<Did you actually read the article?>
Yes, it clearly states what I'm saying in several instances, although it is clear the writer doesn't have that 'slant'.
<Bad, bad analogy. Small airlines actually popped-up with planes during airline dereg. Small energy traders are not popping-up with power generating facilities or trans/dist capacity. Had you likened them to ticket resellers...well, maybe.>
This is incorrect... traders of all kind in many industries deal in all sorts of commodities and services without being owners or operaters. Ticket resellers are essentially the same thing, brokers/traders.
<I think the point of the article was to highlight that the "percieved shortage" which led to higher prices may have been artificially created given the peculiar behavior of some plants. Evidence of collusion and complicity between genrators and traders might have well taken place. Power traders apparently tried "megawatt laundering" and when it looked like they might get caught, shifted to bidding up the off-peak prices, topping out at $250 last month.>
No, I'm just not reading with 'goggles' on... look at your paragraph.. "may haves" and "evidence of" and "tried to"... not one fact except that they bid up prices to obscene levels which looks to me like they took a bath if they were buying! It's standard practice in business to hold supplies to get higher prices if you're willing to take that bet. Here are some facts from the article that have REAL impact on prices which you conveniently left out:
<On May 22, while Northwest hydro operators were still filling their reservoirs, a surprise heat wave hit California when many fossil fuel power plants were down for planned maintenance. >
<"Last summer was the coldest summer in 50 years>
<The manager of most of California's electricity system is the Independent System Operator, which runs a daily auction to buy emergency power on behalf of utilities>- ie. the dolt locks nothing in ahead of time!
<Power traders quickly learned that they could maximize profits by holding back electricity from the power exchange, betting that the Independent System Operator would pay its top price the next day. >
<So traders deserted the exchange in droves, leaving beleaguered Independent System Operator engineers scrambling to come up with 30 percent of the state's daily requirements ---- often by calling generators on the telephone 15 minutes before power was needed and begging them to sell. >
So they weren't even talking to the supplier of their product!
<To avoid this strategy, utilities began to decline expensive bids, with the assurance that the ISO would pay more the next day for power but would not inflate the entire "day-ahead" market. >
So the owners of the electicity new they could get more... and started to catch on to what the traders were doing.
<The hottest temperatures of the year generally hit California in August and September, and alarm over stubbornly high prices for electricity led many to predict a reduction of the Independent System Operator's price cap from $500 per megawatt hour to $250 at an Aug. 3 meeting of its board of governors. >
<But anti-trust investigators have focused in recent weeks on a secret database that was posted by the Independent System Operator on the Internet. The Web site, which was closed to regulators and the public, allowed generators to monitor every 10 minutes whether competitors were running their power plants. Two lawsuits filed in San Diego have charged power companies with using the database to cooperate in raising prices.>
It's strange that it was closed to regulators and the public... IMO that means it's not 'free'... since when is monitoring your competition wrong? In any case, it will be interesting to see what comes of this 'database part'...
<After the first reduction, from $750 per megawatt hour to $500 in early July, evidence emerged of "megawatt laundering" by power traders.
Frank Wolak, a Stanford economist and chairman of the Independent System Operator's market surveillance committee, had predicted that in-state generators could legally avoid the Independent System Operator's price cap by selling electricity to subsidiaries in other states on the "day-ahead" market of the power exchange. The next day the companies could bring the power back by selling it to the Independent System Operator on the daily emergency market. >
<To opponents of price caps, such as Federal Energy Regulatory Commission Commissioner Curt Hebert Jr., the rise in average prices, despite decreases in state price caps, was proof that mandated cost controls do not work.>
That's not a free market... California never did have one, that's part of the problem. The question begs... did YOU read the article?
DAK |
