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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (101895)	5/13/2001 10:21:33 PM
From: flatsville	Read Replies (1) \| Respond to of 436258

Thanks for laying it out in that post. >>>Getting real competition (i.e. not a situation where market participants yield market power to gouge) is not any easy task. I still think there are some valid arguments that the business remains a "natural monopoly" and that competition cannot allocate resources properly -- i.e. with the lowest overall cost / best overall benefit to society.<<< I'm about to get in right behind you on this...especially after reviewing the level of understanding regarding very complicated issues as expressed here. It will never work right if for no other reason than stupidity...and the fact that "the lowest cost / best overall benefit to society" isn't even a consideration or concern.

To: yard_man who wrote (101895)	5/13/2001 10:36:11 PM
From: flatsville	Read Replies (1) \| Respond to of 436258

>>>(I'll be the first to admit my thinking is incomplete on the issue. I am stuck at many places that eocnomists who are movers and shakers seem to have gotten over years ago in selling the proposition to the regulators.)<<< I think you're stuck for very real reasons not because certain economists have bigger brains. They may be better salesmen perhaps, moving and shaking an idea that is about as firm as half baked cake...still tasty to the hungry and greedy. Why do I think that in about 50-100 years will be going through the same shit over water?

To: yard_man who wrote (101895)	5/14/2001 2:35:51 AM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

Very elegant and thoughtful post, Tip...I've been stroking my chin pondering this for some time. The contract path is key, and that puts transmission issues front and center. Certainly a (larger) incentive to reduce demand is in order in the short run, ie, higher rates throughout the grid structure. It's also clear that the government should quit threatening the generators with Californication, ERRR, NATIONALIZATION, if they expect them to invest billions of ClownBux locally on new generation AND transmission capacity. Hard to say if "efficient" pricing can ever be developed.

To: yard_man who wrote (101895)	5/14/2001 9:28:45 PM
From: Art Bechhoefer	Read Replies (6) \| Respond to of 436258

Tippet, you stated, "I still think there are some valid arguments that the business remains a "natural monopoly" and that competition cannot allocate resources properly -- i.e. with the lowest overall cost / best overall benefit to society." Right you are! As part of my doctoral program at the Univ. of Mich., I published a paper in 1976, entitled, "The Dynamics of the Regulatory Process," which argued that where no real free market exists, a regulated firm has a greater likelihood of outperforming an unregulated firm because regulation forces a company to take a longer term view of return on investment. Regulation is essential whenever there is no free market or only an imperfect free market. A free market requires numerous buyers and sellers, such that no single transaction can alter the price of goods or services by itself. That sure isn't the case in Califnornia. A free market also requires low cost, timely access to information, so that all the prices and factors driving prices are known to all buyers and sellers. In an electric utility market, the capital requirements are so huge that entry is restricted to only a handful of companies. Without numerous sellers of electricity, there can be, by definition, NO FREE MARKET! No wonder deregulation doesn't work well. If California regulators had taken a longer term view, they would have seen the folly in forcing California companies to divest their generating plants, for in the long term, the demand in California and elsewhere has been outpacing the supply. The answer isn't necessarily building more plants, especially if one tries to alleviate short term shortages. Higher prices, as any Economics 101 student knows, will ultimately reduce demand, which makes one wonder why some people want to REDUCE government taxes on gasoline and oil. Beyond that are a host of decentralized alternatives, such as wind and solar power, which are now competitive, at least in places where there is an adequate supply of sunshine and wind. The nuclear power alternative that the Administration is now pushing is also questionable because NO ONE knows what to do with the wastes. Nuclear power itself is clean and reasonably priced, until one factors in the cost of perpetual care for the wastes. If you don't hear the Administration talking about waste disposal, you might infer that maybe they haven't figured that one out either. Of course, as a person in charge of energy conservation research at the Urban Institute in Washington, DC several years ago, I am obviously biased. And as a planner who did a portion of his doctoral work on energy regulation (not deregulation), I obviously know nothing compared to the hot shots who are running the show now. Art Bechhoefer