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To: portage who wrote (105510)	5/30/2001 11:11:11 AM
From: LLCF	Respond to of 436258

<The energy wolves quickly learned how to game the system -- testing it by moving prices from $1 per kwh to $5,000 per kwh to $9,999 per kwh in the blink of an eye by manipulating supply. Meanwhile closing down plants strategically to ensure a shortage, even when 1/3 of the generating capacity is already off-line. Haven't you been reading the reports from FERC's own analysts proving as much ?> Your first sentance is certainly correct... the sharpies learned first and traded the pant's off the dinosaurs. However, the implication that there is no REAL shortage of energy is bunk IMO. dAK

To: portage who wrote (105510)	5/30/2001 11:52:29 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 436258

p - >>You are asking for a chimera. Contrary to widespread belief, economics is a soft social science, neither a hard physical science nor a mathematical one. Then why should we believe you ?... In this context, soft simply means that neither mathematical relations nor controlled experiments are applicable. Essentially all of economics can be logically derived from the single assumption that human beings act in order to try to improve their lot as seen from their own point of view. ...This ain't about a normal market. It's about a basic necessity that was foolishly tinkered with by a Republican governor to aid big industry, without meaningful input from the other 99% of the population. The energy wolves quickly learned how to game the system -- testing it by moving prices from $1 per kwh to $5,000 per kwh to $9,999 per kwh in the blink of an eye by manipulating supply. Meanwhile closing down plants strategically to ensure a shortage, even when 1/3 of the generating capacity is already off-line. Haven't you been reading the reports from FERC's own analysts proving as much ? This is a recipe for reasoned regulation of market power and correction of a dysfunctional system if there ever was one. P.S. the natural gas prices were not capped as of this winter, and our electricity rates have been raised by 50%. New plants are being built left and right. Then you get a friendly white house preparing to support the gouging while blathering that it will just raise prices if they reign in the abuses in the short run blah blah blah (like a one year 1,000% increase in wholesale prices already isn't raising them). The kind of stuff that would cause Bush to send in troops if OPEC tried it. The eruption when thousands of small businesses go broke and homeowners can't afford the $900 per month bills after cutting their usage from second lowest per capita in the country by another 10-20% will be interesting. Then you're talking about actual people instead of theories. If your point is that the California problem is due to politicians of both parties, as well as corporate executives seeking favors, and suppliers trying to take everything they can get, that seems like a given, hardly worthy of discussion. However, wholesale price caps are both absurd and unnecessary. If you can prove that the wholesale suppliers have violated any laws, you have my complete encouragement to line them up in the front of the same firing squad that should deal with the politicians of both parties and their friends that produced the mess in the first place. But gouging, even if true, is only a symptom of the real problem, the retail price controls. I happen to agree with the notion that the supply of electricity, along with other utilities, does not lend itself at all well to completely free markets. This is due to the sunk capital cost of existing infrastructure raising high entry barriers to competition with conventional technologies, as well as to issues with property rights. However this is no excuse to completely ignore the basic reality of prices, supply and demand. Electricity is a scarce good. If you aren't going to use prices to allocate it to its most urgent uses, do you propose bribes to politicians instead? In fact, it is only the marginal price that is important. If you want to fix prices for essential baseline uses, that is fine. If you want to provide low income families with vouchers, that, again, is fine. What cannot be avoided is the need to allow the marginal price of peak usage to fail to reduce demand to the level of supply. It would seem to me to be inconsistent to someone to call for voluntary conservation and not to believe that even modest increases in marginal pricing would not provide comparable additional savings in demand. Regards, Don

To: portage who wrote (105510)	5/30/2001 12:05:15 PM
From: yard_man	Read Replies (2) \| Respond to of 436258

>>.testing it by moving prices from $1 per kwh to $5,000 per kwh to $9,999 per kwh in the blink of an eye << Need to recheck your numbers there ('normal prices' are in the cents/kWh, even in California), but I'm not sure if price caps would work -- at some point you would have to relax them or go permanently back to regulated prices -- but if you are to relax again, who will invest capital on that promise? Either guarantee a small "almost riskless" return under regulation (really not as bad as some think) or the oppty to squeeze enormous profits. Either way they'll overshoot and wind up building too much capacity. I like free markets, but they (Ca) never intended to go there, there also may be some real fundamental impediments to getting there, and the transition is so very important. California is just a demosntration of how not to do it. That's all. We experience volatility, too, but it hasn't crippled us in the midwest ... Under normal economic circumstances California's mistakes would have been self-correcting and not a huge deal, but the timing is simply awful with the contraction in hi-tech and other problems.