Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (11489)	1/6/2001 3:34:56 PM
From: Mr. BSL	Read Replies (1) \| Respond to of 42834

The value of electricity never enters into the equation HORSESHT! The value of power always enters into the equation and is passed on directly or through surcharges to the end users. From the consumer's point of view, they pay cost plus profit. The value of electricity, that is what it would fetch on the open market, does not enter into the equation in a regulated market. The value you are talking about is cost. The value I am talking about is margin that the consumer will be willing to pay. Under this arrangement, the consumer and industry will get as much CHEAP electricity as they will ever need. In what country is this? I defined CHEAP as cost plus profit, as opposed to what people will have to pay on the open market. Electric prices have risen substantially in recent years. There have been price spikes during the summer of up to $10,000 a mwh. The market has been and is going to continue to value electric power at market prices. We already know the dollar figure. Again, I am arguing that cost plus a regulated profit will be less than cost plus a markup that people are willing to pay. BTW, what do you think these $10,000/ Mwh are due to? If the utilities are regulated and required to have certain capacity and are able to pass on the costs of this capacity, these spikes would be pretty rare wouldn't they? A major problem is that outside of price caps energy demand has risen by 12% in certain areas and generation has risen by only 2%.* The trade off is profit for the regulated utility for maintaining enough capacity. The utility is not living up to its end of the bargain if it is not increasing generation. I have to wonder how in touch you are with this industry at the moment. Things are changing fast as the genie is being let out of the bottle. Has your microeconomic pricing and macroeconomic forecasting predicted what is going on in California? Do you see this current chaos as a short thing until we are fully deregulated? Do you think that the current price of electricity is enough incentive for companies to begin major generation projects? What will it take for supply to catch up and keep up with demand? Dick