How does a privatized electrical grid work (like in Texas)?



Edit: I mean like, how is it *supposed* to work – not counting whatever went wrong recently in Texas.

I mean, each “provider” doesn’t have its own wires running to each subscriber, right?

So what exactly does a provider do? Just some fancy accounting?

Does each provider have their own power plants, or are they just buying power from existing power plants?

Does a provider necessarily own any of the infrastructure at all? (power plants, transformers, poles, wires, etc).

In: Economics

There are a few companies that own the transmission of power–the local power lines, transformers, distribution stations, etc. These are monopolies in their area, but have no real interaction with the customers, no direct bills or anything. Then you have the power companies that a consumer chooses to buy from–these companies are the ones responsible for supplying power to the grid. Generally this is through owning power plants themselves, though they can “buy” power someone else is producing if they need to (I believe this is where Griddy got into trouble). They do the billing to the end customer, though of course some of that gets passed along to the other companies involved in the transmission.

ERCOT essentially oversees all of it and is supposed to make sure everything is coordinated properly.

There is 3 steps to you getting power.
Production, distribution and retail.

The grid is the distribution part. It’s the utility.
If it’s privatised then the government has sold, leased or entered into a contract with a private company, for them to run it and reap the profits. The grid is almost always a monopoly because multiple sets of powerlines is dumb.

They act as middle men between providers and users and are responsible for the upkeep on the grid.

The idea behind privatisation of essential services like an electrical grid is the idea that a private company is more competitive, I.e cheaper, than the government.

So privatised production, where companies can compete is a potentially good idea. Privatised distribution that is granted a monopoly means that competition is impossible.