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blodreina_kumWonkru t1_j1mi4ib wrote

Reply to comment by sexy_wash_bucket in Any context other than it’s really cold? Peco asking for electricity conservation. by Unlucky-External5648

This is super interesting but weird. I get the 2nd issue, but I can't wrap my head around the 1st. Why do providers bid on electricity? We really treat power the same way do anything else that's bought/sold/re-sold? I feel silly asking this question, but for some reason that just seems bonkers to me that this would be the case to the point where providers could "run out" of energy to provide to people.

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sexy_wash_bucket t1_j1mmgru wrote

Lots of boring judicial history there but the main gist is that we (the U.S.) created RTOs (like PJM) to ensure that every bit of electricity in a region was being managed by one overall regulator to maximize synergies. Every provider is required to bid (basically) 100% of their capacity on the day-ahead market, every day. If we didn’t force energy bids like this, providers could e.g. withhold energy until peak demand times to maximize profits, essentially giving an F U to people at non peak times and leaving them susceptible to blackouts. The bidding system is just the method that FERC employs to find a fair price to pay providers despite there being so many - but in reality, it’s just the chosen strategy to ensure all electricity being produced enters the market.

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