Charges of price-gouging are an infallible sign that the person making the accusation is an economic idiot.
Maybe the real idiots are the one's who have bought the myth that this is truly a simple supply/demand situation...that the disfunctional CA market couldn't possibly have created the opportunity for gouging-type of behavior or that some might take advantage of it and act on it.
But the WSJ says that's not the case then it must be true, no? (We wouldn't possibly want to do any homework here or consider evidence to the contrary, now would we?)
claremont.org
Making Sense of California’s Electricity Mess
By Brian T. Kennedy
The California State Legislature has passed a package of bills to relieve, at least for appearances sake, San Diego rate payers from their high electric bills. San Diego is the first region in the state to enter fully the restructured electricity market, having completed the transition process from regulated utility to electricity supplier. The relief package, part of which Governor Davis has signed, includes a price freeze on the retail cost of electricity and a streamlining of the siting process for new plants.
Left unfixed was the wholesale electricity market which will continue to charge high prices throughout the state. For the meantime this will mean a stabilization of prices for beleaguered San Diego consumers, but also the accumulation of a multi-million, if not billion, dollar debt that will someday have to paid by rate payers, tax payers, or utility shareholders.
The day before the vote, on an unusually cool August day, electric rates hit their wholesale market price cap of $250 per megawatt hour. Demand was low and supply—as measured by total megawatts available to the market— was more than adequate. Theoretically, prices should have been closer to $60 to $80 per megawatt. Legislators were left scratching their heads. In the end they passed a stop-gap measure that will do little to stop the long-term problem of California’s electricity market and in fact may worsen it...
Gee, if the demand was low, why didn't the price go down?
Hmmm.... |
