Reference no: EM132898849

The unseasonal cold the week of January 15 tested the limits of power companies and consumers. Texas was a classic case where market dynamics (supply and demand) of energy quickly went through the roof. The power companies in most of the United States are able to buy and sell power through a grid system that connects the various markets. The Tennessee Valley Authority, for example, can sell excess electricity to other companies. Texas, however, is unique. Its power grid is, by and large, disconnected from the national power grids. So when electrical demand surged with consumers needing to stay warm, the self-contained power grid was unable to pull in power for elsewhere. Consequently, supply declined, demand increased, and so did costs. Many consumers discovered their utility bills increased hundreds and thousands of dollars in just a few days. So here's the discussion question: what should the Texas power companies do? Pass on the increased costs to their consumers? Should the companies eat the increased costs and reduce their profit and shareholder stock value? Or is there a socially responsible alternative?