Power Outtages

Kylere · Post by **Kylere** » August 19, 2003, 2:36 pm

vn_Tanc wrote:
Deregulation of electricity in California and other states took place on Clinton's watch. The idea was to let the market come up with a better way to allocate production and distribution than the heavily regulated system of yore. Interesting idea. lousy execution
WTF is this? Are you trying to tell me that unrestrained market forces are NOT a panacea for all the world's ills???

Frikkin commie. Go back to commieland!

Considered and careful deregulation is smart, ignoring it all so you can stick a cigar in your intern is priceless

Adex_Xeda · Post by **Adex_Xeda** » August 19, 2003, 3:44 pm

Actually Tanc California only half assed the deregulation.

They freed up half the system to market forces but tried to keep state control on the generation prices.

This inflexiblity lead to the the problems California had.

Texas completed a full deregulation and today has plenty of surplus power, redundancy and affordable rates. It's wooed many a business to come down here.

Again the failing wasn't deregulation, rather California chose a poor plan to deregulate by.

Chmee · Post by **Chmee** » August 19, 2003, 4:54 pm

WTF is this? Are you trying to tell me that unrestrained market forces are NOT a panacea for all the world's ills???

What happened in California deregulation was hardly an example of "unrestrained market forces". For a very good writeup of what happened see the following. It is a pdf file so you will need adobe. Its pretty long, but worth a read.

http://econ-www.mit.edu/faculty/download_pdf.php?id=551

There were a lot of various problems that helped contribute, a spike in natural gas prices, trouble in getting new capacity generation up and running (largely because of difficulties in getting the appropriate permits etc.), increased demand, and yes, some gaming of the system by some players in the market to drive up price.

But the biggest problem was that although the wholesale prices the utilities bought their power from were deregulated, the retail prices the utilities sold to customers was capped at roughly 65 mw/hr. When the prices spiked on the wholesale market, utilities ended up being in a situation of buying power in some cases up to 400 Mw/hr and selling it at 65 an hour. This is a bad business model. Given that fact that power cost the same as always to the end customers, they had no real incentive to cut back usage. Ultimately the state stepped in and negotiated long term contracts with the generating facilities (something the utilities asked to be able to do, but were denied by the state) and raised the retail price caps, Plus some new generation finally came online. That is a very very rough synopsis, as I said before, read the article it does a much better job explaining what was going on. Portions of the system were deregulated, but other portions of it remained strictly regulated, and contributed largely toward the problems.

Chmee · Post by **Chmee** » August 19, 2003, 4:56 pm

Adex said:

They freed up half the system to market forces but tried to keep state control on the generation prices.

Actually the generation (wholesale) prices were what were deregulated. The retail prices paid by the end consumer were what remained regulated.

Voronwë · Post by **Voronwë** » August 19, 2003, 5:04 pm

deregulation is tricky.

Atlanta deregulated their natural gas about 5 years ago and it has been a complete fucking fiasco ever since.