The market way to deal with outliers is to have an options market. Basically, it is an insurance market for providing electricity on a tight day. Texas has a different way of handling it that I don’t like.

A big problem in the electricity market is that most customers don’t respond to supply shocks. They pay the same price in an emergency as in normal times. So, when it got very cold and power plants started shutting down, they used more electricity because they needed more heat! The one electricity provider who did pass on higher prices to customers and reduced consumption, Griddy Energy, was roasted in the media. Because customers didn’t respond to the shortage, utilities had to. They instituted “rolling blackouts”, which we really just blackouts for any grid that didn’t have a hospital on it.