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How the Free Market Rocked the Grid
sean_nestor sends in a story at IEEE Spectrum that begins:
"Most of us take for granted that the lights will work when we flip them on, without worrying too much about the staggeringly complex things needed to make that happen. Thank the engineers who designed and built the power grids for that — but don't thank them too much. Their main goal was reliability; keeping the cost of electricity down was less of a concern. That's in part why so many people in the United States complain about high electricity prices. Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation. After all, many other US industries have been deregulated — take, for instance, oil, natural gas, or trucking — and greater competition in those sectors swiftly brought prices down. Why not electricity?"
No, the solution is MORE regulation, not less.
The rates need to be regulated, and the private companies need to be taken over by nonprofit public organizations.
Every time deregulation is tried, consumers get shafted.
Yeah, Look at airplane tickets and how much they have gone down...
Or better yet, Phone companies! My bill is as low as... Egads! It isn;t. Help!
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
"First things first -- but not necessarily in that order"
-- The Doctor, "Doctor
Bad idea. Ask Adam Curtis.
PS - Cheaper oil? Cheaper natural gas? What have you been sniffing?
You mean like Wall Street or Enron?
Such arguments were compelling enough to convince two dozen or so U.S. states to deregulate their electric industries. Most began in the mid-1990s, and problems emerged soon after, most famously in the rolling blackouts that Californians suffered through in the summer of 2000 and the months that followed. At the root of these troubles is the fact that free markets can be messy and volatile, something few took into account when deregulation began. But the consequences have since proved so chaotic that a quarter of these states have now suspended plans to revamp the way they manage their electric utilities, and few (if any) additional states are rushing to jump on the deregulation bandwagon.
Yeah, so, how about not continuing this experiment with our critical infrastructure?
Palm trees and 8
The deregulation put in place by the Governor of Cali before Gray Davis pretty effectively showed that deregulating power in California doesn't work. I don't remember the specifics of it but they ended up shutting down a whole bunch of power plants in order to keep the electricity prices artificially high. In addition to brownouts/blackouts and other issues they were raking in money hand over fist until re-regulation got passed. Davis did a horrible job of handling that, but the foundation for it had been set by the republicans the previous term.
Point? Major infrastructure services don't need less regulation, they need less collusion and more competition, something that can only happen when there's an abundance of supply that's at odds with it's competitions to fill a limited amount of demand (relatively speaking.)
There are no free markets. There are only markets controlled by governments and markets controlled by customers. The markets controlled by customers work out pretty well for customers. The markets controlled by governments work out pretty well for governments and the politicians that run them and the lobbyists who fund them and the corporations who make money because the politicians control the markets in their favor.
Don't piss off The Angry Economist
One word: Enron.
Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation.
You mean like they did with the telecos? Or the cable companies? Or any other kind of infrastructure? I challenge anyone here that can name a deregulation of a public utility or infrastructure that has lead to increased competition in the market in question over time.
#fuckbeta #iamslashdot #dicemustdie
I don't think deregulating people's essential services is a good choice, electricity is a service that everyone needs and you would have to pay it anyways even if you disagree with the price they are charging you. It is not the same as other type of services where you can choose not to apply until a good offer is put on the table or even not having it at all.
Death Star anyone?
The IEEE publishing a political editorial like this really discredits them as a professional organization.
I've had enough abrasive sigs. Kittens are cute and fuzzy.
All other services to your house - phone, cable TV, internet, can be shipped in by other means than a hard wire now. Not electricity (or gas). By definition, some monopoly must own that last mile. This is why such services should be regulated, and the regulators be knowledgeable enough to shop for competitive rates.
I hate being bipolar; it's awesome!
About deregulation and about how my butt still hurts from the Enron assrape. I'm normally a free-market kind of guy, but I learned a lesson on this one.
"Eve of Destruction", it's not just for old hippies anymore...
Wouldn't it be better to invest in renewable energy so that every house is a positive contributor to the grid that sells energy to industry? For example, cooperative developments that purchase micro fault tolerant nuclear reactors from hyperion energy that produce heat and electricity and push the excess to the grid.
<sarcasm>I am always surprised of how easily these "neocons" forget the most basic economic concepts of the system they worship... They forget things basic concepts like ROI, entry barriers and so on, as long as forgetting them favours their dogmas.</sarcasm>
In short, in Capitalism 101 we saw that, in a pure free market, if sector A has profits better than sector B, then inversions will flow from sector B to sector A, increasing supply until price drops, and profits in both sectors are the same.
In Capitalism 102, we saw that, in real life, maybe building a new enterprise in sector A is not just as easy... it may require huge inversions, a big risk (if by entering the market they lower collective profits, maybe the ROI won't be positive), and outright collusions (for example, all enterprises in sector A join and tell you "if you enter into our sector, we will presure our suppliers so nobody does provide you with the materials you need if they want to do bussiness with us").
In Campitalism 103, we all saw what happened to Enron.
In my country, the former monopoly of telcos (Telefónica, now Movistar) still is the only supplier when you need some services in some geographical areas (not by law, but the other telcos do have wanted to get the infrastructure). Sometimes when they have lost a contract with us, they have blocked providing the service through the winner to the maximum that the law allowed them (and at least we have some law forcing them to provide the service in a limit time).
Of course, some illuminated people will only repeat Capitalism 101 lessons while covering the ears to avoid realising what they are really saying...
Why can't
The Tragedy of the Commons. Also known as the Race to the Bottom.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
...a market for electricity will ensure nobody goes without electricity, presumably by the same process by which a housing market ensures nobody is homeless and an international food market has caused an end to world hunger.
The ideologues are back with a vengeance. After all that has happened, after the finance system collapsed (and showed that it wasn't really made of anything substantial in the first place) how can anyone still listen to market fundamentalists?
If we can put a man on the moon, why can't we shoot people for Apollo-related non-sequiturs?
The premise of this article is stupid, and the logic is full of holes. It equates state-sanctioned capitalist monopolies with publicly owned nonprofit utilities and then proceeds to glory in how private utilities solves their fictional straw-man "problem." Privatization is regressive and only serves to make the rich richer at the expense of everyone else.
Did we already forget the lessons learned during California's manufactured energy crisis in the early 2000s?
Did we forget about Enron?
Did we forget about Pinochet?
Gee, privatization sure worked out great for other basic necessities, like the barbaric USA health care system! Basic services should not be subject to the exploitative forces of the so-called "free market" -- leave that to the gamblers on Wall Street.
Republicans aren't particularly free market either...
In fact, the "deregulation" talking point has been used and abused so much by both parties it barely means anything anymore. Turning a government-provided service into a government-mandated one shouldn't be called deregulating, as it is often done. It paints the illusion of a free market where there isn't.
Deregulation will bring down prices in most markets through competition. However, this is not the case for natural monopolies. When deregulation occurs under a natural monopoly market, there is a battle to become the dominate player and then all the reset of the competition dies. This is why public utilities should not be deregulated.
WTF, 1.5 months after the U.S. change of guard and we're already recycling Enron?
For a couple of years, I worked in the UK electricity industry, which was at least partially deregulated in 1998. People look at me funny when I say I've got candles and tinned food stashed away, but I expect every winter to be the one where it all comes crashing down.
A big part of the problem, at least for us poor schlubs charged with getting the billing right, was that all these deregulated entities keep getting bought and sold. And every time they do that, there's a data migration, which almost invariably gets screwed up. Bad data piles on bad data on bad data, with fixes promised but never delivered in time for the next buyout. One region in particular had one standard evening/weekend meter set-up and no fewer than four different versions of that reality in their database. The net effect was to flip their predicted e/w usage pattern upside down. That usage pattern is what gets fed into the National Grid computers for demand forecasting. See where this is going?
I'm told that the larger "half-hourly" stuff is in somewhat better shape, which is probably why the whole thing's held together so far. But if what I saw was what you can expect from a deregulated energy industry, I'd say there's good reason to be afraid...
Just look at all the "innovation" that companies like Enron brought to a deregulated energy market! Let's ask California how well that worked out for the average consumer. While we're at it we can look at deregulatory laws like the Commodity Futures Modernization Act and the repeal of Glass-Steagal that enabled such "innovation". The "free market" for oil is now run by speculators who can buy and sell contracts for millions of barrels of oil but never have to take delivery, creating false demand and squeezing millions of dollars a day from average americans as they have to pay over $3.00/gal to fuel their vehicles. What else has deregulation done? How about all those nasty little unregulated derivatives such as MBS(mortgage backed securities) that imploded the world economy? That's financial "innovation" like the world had never seen before. All thanks to deregulation, yay!
All things are subject to interpretation, whichever interpretation prevails at a given time is a function of power and n
Prices are set in free markets by the interaction of thousands of self-interested individuals. The market price is controlled by no one entity. Further the market price serves as a signal to energy suppliers and consumers. If the price of electricity rises consumers should buy products that consume less electricity (say more efficient computers). Thus the market price organizes society.
In a rate-regulated system one entity (politicians which may be bought) controls the price - this is antithetical to freedom (see F.A. Hayek). Also, if the politicians put the price too low, more electricity is demanded than can be supplied (this is why there were bread lines in the USSR). Further, consumers don't receive the signal to switch to more energy efficient products, which exacerbates the problem.
The most economically efficient electricity market is one with, "bid-based, security-constrained, economic dispatch with nodal prices" - William Hogan, Harvard
For the same reason "life isn't fair"
As long as 1% of the total population controls 90% of the wealth, there is no such thing as competition or free market capitalism.
I like competition and I dislike government intrusion but there is a reason FOR government and that is to protect it's citizens, that includes protection from economic crimes as well as physical ones.
The middle class is shrinking regardless of which ideology is popular that month. People are losing their homes left and right, jobs are going over seas and yet still so many people are ignorant to the real issues.
Deregulating natural monopolies doesn't solve the problem. It just hands a blank check to a corporation chosen by the government to fuck it's customers however it chooses.
Free market is an oxymoron to anyone that actually understands what the two words mean.
Ontario deregulated the energy market and all it did was raise the hell out of our electricity rates. The only "competition" is between which energy resellers can sell you the more ridiculous contract.
There are good and bad regulations. The SOX/NOX cap and trade regulations as part of the clean air act were good regulations. The goal wasn't to reduce prices so much as make sure that our air didn't have so much Sulfur Oxides in it to make rain as "acidic as vinegar." Subsidies are bad. NIMBY regulations that obstruct wind farms, nuclear plants, recycling etc. are bad. The problem is entirely about which regulations are useful not necessarily the quantity. If regulations go far beyond what is useful to society, prices go up; too few useful regulations and you get rent seeking behavior and rain like vinegar.
Sigs are too short to say anything truly profound so read the above post instead.
Look at how things are going for Nova Scotia, Canada. I'll give you a hint. Not good.
... doesn't understand that technological advancement has limits, you cannot infinitely drive the cost of something down towards zero and you can't count on the universe to have some unknown undiscovered technology just waiting in the wings.
In the physical universe processes take scientifically measurable amounts of time, resources and computation to complete.
This cult of the market always forgets that natural law trumps ideology.
Uh.
Right.
Electricity prices for commercial usage in California is what? 27cents/kwh? And it's what... FIVE CENTS per kwh in Quebec?
Sure.... SUUUUURE... that's all due to regulation, or infrastructure, or reliability. Suuuure.
Sorry for the MASSIVE sarcasm, but frankly -- have you seen how large/complex Quebec's infrastructure is?
The real difference in costs here, is the cost of the power source. Hydro in Quebec's case, or the fact that California buys so much of its power from out of state ....
There ain't never been a free market. There ain't never gonna be a free market.
Power, water, sewer, transportation and communications will be monopolies. The question is whether they'll be regulated or not. If not, consumers will get reamed.
Wansu, th' chinese sailor
California did get deregulation. The greedy providers took plants off-line to bid up the prices, there wasn't enough capacity left, rolling blackouts ensued. Rolling back deregulation and we have stable power again.
If all power generators and distributors were community owned not for profit entities, we probably would need no regulation. But, these are the exception today. In order to reign in the greed of those controlling our power, we need more regulation, not less. These folks are just as criminal as the banksters who destroyed the lives of millions with their deregulated greed.
Besides, its not like the PUC isn't heavily influenced by industry. Name two places an energy analyst can get a job... hmmmm... a utility, or the PUC. And, yes the folks move freely between the two. A friend of mine who now works for the PUC helped write the deregulation legislation, for California, when she was with a large utility.
Really, I expect better of articles to slashdot than some idiotic right-wing propaganda that has been proved to be a failure every time it is acted upon. Oh yeah, the OP wing-nut said too much money is being spent on safety and reliability... tell that to those poor folks in SF that were burned alive when a gas line exploded for lack of maintenance-- maintenance that the rate payers were assessed an extra fee (years prior) just for repairs to this and a few other locations with rotting natural gas infrastructure. But, the utility absconded with the extra rate payer money, and innocent people died in a fiery hell.
The fact is they are just for re-regulation where the big guy gets to bully the little guy out of business. No one in the U.S. is for a free market where you have to actually compete on your service and the strength of your product. Ask Comcast...
Citation needed. Turning a government provided service into a government mandated one isn't something I've ever seen called deregulation.
...littering the landscape with more towers and more high-tension wires. And have a tolerance for all the "resellers" that will jump into the market, all subsidized by the existing power company's wholesale rates (which are too high and would get higher).
The ONLY practical solution is one like that proposed by Bloom Energy: Get rid of centralized power generation and make every neighborhood its' own power generator, with the citizens who own it deciding when to add/remove capacity.
My local electrical utility (run by the city I live in) is a member of Energy Northwest, which if I understand it is basically a co-op of its member utilities in the pacific northwest. The power is provided basically at-cost to the utilities. Our electricity rates here are very low compared to the rest of the US and we don't have all these scheister "energy companies" running around and ripping off the consumers.
http://energy-northwest.com/
Citation needed. Turning a government provided service into a government mandated one isn't something I've ever seen called deregulation.
Not the most unbiased sources, I admit... http://mises.org/daily/1954 http://mises.org/daily/3981 http://mises.org/daily/704
Deregulating aint necessary a bad thing.
But deregulating networks just does not work. Like streets, rails, power, phone, water, gas, ...
They pushed for deregulation, then prices started to skyrocket, and blackout/brownouts followed.
the best market is one that has regulations ONLY to prevent undeserved monopolys (google can kept their search monopoly because have u seen how well it just works, i use it as a spell checker one what ever on im using doesn't know, bing cant do that and their ads were irritating and were setting up strawmen)
by lowering the entry level till anyone can get in with small loan, not a huge grant or 3 generations of saving money
warning pointless sig
Seth Blumsack, the author of that offensive lie, should be forced to read aloud the live data feed of the oil and gas market prices. For the rest of his life. Oil and gas prices have skyrocketed without regulations protecting us from speculators, supply side manipulation, and every other kind of abuse the market manipulators cook up. Trucking is a random example of an industry never properly regulated enough that is also not actually deregulated.
But right there under lying Blumsack's byline is a cluster of pictures of Enron creating a faked energy crisis in California, because deregulation allowed it. Of course, that crisis also required Bush and his lying "free marketeers" to be running the Federal government, which is obligated to protect one state from interstate commerce abuses that damage it - which is what Texas deregulation allowed by keeping Enron's practices and books secret, even though California's deregulation required opening them.
--
make install -not war
In a centrally run (communist) country everything is run as the government wants, and the people pay for it. In America telco's secretly spy on their customers, give high paying jobs to retiring members of the gov, and other things the gov wants and in return the people (taxpayers) pay for everything. The only difference is that in a real communist/socialist country you get universal healthcare.
The real answer lies neither in blind deregulation nor in overeager regulation. Rather, what's needed is an honest assessment of what places in the electricity industry are being stifled by over-regulation, and which places are likely to result in abuse of the consumer with under-regulation.
For instance, the entry into the market of firms that do nothing but buy and sell electricity to extract profit from arbitrage only serves to increase prices and creates opportunities for abuse. Regulation is needed to ensure that such firms have no place in the market and that such severe arbitrage is not possible.
On the other hand, further development of the electricity infrastructure is greatly hindered by environmental regulations and NIMBY objections, to the point where even renewable energy projects such as solar and wind power run into problems getting environmental approval or are delayed by several years while the approval process bears itself out. Deregulation is needed to ensure that beneficial projects can proceed as long as pollution regulations are observed in the construction and operation process.
Canada has more bureaucrats and higher taxes. If our prices are a fraction of yours it's due to profit margins. If your service is unreliable and you keep getting brownouts and blackouts (not caused by storms) then that's incompetence on the part of the people building/maintaining your power grid and generators.
Libertarian "economists" are like libertarian "philosophers". They may qualify for the low bar of libertarianism, but not generally anything else.
The "Austrian" school is just a bunch of well-funded kooks, used as a tool for big business.
For every problem, there is at least one solution that is simple, neat, and wrong.
Why is it that conservatives and libertarians can never seem to draw from actual empirical evidence, and insist on clinging to unproven philosophy?
The hell with Adam Smith. Look at this issue in practice.
I live in Seattle proper, where we have a publicly-run utility company. We have the lowest electricity rates in the nation, and solid reliability. Sure, some of that has to do with natural resources in the area, but Seattle's suburbs have those same advantages. You literally go outside Seattle's city limits, and you have to buy electricity from Puget Sound Energy, whose rates are significantly higher, and whose service is worse. The public utility beats the private one hands-down.
For the other side of the coin, look at California's recent experiment with electricity deregulation. Enron jumped right in and screwed everyone over. The little detail of the market makers is always conveniently ignored by conservative theory. The entire west coast suffered because of California's naivete.
Electricity in this country is not expensive. It's cheap. Period. Americans just feel that God has given them the right to boundless consumption, so as long as energy isn't free, they whine like little babies.
California, 6th largest economy on the planet. You don't have it hanging between your legs to come to California AND talk about Electrical Utility Deregulation out loud, in a shopping mall. LOL :-)
In other news, it appears that IEEE wants in on a part of this 'deregulation' scam action. They're looking a little thin in the pockets.
If the only way you can accept an assertion is by faith, then you are conceding that it can't be taken on its own merits
The electricity market in California was not deregulated, regulation was increased and a set of bizarre rules put in place. Utilities were forced to sell off their distribution networks. "Alternative energy" companies were given preferential treatment at the expense of established suppliers, whose rates were capped by government force. There were a host of idiocies, detailed at one time in "Reason" magazine.
Contribute to civilization: ari.aynrand.org/donate
Right. Look no further than the deregulation of the Banking industry.
this should be a a no-brainer unless you've programmed yourself with Fox news.
The "Free Market System" was built around Mom and Pop shops. It worked then because the shops were small and local. When you try and apply that model to mass marketed, world wide multy billion dollar, screw the customer and make as much money as we can businesses it falls apart and works against the consumer.
Before replying in this thread you must have at least taken a Microeconomics or a Macroeconomics university level course.
I wish!
And what makes you think the consumer is a more knowledgeable force than ignorant investors or greedy bankers (shhh don't anyone tell him you all can own stock in a utility too)?
I think the slashdot crowd generally gets this but I thought maybe saying it outright might be good. In the political arena "deregulation" is linked to "privatization". That is to get one you must do the other. I think this is because the people who want private also don't want to be regulated and those who want regulation also want public goods. The odd thing is that what citizens want is more regulation over the private industries.
Just look at all the "innovation" that companies like Enron brought to a deregulated energy market! Let's ask California how well that worked out for the average consumer. While we're at it we can look at deregulatory laws like the Commodity Futures Modernization Act and the repeal of Glass-Steagal that enabled such "innovation". The "free market" for oil is now run by speculators who can buy and sell contracts for millions of barrels of oil but never have to take delivery, creating false demand and squeezing millions of dollars a day from average americans as they have to pay over $3.00/gal to fuel their vehicles. What else has deregulation done? How about all those nasty little unregulated derivatives such as MBS(mortgage backed securities) that imploded the world economy? That's financial "innovation" like the world had never seen before. All thanks to deregulation, yay!
The California electricity market wasn't completely deregulated. And the residual government power is what caused brownouts and bankrupt electricity providers to Enron's benefit.
Second, claiming that speculators are responsible for the slightly elevated price of oil (adjust for inflation) is just a demonstration of your ignorance of the oil markets. Where in the world do you think that oil goes? If I speculate and buy a million barrels of oil, then that oil has to go somewhere. Either I have to pay someone to store it physically or I sell it. Being a speculator, I sell it as expected. And the oil ends up in the hands of the consumers of oil, as expected. Supply and demand explains the oil prices far better than blaming things on the scapegoat of the month.
Finally, you apparently don't understand what went wrong with the financial crisis in 2007-2009. Here's the phrase that explains it all: "50 to 1 leverage". No security, no matter how regulated or safe, makes financial sense when you have. by hook or crook, that kind of leverage. Fortunately, government was around to bail all these greedy bankers and clueless investors. Of course, that means the market wasn't truly deregulated.
Deregulation in California is what drove the sometimes 2000% increase in electricity costs that peaked in 2003. It brought us Enron and the recall of Governor Gray Davis.
Blindly recommending deregulation on a commodity that is bought and sold in an a marketplace that promotes investing and speculation instead of direct production, distribution, and consumption creates a situation that will blow up unless it is regulated in some fashion.
(Of course the SEC has shown it can really keep a handle on this type of thing... hmmm... uhhh, urrrk...
It doesn't matter what course you choose to take. If you leave the psychopaths in positions of power, then whatever system is used will only lead to further misery.
These problems can only be solved by the recognizing and removal of non-humans. I'd start at the banking level, remove the psychopaths from that system, undo usery, and then work down.
If the ability to experience empathy is a pre-requisite before one can be considered human, then Psychopaths are not human. They are a predator population which has embedded itself at the highest levels of power and social control. If you want to treat them kindly, then that's fine, but whatever happens, they need to be removed from their positions or we will continue to live in a state of war, poverty and misery.
-FL
Like all companies (e.g. banks), energy companies do not care so much about risks to the entire system. So in deregulated markets, one problem is that companies start shutting down power stations that aren't normally needed, since it's expensive to keep them on standby. Then a cold winter comes along, or a heatwave and suddenly there isn't enough power available any more. The only way to stop this occurring is to massively fine companies that can't supply enough power but I am sure that lots of lobbying goes on to make sure such regulations are either absent or toothless.
I remember when the oil industry was deregulated. Prices shot up. Now they make profit even when things are at their worst. What will happen if the electric industry is deregulated? The same thing. Electric companies control regions and have no competition in those regions. Even Co-ops buy their electric from the main company. Deregulating it will just make things worse.
You cannot deregulate power when the power grid is, essentially, owned by a few companies. You can only deregulate when playing field is completely level.
As a trucker, this is news to me. /off to finish up my logs & check all my other paperwork before signing off w/ dispatch on the qualcomm.
I will expand on your comment. Careful regulation can create a free market, e.g. by preventing monopolies. Deregulation may or may not create a free market, it may create captured market. Esp. in situations like power and water where there may be only one provider for an area. This was known long ago and why we have public utilities commissions. These basic services are so important they must be regulated to created the greatest public, rather than private, good.
There is a blindness in some circles to the fact that the private sector is good at some things, the non-profit sector at others, and the public sector at others. We need all three to advance our economy and the over all social welfare.
putting the 'B' in LGBTQ+
I hereby award the title of "Nerd" to anyone posting on a topic on /. Xmas Eve, other than myself. Including the Jewish posters, why aren't you in a Chinese restaurant already! :)
putting the 'B' in LGBTQ+
Ever seen an inflation adjusted graph of gas prices? Please do remember that the Department of Energy was created in 1977 and that's when Carter officially set us onto the path of "energy independence" from our insane importation of 1/3 of our oil to our current of almost 2/3.
http://www.inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm
The price of crude is set outside the US. We could only even attempt to force the price down by lowering our consumption. We could do that by choice or through regulation which would lead to shortages and fuel lines. We actually tried that already in 1979-80 because we got pissy with Iran. The only outcome was inconveniencing our own citizenry while Russia happily bought oil from Iran and sold them fighter jets since we stopped selling them ours.
You ever waited 4 hours in line just to buy gas? Gas and electricity are dirt cheap in the US, and we forget how good we have it.
Enron took advantage of stupid regulations to screw over consumers. Had prices been allowed to fluctuate, citizens would have gotten pissed and cried for their heads much sooner.
Those citing California (and other) "deregulation" attempts as evidence of a need for more regulation are entirely full of it! I live in California and do recall what occurred however this was a result of BAD regulation not DEregulation. In a free market consumers MUST have the choice to say NO. If you install a third party who buys on behalf power of the grid (ISO) and then give them a mandate to buy AT ANY PRICE when conditions warrant then that is NOT A FREE MARKET! And.... it can never work,
Consumers should have had access to whatever power was being produced by their chosen supplier at whatever rates THEY had negotiated with the supplier. If their supplier was not providing sufficient power to service all of their customers then those consumers could take their dollars elsewhere or pay high rates to keep their power on. Either way at each point the consumer must have the choice to say no I will not pay $1000 for this kwh (and who the hell would other than the ISO?)
When deregulation "failed" California threw out the baby with the bathwater. Admittedly the bath water was a fetid stinking slurry of disgust created by the legislature for their energy industry cronies, but the idea of deregulation was a good one.
To say that deregulation did not work is to completely misunderstand what was actually done and how an actual free market actually works.
From the article: "With retail prices capped by law at 6.7 cents per kilowatt-hour, two of the state's three investor-owned utilities, Pacific Gas & Electric and Southern California Edison, ran out of money to pay for electricity. " One of the major rules in any economic model is that price ceilings cause shortages...so blackouts make a lot of sense in California's case. During the 1970's the gas shortages were caused by a price cap. That is such a stringently bad regulation that I can't see how you'd describe it as "deregulation." It's more like government stupidity taken advantage of by corporate fraud.
How many "Enroners" were actual, experienced engineers as opposed to MBA grads needing a job? Therein lies the answer.
Finally, you apparently don't understand what went wrong with the financial crisis in 2007-2009. Here's the phrase that explains it all: "50 to 1 leverage". No security, no matter how regulated or safe, makes financial sense when you have. by hook or crook, that kind of leverage. Fortunately, government was around to bail all these greedy bankers and clueless investors. Of course, that means the market wasn't truly deregulated.
Regulation can restrict how much leverage banks can have. I think the financial reform bill passed last spring set it at 15 to 1. Many would like to have seen it lower, anywhere from 3 to 10 to 1. I have read, but can't cite where, that the nation’s founders limited bank leverage in their time to as low as 4-to-1.
Tech Public Policy stuff
Seriously, where is he living so I know where oil prices go down and secondly where are these states were electricity has become deregulated and prices have gone down? All I've ever read are complaints from people while their bills shoot through the roof.
Electricity supply is not a market. It's part of the vital infrastructure of a country. It should be owned by those who paid for it, which is the people. Ideally it should be free.
So what would happen in your non-regulated market all using the same grid if one company decides that 110 volt is for sissies and go the manly 220 volt of civilized countries?
Rules, regulation would forbid that? Ah!
You could of course create dozens of grids all next to each other. Copper after all costs NOTHING!
De-regulation has been done in MOST of the world for the majority of history and it SUCKS. Try a de-regulated bus service in Pakistan. Anyone with a truck can start one. Just have to guess were you end up at. And if you want to go somewhere it isn't economic to go? Then screw you!
People calling for a free market are delusional if not outright insane or lying. Most know perfectly well it can never work but hope to profit from the chaos. Why not deregulate the roads? Drive any side at any speed. Free market will sort it out (he who buys the biggest truck has the right of way).
The free market "works" in areas where setup costs and restrictions are minimal. And even with mobile phone stores there is regulation because towns rightly think that the entire highstreet turned into a mobile phone store is NOT the way to create a vibrant inner city. The amount of rules and regulation we have shows clearly that the free market cannot work in our modern civilized world, it never has.
You only have to look at regulation like opening times, advertising, environmental rules (and this can be as simple as not allowing big lorries to supply a shop at night), minimum wages, child labor laws, labor laws, health and safety standards, food standards that a free market is a pipe dream or a lie. The idiots think it is a dream, the powerful use it as a lie to keep the idiots under control. "No no, your power bill hasn't gone up by 100%, that is the choice of a free market! It will go down REAL soon any day now. Keep paying happy little consumer".
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Because we worked out that fast breeders are a huge waste of time not long after that. Just think about the practicalities of it for a few seconds. It is about getting a very hard, very strong, very high melting point material out of the breeder reactor and then cutting that up into very little bits, sorting by weight and forming it into new fuel rods in a situation where it all has to be done remotely with enough radiation present to fry the electronics of anything short of a probe designed to orbit Jupiter. Plus all your gear that does the work after surviving the neutron damage becomes radioactive itself.
There are many other civilian nuclear technologies that show far more merit.
The only reasons the things even sounded like a good idea in 1968 were due to a shortage of very high purity Uranium and due to weapon material fetching a good price. Since then nuclear technology has moved on so reactors are far less fussy about their fuel and there is a lot more Uranium available now anyway. The weapon material no longer has to be sourced from civilian plants especially at the stupid artificially inflated prices of years past, so there is no practical or financial reason to build a plutonium fast breeder.
You have been conned by idiots that bought the propaganda before you were born and have not kept track of what has happened over the last 40 years.
Where have you been living for the last decade?
Go away, watch the documentary then think about it a bit.
Deregulation just opens the doors to more kinds of fraud.
Keep those regulators in place and if they get to friendly with the people they are meant to be supervising, smack em round the head.
Regulation can restrict how much leverage banks can have. I think the financial reform bill passed last spring set it at 15 to 1. Many would like to have seen it lower, anywhere from 3 to 10 to 1. I have read, but can't cite where, that the nation's founders limited bank leverage in their time to as low as 4-to-1.
That would have been effective regulation. There's also the problem of getting government to enforce that regulation. As to what the founders intended, I imagine they would have differed greatly in opinion, just like any disparate group of people would.
While the phrase "deregulation" casts things more or less in terms of some ambiguous quantity which is called regulation, it's worth noting that not regulation is the same in its impact, purpose, and required degree of government power to enforce. Requiring banks to maintain a certain level of leverage or reserve is far less intrusive (that is, for it to work, government requires far less ability to observe and control in order to enforce the regulation properly) than requiring business to report every transaction above $10,000 or requiring banks to loan certain amounts to certain categories of people.
The poster that I replied to originally complained about "innovation" in financial instruments. IMHO, there is such a thing. While new, poorly understood, financial instruments are inherently dangerous, they also provide new ways for people and businesses to either hedge their risks or make educated guesses (in other words, speculate) about partial unknowns which have some value. The problem with the recent real estate-spawned crisis wasn't the development of these untried tools, but the amount of risk that the entire market subsumed via extraordinary levels of leverage. Merely requiring a greater degree of leverage, would have mitigated the harm from the crisis no matter what crazy and risky financial instruments had been created.
After all, many other US industries have been deregulated — take, for instance, oil, natural gas, or trucking — and greater competition in those sectors swiftly brought prices down.
I guess this asshole hasn't bought any gas lately or has a chauffeur that drives and fills the tank so he has never looked at the price of gas. Also how do you have competition when you local electric company is the only game in town to get electricy unless you run a generator. Every where I have lived in the US electric power companies are a monopoly All my life I have wished for another wire to connect to besides Georgia Power. There isn't one.
Someone should shoot this bastard.
There is a simple way to lower the costs of energy while assuring us decent cheaper power.
Basically, the storage not only smooths out the energy curve (handles the varying demands), but also, allows AE to generate power and have it stored. That encourages home owners to get Wind, Solar PV, Solar thermal, tide, etc.
The CRITICAL part is that any tax breaks/subsidies should start HIGH and over a period of time DROP. That encourages ppl to jump into the game early. In addition, it encourages loads of start-ups. For example, companies doing molten salt style solar thermal, might be tempted to create a molten salt version that uses electricity to heat. In doing that, they can get their manufacturing costs down quickly for that portion which helps on their core idea of Solar Thermal.
In addition, the HIGH tax break/subsidy encourages its growth NOW. That means lots of jobs quickly. One key to that, is to require that it be either local to the USA or from nations that do not manipulate their money vs. the dollar. Far too many nations either have their money fixed against the dollar (China being the best example), or manipulate (I will exclude for the time, but easy enough to show and prove).
I prefer the "u" in honour as it seems to be missing these days.
> Thank the engineers who designed and built the power grids for that — but don't thank them too much. Their main goal was reliability; keeping
> the cost of electricity down was less of a concern. That's in part why so many people in the United States complain about high electricity prices.
Can't agree with that. In New Zealand the main goal of the engineers who designed and built the electricity infrastructure also was reliability. The cost of electricity in NZ, while it has increased massively in recent times since the electricity industry was deregulated, is relatively low - and continues to be cheaper than in the USA, Canada, the UK, and most if not all of Europe.
> Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation. After all, many other US industries
> have been deregulated — take, for instance, oil, natural gas, or trucking — and greater competition in those sectors swiftly brought prices
> down. Why not electricity?"
Deregulation is not the solution.Many essential aspects of infrastructure were deregulated and privatized by successive right-wing governments over the years. The net result in each and every case was increased prices being charged to consumers, and/or reduced quality of service.
So, we can certainly say from experience that "deregulation" is NOT a valid solution for problems in infrastructure areas that are a natural monopoly such as electricity, gas, water, telephone lines, rail, roads, and television. At least deregulation is not a valid solution unless you want to see prices triple!
> Have a tax break or temp subsidy for energy STORAGE. This group of ppl will buy excess electricity and sell
> it at a higher rate and provider the electricity that is needed.
Expecting tax-payers to subsidize a second-rate solution is not a valid answer.
Ultimately what you really need are cheaper methods of generating electricity.
"The problem with the recent real estate-spawned crisis wasn't the development of these untried tools, but the amount of risk that the entire market subsumed via extraordinary levels of leverage. Merely requiring a greater degree of leverage, would have mitigated the harm from the crisis no matter what crazy and risky financial instruments had been created."
It depends on your definition of mitigate and reasonable leverage. I see no reason that a historically reasonable level of leverage would have been better than a bad one. What's the difference between 30 to 1 and 10 to 1 if everything is interconnected? Sure the long term effects may not be as bad, but everything will still collapse in the short term. So you are still left with the tools that allowed the problem to exist. And someone will always create the tools.
No, deregulation has worked wonders for electricity. Here in Norway, the power company sells all the renewable-powered electricity to foreign countries in the summer, leaving the water-magasines emptied for the winter. Thus the power companies profit double, once for selling at higher price to foreign countries in the summer, and twice for jacking up the prices in the winter, leading to shortages and crises. Now we're having like 2-3 times the energy bill compared to 10 years ago, 3-4 times that in the winter. Not bad profits there at all..
The great thing about this is that we're left totally vulnerable to expensive foreign import of electricity in the winter, and we're importing dirty nuclear and coal energy, although Norway has loads of cheap renewable energy reservoirs with our water powered powerplants. It doesn't matter what any individual company does either, because either you're on the Nordpool power-exchange, or you're not delivering any power in Norway. So it's really impossible to create any viable alternative in the market due to the market structure being centered around Nordpool speculations.
How can profit be a bad thing? It makes no sense to regulate anything. An1 want some tea with that koolaid?
Irony mode off..
http://www.debunkingskeptics.com/
This is about STARTING something. It is not about subsidizing something for a long period of time. Right now, we have SUBSIDIZE nukes for its entire lifetime (60 years). We have also subsidized Coal for almost 100 years. Likewise, we have subsidized Oil for its entire time.
If you look at the history of ALL OF OUR ENERGY as well as massive projects, ALL WERE SUBSIDIZED TO GET THEM STARTED.
Railroads were given right of ways, and 100's of millions of acres of land to fund them.
USAF and US Postal bought loads of aircrafts, as well as US Feds built the vast majority of the airports.
We built roads to subsidize our trucks and car industry.
We have bought loads of power from coal company to get them started in various place. The feds put the national grid together to assure that energy would be everywhere as a way to start power companies. The feds put up telephone poles everywhere to fund the telephone companies. And W and the neo-cons push a subsidy for ethanol which was the most INEFFICIENT SUBSIDY OF ALL.
And you think that by offering a TIME-LIMITED Tax break/SUBSIDY OF ENERGY STORAGE is inefficient? You have to be kidding. It is actually cheaper to store energy than to produce it in varying amounts. As such, storage allows for large electrical production that runs at a single speed. That allows for building more nukes and even more efficient natural gas facilities. Finally, storage has the advantage that if done in smaller size, it allows ultimately for a 2 level grid, instead of the current single level fits all.
I prefer the "u" in honour as it seems to be missing these days.
When the laws are changed so that any citizen can put up a windmill and then sell power DIRECTLY to their neighbor, then we will have an environment in which the free market can allow for cheap power. Until then we have a government back monopoly based system that will need to be carefully monitored and controlled by the government to prevent/stop involved companies from taking advantage of consumers.
"Deregulation" is just a made up word used to sell us some bullshit. At the end of deregulation in any state there are always even more regulations then when they started, and I still can't sell my extra solar power to my neighbor.
"They that give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety"-B.Franklin
Angered by the steep rates, consumers formed electricity cooperatives and municipal utilities. That in turn led Insull and his counterparts to plead with state officials for protection from this "ruinous" competition. Politicians complied, passing laws that granted the large electric power companies exclusive franchises in their areas in exchange for regulation of their prices and profits. The municipal utilities and electricity cooperatives continued to operate but in most cases never grew as large as the regulated for-profit (investor-owned) utilities.
I work for the state owned electric company of Mexico, Comisión Federal de Electricidad. For a private investor, it doesn't make sense to provide power to a small cluster of 5-20 homes, but for the people living there is the difference among living in XIX century and now living in XXI century. That's what state owned companies will provide or private companies can under a very strong regulation. I understand the view that "customers sould have a choice" specially when customer service in private and public utility companies is so bad that in our case, company vehicles in some places don't use company logos because they are welcomed by angry people with firearms fire, but the economies of scale works in favor of the large companies. No matter how good is your solar/wind array, it is no match for a large hydroelectric dam that produces 1Mw for a dollar or less.
Mexico: 100% conservative's America now!
I see no reason that a historically reasonable level of leverage would have been better than a bad one.
The analogy is climbing out of bed versus climbing a huge, sheer, ice face freestyle. A suicidal klutz is very limited in what harm they can do to themselves getting out of bed. While even a small mistake by even the best ice climber who chooses to climb ice without safety equipment can (and probably eventually will) result in death a few seconds later.
By this, I mean the difference is in margin of error. At 50 to 1 leverage, if your investment goes down by a meager 2%, then you are wiped out. Any further loss comes from the people who lent you money. If they in turn had been playing the highly leveraged game, then things could get ugly fast with a single big bankruptcy causing a chain reaction of bankruptcies and destroying a lot of assumed value.
For the extreme conservative example, suppose I have no leverage at all. Namely, the only money at stake is mine and I can't possibly lose more than that. Then what's the worst that can happen? Namely, that I lose every cent I had and that is that. There is no risk to anyone else. I didn't owe anyone money so there's no one left high and dry by my screw up/bad luck.
What's the difference between 30 to 1 and 10 to 1 if everything is interconnected?
A lot as it turns out. First, if investments decline between roughly 3-10%, then the 30 to 1 levered investor is completely underwater, while the 10 to 1 still has some assets to their name. The 10 to 1 leveraged investor can weather mild declines better. At the extremes, a complete loss of the investment means that the 10 to 1 leveraged investor loses a third what the 30 to 1 investor loses. You can still have an ugly chain reaction which brings down a lot of the investment firms in your economy, but their size and scope will be considerably smaller.
"Deregulation"? So, you're too young to have invested tons of money in Enron?
Don't just regulate, nationalize.
And btw, their specs, and rightfully so, were reliability, period. Beyond that, if you think that companies didn't look for cutting costs to maximize profits... consider the great northeast blackout of a few years ago, when it came out that the companies hadn't upgraded the infrastructure for 30, 40, and 50 years.
mark