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To: Lazarus_Long who wrote (1876)	8/15/2003 6:29:14 PM
From: TimF	Respond to of 7936

longharvest.com Message 19214569

To: Lazarus_Long who wrote (1876)	9/4/2003 3:33:52 PM
From: TimF	Respond to of 7936

The Failure of State-Designed Markets Message 19271562 "...Power Market Design Since the failure of the reregulation of the electric power market in California, the Federal Energy Regulatory Commission has proposed "harmonizing" US wholesale power markets. Their justification for potential standardization of the wholesale power market is based on the same tired argument that markets just don't work. According to a FERC white paper on the Wholesale Power Market Platform [iv] issued this year: …short-term wholesale markets with transparent prices and market structures that will reliably produce just and reasonable prices are not likely to develop without strong Commission action. Wholesale electricity markets do not automatically structure themselves with fair behavior rules, provide a level playing field for market participants, effectively monitor themselves, check the influence of market power, mitigate prices that are unlawful, or fix themselves when broken. We have heard this type of argument before. It goes something like this. Government "deregulates" market. Market fails under "deregulation." Government must place stronger restrictions on a process to correct its failures and shortcomings. Of course what is lost in this whole argument is that the government's original regulations caused the initial problems. Also, it is never mentioned that after "deregulation," the government is still regulating the market. In the case of electric power, there is still massive Federal regulation of the transmission system and massive state regulation of retail markets despite the deregulation of wholesale. To the one-dimensional economic thinker, a "deregulated" wholesale market can exist or be expected to exist independently and effectively from the transmission (electricity transportation) and retail markets. Therefore, according to FERC, since "deregulated," "unhampered" markets for wholesale power are failing, FERC needs to step in and make it function "properly."..."