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To: Ilaine who wrote (56200)	1/10/2001 12:49:07 PM
From: yard_man	Respond to of 436258

Also, the capital investment required and the lag -- price signals can't work at the consumer level anyway -- they have to work at the wholsesale level But regulation f8cked it all up. Environmental reg, electricity reg -- U need to remember that until '98, scarcity didn't translate into huge volatility -- there was a "step change" coming prior to that which the "wholesale market" could not forecast for the players If California could buy at cost+10% from its neighbors, we wouldn't have all this to talk about. Had they seen this coming even the environmentalist crap would have been got around to build new plants

To: Ilaine who wrote (56200)	1/10/2001 1:29:21 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 436258

CB - That's good textbook economics, but one problem is that no one knows how much they are paying for electricity when they use it. The bill comes a month later.... All they need to know is whether and how much they care what the size of the bill is. If the price is controlled too low, they will neither know nor care. A slightly higher bill will result in gnashing of teeth, but no other action. Still higher, and they will write or call their state rep. Finally, at some point, they will use their off switches more often. I personally rarely turn off anything, subjectively valuing a lower rate of incandescent bulb failure higher than the extra direct electricity cost. A rate high enough to cause me to change that choice would be equivalent to increasing generating capacity by 30% if it applied in general. The real problem is not total power generated, transmitted and consumed, but its variability over both time of day and season. There is still plenty of opportunity for technological improvements to level the load requirements, and thus the peak capacity requirements, but the regulatory environment and price controls help prohibit any such investments. ...Another problem is that the price of electricity is capped for the consumer. It's the supplier that's got to deal with that, not the consumer. No, this is the problem to which I was responding. Regards, Don