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Politics : Sharks in the Septic Tank -- Ignore unavailable to you. Want to Upgrade?

To: cosmicforce who wrote (1406)	1/17/2001 11:44:19 PM
From: TimF	Respond to of 82486

The privatization of everything is nicely modeled in California in mesoscale. As I tell my kids to keep the lights off, it is nice to know that the utilities outsourced all their generation They were required to by law. The deregulation wasn't much of a deregulation. Who can generate electricity and where as well as how and from who the utilities can buy it from and how much they can charger for it is all regulated. That is why you have the shortages. The two big ones (Edison and PG&E) pulled in a percentage but forgot to cost normalize their fuel basis. THEY had no 5 year plan. Were they storing oil when it was cheap? No. Now they and the shareholders are expecting us to foot the bill because they couldn't manage volatile fuel costs. It costs money to store oil for 5 years. Utilities have their prices they can charged capped. They could have bought oil to store (or bought futures contracts or signed long term deals for oil supply) years ago but how many people would have supported an increase in their bills. If they did support it would they have reacted well if the price actualyl went down and California was forced to pay more then everyone else for electricity? You expect them to have a 5 year plan but if that plan is supposed to include figureing out how much oil will cost then its chances of success are about the same as the 5 year plans of the (thankfully extinct) USSR. If they can accurately predict the swings in oil prices they could probably make more if they left the utility industry and became oil futures speculators. This may present an opportunity for alternative fuels and energy sources(which they and the oil companies complained were TOO expensive). Now faced with 200% utility increases, those alternatives don't look so expensive, but the utility companies prevented that industry from growing even though it was in the national interest to have it. Even with the increases is gas and oil atlternative fuels are still expensive (and the problem in California is more lack of generator capacity and caps in prices for supply rather then fuel costs). The utility companies would have used these fuels if it made economic sense (and even if they didn't they could not prevent others from using them). The real reason they are still used so rarely is that they are still to expensive. They will be used when there price goes down or oil and gas prices go up enough thats how markets work. If X and Y are subtitutes and Y is much more expensive then X then Y will not be used much. It isn't in the interests of the nation to try to change this by law or regulation. Tim