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To: Math Junkie who wrote (11475)	1/6/2001 10:20:07 AM
From: MrGreenJeans	Respond to of 42834

Richard The thing that amazes me is, what brain surgeon decided that they could regulate retail rates without regulating wholesale rates? The thing that amazes me is that people believe free markets and regulation work at all. This is once again proof price caps do not work.

To: Math Junkie who wrote (11475)	1/6/2001 1:21:23 PM
From: Mr. BSL	Read Replies (3) \| Respond to of 42834

The thing that amazes me is, what brain surgeon decided that they could regulate retail rates without regulating wholesale rates? And then they wonder why the utility companies who are caught in the middle are in danger of bankruptcy. I hope every legislator who voted for this flim-flam of a "deregulation" gets thrown out of office. Regulation works. A utility is granted a monopoly by a state. The utility guarantees CAPACITY. The state guarantees a PROFIT for the utility. The utility’s revenue is cost plus profit. The value of electricity never enters into the equation. Under this arrangement, the consumer and industry will get as much CHEAP electricity as they will ever need. Regulated electricity is cheap because its price never ever approaches market value. What is the market price of electricity? Simply the price that a consumer or business will pay in order to avoid doing without it. We will find out the dollar figure soon enough. If the choice is to pay 50 cents a kilowatt hour or do without, people will cut back their consumption but still pay the price. The debate will degenerate to one of wealth redistribution, where the government will be subsidizing rates for many citizens. The revenues will have to come from taxes. In a regulated environment, the utility is expected to exercise prudence in its expenditures. The prudence bar is set very low in that any reasonable cost is passed on. You really have to screw up bad to fail a prudency audit. Regulated utilities are not expected to be efficient as regular businesses. It’s not practical for a business in a non competitive environment to be as efficient as one that is in a competitive environment. That is the trade off. The utility guarantees CAPACITY and the consumer pays for some waste on the cost side of the ledger. Of course, the consumers more than make up for it by paying rates much lower than would be the case if the value of electricity was in the equation. Deregulation arguments focus on the inefficiencies of a utility monopoly. Completion certainly will remove those inefficiencies. It always has and always will. The consumer will gain maybe a few cents per Kilowatt hour due to these efficiencies. Big business is an easy target. Why should the consumers pay for their inefficiencies? The last laugh will be on the consumer who is too stupid to realize that he is killing the golden goose by allowing the price of electricity to approach market value. Politicians are just being politicians when they take advantage of the situation, whether it is through kickbacks or through positioning themselves as the champions against evil business. Disclaimer - I am in the electrical generation business and am benefiting tremendously from the new found value of electricity. Electrical generation, construction and test skills are in demand once again. Dick