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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: elmatador who wrote (43213)	12/13/2003 10:19:50 PM
From: Raymond Duray	Read Replies (1) of 74559

The energy sector was used -and very happy with- to the regulatory environment. Once de-regulation was tried, the system reacted by sabotaging the efforts to de-regulate it. You will have to provide more specific examples of what you are presenting as global truths here. The part of the U.S. that was most egregiously victimized by the failed attempt at de-regulation is the Western States. In this region, it was the utility holding companies themselves that wrote the enabling legislation, to their own evil ends. They were chafing under the strain of complying with what they considered onerous regulation and union control of the workforce, although they enjoyed stable and predictable profits from their operations. Your view of what happened did not happen here. The executives of the private utilities decided in the mid 1990s that they wanted to act more like mercenaries and pirates than like stodgy predictable businessmen within certain constraints that were meant to assure stability in the system. It was the utility executives, and their hired traders manipulating markets that created chaos where none needed to exist. Far from your view that excess capital is of any use to the world of energy production and distribution, it proved to be remarkably wrong-headed and maladaptive. There is currently a huge surplus of excess generating capacity in the U.S. today. A most egregious example of which is foolishly developed gas-fired combined-cycle generator stations developed by IPPs, Independent Power Producers, in the state of Mississippi without a clue as to how they were going to transport this electricity to distant markets. They grossly overbuilt, simply because they could, due to the lax regulatory climate in Mississippi. Capital was simply wasted there. And yes, it was wasted by the IPP subsidiary of the bankrupt California utility, PG&E. So, don't even begin to try to tell me how intelligent markets and de-regulation are. They are a fiasco of greed and excess here in the U.S. electricity market.

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