To: dfloydr who wrote (3662 ) 4/23/2001 10:28:59 PM From: Zeuspaul Respond to You summed up the issues very well. Your post should be framed and sent to all fifty state legislatures as required reading before they vote on deregulation measures.Importantly, most PUC's allowed a utility to include in it's rate base a percentage of excess capacity ... often as much as 20%. Investors willing to settle for steady but modest income streams invested in utility stocks or utility bonds. It was pretty dull. Companies in fast growing areas grew a bit faster than others. Generally people expected 4 to 5% returns with an occasional 6 or 7%. Accordingly the old thinking of cost plus a modest percentage = a fair price for electricity is history. Now the pricing scale has to change. Under the old system, with lots of built in excess capacity, the cost of which was shared by all, it was OK to give big users a discount. After all if they used a bit more, the excess capacity was there to be had. Now, with companies running "lean", incremental usage is probably the most expensive kilowatt. Prices should now escalate as usage goes up to reflect the fact that the incremental usage is what is going to pay for new, more expensive sources of power. I also have no doubt that some pricing has swung to extremes. This will happen in a new market ... but let it swing ... it will balance out once the impact flows through to the consumers and they cut back in response. Remember, price is a real source of information. Mess with price and you obscure the information and blur the response. by a little careful planning they cut both their electric and gas consumption by 40+% So CA, stop bitching and start switching As whitepine suggests, get out of the myth phase of your thinking.
