Very explicitly the latter, but predicated on the assumption that energy production is infinitely elastic — as long as you priced power high enough, someone will eventually generate it for you. In this case, however, you could run the spot price up as high as you wanted (and the PUC did!), but producers couldn’t bring additional capacity online, and consumers couldn’t moderate their demand (since they were constantly freezing, then thawing as soon as they got power back), so the market catastrophically failed with inelastic demand and production.

I was in power markets when Texas dereg happened, and our economist termed it a “priced to fail” market design. Wasn’t wrong!