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To: yard_man who wrote (103130)	5/18/2001 9:40:01 AM
From: Ilaine	Respond to of 436258

>>I would replace assurance with "reasonable expectation" or "reasonable opportunity to earn a return." Shows how conditioned I was by my former life as a regulator ...<< If the risk of failure of high, then the expectation of return must be correspondingly high. Take, for example, drilling for oil. Even today, with all the new seismic equipment, exploration well completion rates is between 30% and 40%. That's a lot of money to spend pounding sand. Governments are perfectly content to let capitalists take the risk of failure in the oil patch. I don't see any regulators guaranteeing them a "reasonable expectation" of a return there.-g- The way you describe the transmission of electricity sounds very different from an entrepeneurial activity to me. It ought to be low risk, and if it is going to be heavily regulated, anyway, maybe it's something that governments should do, like providing and maintaining roads and interstate waterways. The Federal government built and maintains the interstate highway system - actually I guess the states did, with Federal money - that seems like the most analogous model. Lots of generators, using transmission lines as if they were "free" highways. But as you point out, analogizing doesn't really work in real life. I would foresee a problem here because of the difficulty in getting price information from the generators to the consumer and consumption information from the consumer to the generators and vice versa. No feedback loops. To me, the only thing that would make sense - because consumers don't want to be "gouged" by paying high spot prices during shortages - and don't want blackouts, either - would be long term contracts, negotiated way in advance. Then the generators would know how much to produce and the consumer would know what the price was.