Comments on: Britain and Electricity – Asking the Wrong Questions

By: Joseph Somsel

Joseph Somsel — Tue, 27 Oct 2009 00:14:43 +0000

I agree that “deregulation” in California has been a sham – the net result is MORE government control of the system and the private companies that participate in it. Some companies, the ones that play along, can find this rewarding. Those that don’t, get push back until the stockholders replace management with a team more compliant. New entrants have to beg.

While a “free market” in generation SOUNDS good, remaining elements of natural monopoly remain, especially with transmission constraints. A large generator can’t usually participate in a state-wide market but instead is stuck within the territory set by transmission bottlenecks. That’s why the new issue is “locational” market distortions.

As an engineer, central planning of an electrical grid combined with an enforced obligation to serve with a non-corrupt regulator makes a LOT of sense. Too bad that politicians saw the grid as an opportunity for a political power grab.

By: Michael Kennedy

Michael Kennedy — Thu, 22 Oct 2009 23:52:23 +0000

California “deregulation” was a sham because the utilities were forced to divest their plants and buy energy on the spot market. They saw the coming crisis and begged the governor, Gray Davis, to let them sign long term contracts with all the generator companies that had popped up to buy the plants. They were not allowed to do so and six months later the storm hit. Actually, when rates went up 500%, as mine did, consumption dropped by half and there might have been an equilibrium fairly quickly but the politicians panicked and then all hell broke loose. The problem is not solved and is just a small piece of the maelstrom that is California politics.

By: Shannon Love

Shannon Love — Wed, 21 Oct 2009 18:01:14 +0000

Half-assed “deregulation” is worse than pure socialism. The free-market works because of numerous feedback loops that steer resources to the proper use. Creating a system which has most but not all of its feedback in place creates a runaway system that eventually crashes. In this case, we have no feedback to maintain the transmission grid and we have no feedback that makes new generators profitable. “Deregulators” were more worried about someone monopolizing the power grid than they were worried about paying for maintaining the grid. They just assumed that demand for electricity would induce people to invest in generation without any thought given to all the regulatory hurtles in the way.

By: Jonathan

Jonathan — Wed, 21 Oct 2009 17:51:23 +0000

It’s not looking good. As in California, partial deregulation often causes more problems than it solves, and legislators and the public often draw the wrong conclusions from the problems.

I blame our lousy media, which are dominated by people who are ignorant about science and economics, and our lousy system of primary education for teaching green propaganda and sentimental fables about nature rather than science.

By: Marty

Marty — Wed, 21 Oct 2009 17:45:49 +0000

The only honest way to reduce CO2 through the market is through a carbon tax, but of course that would be too obvious.

Not that I believe for a minute that AGW is proven to even exist, let alone be so dangerous as to justify hobbling the economy.

By: renminbi

renminbi — Wed, 21 Oct 2009 04:35:28 +0000

I gave up on the hapless Economist a long time ago.Theyare “pro-market” in a strange,bloodless way.They miss the moral point of the market;maybe that is why they can never get it quite right. Actual , in a more general sense they have a broken moral compass-they even endorsed Obama.

By: Robert Schwartz

Robert Schwartz — Wed, 21 Oct 2009 04:26:54 +0000

Depressing, ain’t it?

We’re pretty much in the same pickle, aren’t we?