tippet, I meant megawatt hours, not kwh - my addled brain couldn't remember the exact details from the article or find the link as I was trying to get the post off before rushing out the door this morning. But my point remains the same, and here's the quote and link --
sacbee.com
On July 9, 1998, the price for reserve power needed by the ISO was running at $1 a megawatt hour and was
being tracked on computer screens in the market operations department of the agency.
A staffer hurried up to ISO chief executive Jeffrey Tranen with a note. The $1 price tag, set by the power
generators, had shot up to $2,500. Then, just as suddenly, it spiked again to $5,000, where it stayed for three
hours.
After that, it mysteriously dropped again, all the way back to $1.
Four days later it happened again, but this time the price went to $9,999 and stayed there for four hours. Then it
dropped to a penny.
"All of us saw those numbers and realized ... there was nothing to stop someone from bidding infinity," said
Tranen, now a software executive.
>>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.
I generally like free markets too, and deregulated ones where it makes sense. I think the airline, freight transportation, and telecom deregs have mostly worked ok, although the jury may still be out as the weak get shaken out, cost cutting leads to safety hazards, and new consolidation may just reinstate market pricing power. The local exchange carriers, cable companies, and some others in telecom don't seem to have much problem holding on to their monopolies though -- but the implications of this are not as serious as when things goes awry in energy markets.
Now the California situation may just be a demonstration to you and others, but these guys are seriously f*cking with us under conditions that are outrageous, with no checks or balances. They may think it's all a grand game behind their little computer monitors, but we don't. The big price increases haven't hit yet, but when they do, some people playing this thing on us are in for a surprise. When people out here get pissed, sensing abuse, they are not nice compliant little fools who just take it and move on.
As this story gains momentum outside our confines, people elsewhere are going to start wonder what's going on in DC, and if they could be next on the hit list of the energy barons and their pals. References to Path 15, ISOs, and the CEC may make people's eyes glaze over, but when they start hearing the analogies to a gallon of gas that cost $1.50 last year costing $15 - $18 a year later, they will relate and start questioning what's going on to allow this to continue out here.
David Freeman, the new head of the state's energy program, was on the News Hour tonight, and mopped the floor with some apologist for the gougers who used old, outdated, bogus arguments and evaded some questions while lying or misleading about others (he said FERC had found no evidence of manipulation, LOL).
Bush keeps repeating his mantra, no doubt developed and approved by committee, that : "Price caps do nothing to reduce demand, and they do nothing to increase supply" - this is hot air, as it may be true in the long run, but it does not address the short term problem of runaway gouging, as Freeman also pointed out. It really obfuscates by never defining price caps -- refusing to acknowledge that it could be capped at 20% higher than in the rest of the country, and would still be way below the outrageous unlimited spot level gouging prices -- without driving investment away. Several articles have said as much, and here's one of them :
This postulates that -- "If prices were capped at a level high enough to ensure a decent profit, but lower than their recent level ...It's even possible that shortages would grow milder, because price caps might remove the incentive for generators to drive up prices by withholding supply.
washingtonpost.com
The last two lines of this article speculate on a classic cut off your nose to spite your face scenario, which would be the supreme irony of the whole thing if it happened. |
