You might think that the $17,000 bills that Texas electricity providers are sending to customers who kept their lights on during last week’s historic storm reflect red state libertarian ideology run amuck. But you would be wrong.

They are actually the product of the exact same approach to markets reflected in the congestion-pricing plan for midtown Manhattan adopted by the New York State legislature in 2019, in the way Broadway priced tickets for shows like The Lion King and Wicked before the pandemic, and the way airlines have been pricing seats for years.

The problem is not ideological but intellectual, and has its roots in something a Democratic appointee to the New York Public Service Commission did to the pricing of electricity in New York State back in 1975. That thing is called marginal-cost pricing, and it became part of American life thanks largely to the efforts of one man: economist Alfred Kahn.

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Notes/Citation Information

Ramsi A. Woodcock, What Those Shocking Texas Power Bills Have in Common with Uber Surges, Broadway Tickets, and Airfare, Slate (Feb. 25, 2021), at https://slate.com/business/2021/02/texas-electricity-bills-griddy-marginal-cost-pricing-alfred-kahn.html.



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