The price of power…

Apparently in Texas you can sign up for a “wholesale” electricity plan. Just like a loan with a floating interest rate, it could be a real benefit to the consumer when rates are low. The catch is, the interest rate for loans or the wholesale cost of electricity changes over time. Sometimes it changes both dramatically and quickly.

Signing up for the “wholesale” plan makes eminent sense when gas and oil is flowing and prices are low. All it takes, though, is a single unexpected event to make such a decision catastrophically wrong. It’s the inherent risk of pinning your plans on a floating rate that’s governed entirely on the vagaries of supply and demand in a potentially volatile marketplace.

While I feel badly for the people who woke up this week to a $16,000 bill for electricity, I presume the contract they signed included a pretty large warning that price moved both up and down and often does so with great rapidity. I felt sorry, too, for people who signed up for zero percent mortgages only to realize that when their mortgages rest to the “real” rate they couldn’t afford both the principle and the interest.

In both cases, these are people who willingly bypassed traditional service agreements or mortgages in favor of “exotic” options. The low up-front cost of exotic options, even if no other explicit warning is made, should be a clear indication to the average consumer that they are assuming a greater than normal degree of personal risk. Both are just one step better than walking in to the local casino and putting your month’s mortgage or rent payment on red and hoping for the best.

Though I feel sorry for both groups, I don’t feel any more sense of personal responsibility to bail out electricity consumers who made bad choices than I did for bailing out homeowners who took on unreasonable levels of debt. Expecting to enjoy all the benefits of low prices without encountering the corresponding negative possibilities smacks of immature thinking. Constantly protecting people from the natural consequences of their own actions clearly hasn’t done us any favors, as it seems no one has taken any of the lessons to heart. 

Now because I’m not a complete bastard, I could be convinced that low-interests emergency loans for those needing relief is a reasonable idea, but simply wiping out legitimate debt because it’s politically expedient sends an appalling message. Mine won’t be the popular opinion, of course, since no one wants to be responsible for themselves and politicians don’t win votes in this modern world of ours by expecting anyone to live up to their personal obligations when a billion dollar bailout is available. So, really, those whole post is about nothing more than yelling into the void.

What Annoys Jeff this Week?

1. One Day Shipping. I have no idea why Amazon even pretends to offer items for “one day shipping” any more. Of the last three items I’ve purchased that touted this speedy service, exactly none of them arrived when “expected.” When I’ve been lucky, the items may have shipped by the expected arrival date… although one of those never arrived at all and had to be reshipped, arriving a full week after I ordered it. At one time, Amazon was practically synonymous with “logistics,” but mostly now I think they just make shit up as they go along.

2. Anti-intellectualism. America has a long history of anti-intellectualism. I could give you someone examples, but since we’re currently living through one of them, I’ll save you the trip down our collective memory lane and hope that you’ll just accept that I’m telling you the truth. Maybe the space program in the 60s was an exception, but I suspect that was more because those with the right stuff were billed as test pilots rather than engineers – though in many cases they were both. I know the historical backstory of why Americans have a long tradition of hating the smart people in the room, but I’ll never quite understand why we can’t get the hell over it. 

3. Peak savings days. Local electric companies are quick to hand out a few pennies savings for those who are willing to swelter a bit as afternoon temperatures hover in the mid-90s. All that really tells me is that increasingly, the local electric grid hasn’t been built out to meet actual demand for its product. Personally, I’d prefer to pay them a few pennies more during off-peak times so they can build a bit of excess capacity rather than sweating all the way through high summer. A little personal comfort feels like something well worth paying for, but maybe that’s just me.