more efficient operations. The efficiency gain suggests generators are operating at an overall lower cost, which means even with lower prices generator profits could be higher now than they would have been. It all depends on whether the drop in cost was larger or smaller than the drop in prices.

The cost and profit changes will be somewhat different for generators depending on where they are located, what fuel they use, and how they typically operated. I’ll hazard the guess that relatively efficient natural gas plants have seen their profits increased a bit whereas less efficient gas plants, nuclear plants, and coal plants have likely seen profits fall a little.

FULL CITE: Zarnikau, J., C. K. Woo, and R. Baldick. “Did the introduction of a nodal market structure impact wholesale electricity prices in the Texas (ERCOT) market?.”Journal of Regulatory Economics 45.2 (2014): 194-208.

Here is a link to a non-gated preliminary version if you don’t have direct access to the Journal of Regulatory Economics.

AN ASIDE: One modest irony out of Texas–the multi-billion dollar CREZ transmission line expansion, mostly intended to support delivery of wind energy from West Texas into the rest of the state, has turned out to be used more to support the import of power from elsewhere in the state to meet the demands of a rapidly growing Permian Basin-based oil and gas industry.

Court says no to FERC’s negawatt payment rule

Jeremy Jacobs and Hannah Northey at Greenwire report “Appeals court throws out FERC’s demand-response order“:

A federal appeals court today threw out a high-profile Federal Energy Regulatory Commission order that provided incentives for electricity users to consume less power, a practice dubbed demand response.

In a divided ruling, the U.S. Court of Appeals for the District of Columbia Circuit struck a blow to the Obama administration’s energy efficiency efforts, vacating a 2011 FERC order requiring grid operators to pay customers and demand-response providers the market value of unused electricity.

Among environmentalists this demand-response enabled “unused electricity” is sometimes described as negawatts. FERC’s rule required FERC-regulated wholesale electric power markets to pay demand-response providers the full market price of electricity. It is, of course, economic nonsense pursued in the effort to boost demand response programs in FERC-regulated markets.

The court held that FERC significantly overstepped the commission’s authority under the Federal Power Act.

The Federal Power Act assigns most regulatory authority over retail electricity prices to the states, and the court said FERC’s demand response pricing rule interfered with state regulators’ authority.

Personally, I would have dinged FERC’s rule for economic stupidity, but maybe that isn’t the court’s job. Actually, I did ding the FERC’s rule for its economic stupidity. I was one of twenty economists joining in a amicus brief in the case arguing that the FERC pricing rule didn’t make sense. The court’s decision gave our brief a nod:

Although we need not delve now into the dispute among experts, see, e.g., Br. of Leading Economists as Amicus Curiae in Support of Pet’rs, the potential windfall  to demand response resources seems troubling, and the Commissioner’s concerns are certainly valid.  Indeed, “overcompensation cannot be just and reasonable,” Order 745-A, 2011 WL 6523756, at *38 (Moeller, dissenting), and the Commission has not adequately explained how their system results in just compensation.

But if this negawatt-market price idea survives the appeals court rejection and takes off in the energy policy area, I have the following idea: I’d really like a Tesla automobile, but the current price indicates that Teslas are in high demand so I’m going to not buy one today. Okay, now who is going to pay me $90,000 for the nega-Tesla I just made?



The case for allowing negative electricity prices – Benedettini and Stagnaro

Simona Benedettini and Carlo Stagnaro make the case for allowing negative prices in electric power markets in Europe. A few of the larger power markets in Europe allow prices to go negative, but others retain a zero price lower limit. Benedettini and Stagnaro explain both why it is reasonable, economically speaking, to allow electricity prices to go negative and the hazards of retaining a zero-price minimum in a market which is interconnected to markets allowing the more efficient negative prices.

It is all good, but I can’t resist quoting this part:

Negative prices are not just the result of some abstruse algorithm underlying the power exchange and the functioning of the power system. They are also, and more fundamentally, the way in which the market conveys the decentralized information that is distributed among all market participants, and that cannot be centralized in one single brain, as Nobel-prize winner Friederich Hayek would say. That information is translated into two major market signals, which are embodied in negative prices.

In the short run, negative prices show that there is a local condition of oversupply under which electricity is not an economic good which society is willing to pay for, but an economic bad for which consumers should be compensated. Therefore, negative prices create an economic incentive for consumers to shift their consumption patterns so as to capture the opportunity of being paid, instead of paying, to receive energy….

However, in the long run, negative prices talk to energy producers, not to energy consumers. The emergence of negative prices, although strongly conditioned by demand-side constraints, shows that the generating fleet encompasses too much “rigid” capacity (i.e. too much nuclear and coal-fuelled plants) and too little “flexible” capacity (for example CCGTs or turbo-gas power plants); or that grid interconnections are insufficient to properly exploit the spare, flexible capacity available within a market area.

So far as I know, all of the regional power markets in the United States now allow prices to go negative. The connections between wind power policy and negative prices have politicized the issue a bit in the United States. Benedettini and Stagnaro explain in a straightforward manner why, no matter what you think of renewable energy policies, you ought to favor allowing wholesale power market prices to go negative.

Texas wind power, the ERCOT power market, the Public Utility Commission

From SNL Energy, “Texas utility regulators expect to open investigation on wind ‘cost apportionment’“:

Having seen record wind output of more than 10,000 MW in March, ERCOT in the report also noted that Texas has gone well beyond its 10,000-MW capacity goal and far earlier than the 2025 target established in the state’s Public Utility Regulatory Act. …

And while wind energy continues to boom in Texas, the PUCT has been working with ERCOT on ensuring a reliable power grid amid wholesale prices that are not encouraging new fossil-fuel plant construction.

Perhaps, just perhaps, there is a connection between the “wind energy … boom” and the “wholesale prices that are not encouraging new fossil-fuel plant construction”?

The SNL Energy report noted the PUCT was beginning an investigation into cost apportionment issues surrounding wind energy and the recently completed CREZ transmission line additions.

A relatively thoughful view of libertarianism from a progressive-liberal perspective

Salon has published a lot of nonsense on libertarianism (e.g., anything by Michael Lind on the topic). So it was surprising, yesterday, to find that Kim Messick’s Salon essay on libertarianism was relatively thoughtful. No perfect, by any means, just better than most progressive-liberal attempts at criticizing libertarianism. The author at least gets basic points right and would surely score higher than most Salon writers on the relevant ideological Turing test (admittedly a low standard).

Just don’t take the title too seriously (“Libertarians’ reality problem: How an estrangement from history yields abject failure”). At Alternet the story is reproduced under the similarly silly title “How Libertarianism Would Actually Curtail Human Freedom.” Article writers often don’t choose their titles, editors do, so just skip ahead for the substance (you’ll have to similarly skim past the Tea Party and Republican chatter at the beginning and ignore the favorable linking to Lind’s Salon work). Once you skip ahead, you’ll find a reasonable journalistic effort to engage with and challenge an overly atomistic view of libertarianism.

Messick misses some things. He is apparently unfamiliar with left libertarianism (for example, the Center for a Stateless Society) or many of the writers at Bleeding Heart Libertarians; he thinks a libertarian free market would leave many people in soul-killing poverty; and at times his discussion confuses society with government. But the core of his challenge to (at least hard-core individualistic) depictions of libertarian principles makes useful work of the philosopher Charles Taylor’s writings on atomism.

In his essay “Atomism,” Taylor points out that we “only develop [our] characteristically human capacities in society” — including our capacity for choice. “Living in a society,” Taylor goes on, “is a necessary condition of the development of rationality … or of becoming a moral agent in the full sense of the term … or of becoming a fully responsible, autonomous being.” Given this, those who value personal autonomy must also affirm the value of its social sources: “[I]f we assert the right to one’s own independent moral convictions, we cannot… claim that we are not under any obligation ‘by nature’ to belong to and sustain a society of the relevant type”:

“[T]he free individual or autonomous moral agent can only achieve and maintain his identity in a certain type of culture… But these… do not come into existence spontaneously each successive instant. They are carried on in institutions and associations which require stability and continuity and frequently also support from the community as a whole… The crucial point here is this: since the free individual can only maintain his identity within a society/culture of a certain kind, he has to be concerned about the shape of this society/culture as a whole. He cannot… be concerned purely with his individual choices and the associations formed from such choices”.

Taylor shows us how to link the liberal concept of agency — the ideal of personal autonomy — with normative conclusions about what people should value. The connective tissue is the pattern of external resources on which our capacity for choice depends: the institutions, practices, and associations within which we develop and cultivate this capacity. For Taylor, it makes no sense to affirm the value of autonomy while denigrating (or simply ignoring) the social goods without which autonomy is impossible. Like communitarians, he thinks we should affirm these goods and not just our purely personal ends. Unlike them, he does not regard this as grounds for a wholesale rejection of liberal autonomy. Quite the contrary — he argues for a social element in ethical life precisely because he values autonomy and wants to sustain the cultural conditions upon which it rests.

On this I think Taylor (and by extension Messick) raises good points about the connections between society, moral development, and individual freedom. I just don’t think the only or even the best response to these points is to reject libertarian political philosophy. Messick sums up the above with, “The obvious inference is that we should see progressive liberalism as a kind of middle ground between communitarianism on the one hand and libertarianism on the other. It acknowledges the social dimensions of ethical life but accepts personal autonomy as a genuine ideal.”

But acknowledging “the social dimensions of ethical life” and “accepting personal autonomy as a genuine ideal” is exactly the common ground I want to occupy as a libertarian. The libertarian minded thinkers I like tend to emphasize the connection between increasing liberty and a flourishing society.

Messick may be surprised to learn there is active debate among libertarians on these issues of politics, markets, and social relations. Some libertarians insist non-aggression is the only necessary principle, while others suggest the broader social order is also important. In the context of these discussions, Messick’s outsider perspective on libertarianism, while imperfect, is good enough to be of some value to libertarians.

Texans should pay higher taxes

From Breitbart, “Drumbeat to raise gas tax extends to conservative event“:

Texans should pay higher gasoline taxes, a Texas Tech University professor advocated at a policy conference organized by the conservative Texas Public Policy Foundation in Austin on April 16. He acknowledged that how transportation dollars are spent must also be carefully considered.

Generally, I’m a “starve the beast” proponent, but I endorse the view expressed above. In fact, I said it.

“Fuel taxes serve as a road ‘user fee’,” said Michael Giberson, who serves on the faculty at Texas Tech’s College of Business. “Those who use the roads, pay for them.”

Giberson told the TPPF conference attendees that the tax should be increased to a level that brings in the same revenues as in 1991–when the tax was last increased.

Texans currently pay 20 cents per gallon, but to meet the 1991 spending power Giberson said the rate would need to be 33.7 percent. He also recommended tying the gas tax to inflation, so that it would increase automatically.

Giberson acknowledged that more fuel efficient engines and electric-powered cars mean the gas tax will continue to be a declining revenue source. He said other options, such as charging Texans on the basis of their miles-driven, should be considered even as he acknowledged concerns about privacy and practical implementation.

I’d quibble just a bit with the characterization of my presentation. I didn’t recommend a 33.7 cents/per gallon tax, but rather was illustrating the toll that inflation had taken since the state gasoline tax was last raised. I did suggest tying the tax to inflation, but commented that the current method allows the tax to diminish over time and forces the legislature into direct action to raise it. I like that latter idea better the more I think about it.

In Texas two things stand between the fuel taxes and the user fee concept. First, about half of the gasoline tax is federal, 18.4 cents/gallon for gasoline, and Texas gets only about 80 percent of the Texas-sourced federally-collected fuel taxes back from Washington DC. The money comes back with some federal strings attached and some of the money is diverted from projects that benefit fuel taxpayers. Second, the feds 20 percent cut off the top is actually better for Texas fuel taxpayers than the state’s cut. By law, 25 percent of fuel taxes collected in Texas go to state government educational funding, so Texas road users only get about 75 percent of the Texas-sourced state-collected fuel taxes back from Austin. The 25 percent cut of fuel taxes for education is enshrined in the state’s constitution (a holdover, I suspect, when fuel taxes were paid primarily by the wealthy).

In response I favored proposals circulating in Congress to radically cut the federal fuel tax and related spending, and shift the responsibility for revenue collection and spending to the states. Congress has a duty to protect interstate commerce, but that need not involve a massive federal overhead to manage. I’d like to claw back the 25 percent fuel tax take from state educational funding, too. We amend the state constitution in Texas just about every other year, so that is no big deal, but because the amendment would appear anti-education I see it as a hard sell.

I also urged more use of toll roads, which have become much more efficient these days, and congestion-based tolls on roads where congestion is a frequent issue. (Nothing annoys me more than some denizen of east coast metropolitan areas saying federal gasoline taxes ought to be higher because it will reduce congestion. For example. No amount of taxing my cross-Texas drives is going to speed your east coast metropolitan commute.)

In the Breitbart article TPPF Vice President Chuck DeVore pushed back against my tax-raising views. He hasn’t changed his views, but recently in response to President Obama’s transportation spending proposal, DeVore’s views and mine seem pretty close: cut the federal role dramatically and let the states decide the mix of taxes and tolls needed to fund transportation infrastructure for themselves.

The Texas Public Policy Foundation put together a great event, with a program organized largely by TPPF staff economist and recent Texas Tech econ PhD Vance Ginn. Happy to be part of it.

Links to video from the conference and presentations are posted, along with links to other media coverage of the event (mostly focused on the Dallas Fed chairman’s lunchtime remarks, not the “gasoline tax controversy”, but I tried). My presentation is second in the panel 1 video.

ADDED: After my presentation I had two promising suggestions from conference attendees. One is that, given that almost all of the actual wear and tear on the roads in Texas come from heavy trucks rather than cars and light trucks, we should tax large commercial vehicles more–probably on a vehicle-miles traveled basis–and the “user fee” for personal vehicles likely falls to something reflecting the modest consequences of driving relatively lightweight vehicles. Trucking companies would complain, and the political prospects of the idea are probably not good. Otherwise makes a lot of sense to me. The other suggestion was to employ certain oil and gas drilling fees currently in surplus for road work, at least for the road improvements needed in the parts of the state experiencing significant increases in commercial traffic due to the oil and gas drilling boom. The suggestion seems a bit kludge-y to me, but comes with enough symmetry between the payers and the beneficiaries to be plausible. Good enough for government work, as is said.

AWEA brags about wind energy’s mediocre performance

On May 2 The Hill published a column by AWEA data spinner Michael Goggin, “Wind energy protects consumers,” in which the reader is regaled by tales of great service and low, low prices provided by the wind energy industry.

Sorting through the claims led me back to the AWEA blog, where among other things Goggin applauds the industry that pays his salary for its grand performance in trying times this past January in New York. Goggin exclaimed the New York grid operator “received very high wind output when it needed it most during the last cold snap, while other forms of generation experienced a variety [of] problems.”

Following the link provided to the NYISO press release I find the claim, “On Tuesday, the NYISO had the benefit of more than 1,000 MW of wind power throughout much of the day.” The New York grid operator reported peak demand during the day (January 7, 2014) at 25,738 MW, so wind energy’s contribution was in the 4 percent range. Another way to say that is that other forms of generation, despite experiencing a variety of problems, provided about 96 percent of the energy New York consumers received when they “needed it most.”

The AWEA website indicates that New York has an installed capacity of 1,722 MW of wind power. Doing the math reveals that about 40 percent of the wind energy industry’s generating capability failed to show when New York electric power consumers “needed it most.”

Impressive? Not really.

To more fully consider the situation, we’d have to ask just how much non-wind electric generating capacity has been driven from the New York market by subsidized wind power. It is part of the AWEA storyline that clean, low-cost wind energy “displace[s] output from the most expensive and least efficient power plants,” and obviously over time frequently displaced units are driven from the market. One may reasonably wonder how much generation capacity was driven from the market before that cold January day when New York electric power consumers “needed it most.”

In related news, the National Renewable Energy Lab just produced an exploration of the wind energy industry’s future with and without the Production Tax Credit. In brief, if the PTC is not revived once again, the industry will likely shrink by about half over the next several years, kept in business mostly by state renewable energy purchase requirements. Indirectly the study concedes that NREL doesn’t think wind power is cost competitive with alternative electric energy supplies, but under the best possible wind resource and grid access conditions.

Please note my occasional wind energy disclaimer: I am not against wind energy (a technology which can contribute real value in the right places), just against bad policy (which takes real value created by other people and shovels it in the direction of investors in wind energy assets and people who happen to own windy plots of land with good grid access).

Easy to dream big when you can spend other people’s money, and really, why else would you build solar power in Michigan?

Crain’s Detroit Business reports:

A solar power work group in Michigan is making progress discussing the possibility of expanding the current utility-sponsored solar incentive program ….

But the real question is whether DTE and Consumers will voluntarily expand their programs — as environmentalists, manufacturers and solar installers have been asking the state to require for job creation and public health reasons — before the programs expire in 2015.

Involved in the solar power work group discussion are state regulators, solar PV installers, solar PV manufacturers, environmental groups, and the state’s two large regulated utilities, DTE and Consumers Energy Co., who collect a regulator-approved renewable energy surcharge from their customers.

Not mentioned in the article are the views of retail electric power consumers, whose money is up for grabs, nor anyone thinking of federal taxpayers’ stake in the matter.

There is a respectable answer to the question “why else would you build solar energy in Michigan?” If you have strong pro-solar commitments, for ethical or other reasons, the you may well feel strongly enough about it to be willing to spend your own money on a system. Or, if you are off-grid or want to be, solar is one way to stay powered.

But the answer most prevalent in the work group, at least if the Crain’s article is a guide, is much less respectable: they are mostly people who feel strongly enough about solar power–or the money they might make from it–that they want to force their unwilling neighbors to pay.

Background on the Michigan solar power work group can be found at the pro-solar-policy Michigan Land Use Institute.