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Sayhey
Sep 2, 2003, 11:54 AM
The NYT has this column on the settlement of the companies who gouged California during the blackout crises:

http://www.nytimes.com/2003/09/02/opinion/02KRUG.html?th

I would draw your attention to the bottom line in this quote:

Yet the charges energy companies agreed to added up to only a bit more than $1 million. That is, the average Californian was bilked of more than $250, but the state will receive compensation of about 3 cents.

Isn't it great to know our Federal Regulators are looking out for California consumers?

zimv20
Sep 2, 2003, 12:09 PM
i like his analysis on deregulation:

There is a theoretical case for a deregulated electricity market. But making such a market work, it's now clear, requires at least three preconditions. First, it requires a robust transmission system, yet the recent blackout made it clear that we have now created a system in which nobody has clear responsibility for the transmission network. Second, it needs a watchdog agency with adequate powers to prevent and punish price manipulation; FERC doesn't have those powers. Third, that watchdog must not be an agent of the very companies it's supposed to be policing. Enough said.

mcrain
Sep 3, 2003, 12:30 PM
Well, considering we have no idea what Cheney and the Enron types did in their little secret meetings, how do we know whether or not the Bush administration is an agent of the energy companies?

IJ Reilly
Sep 3, 2003, 12:36 PM
Originally posted by Sayhey
Isn't it great to know our Federal Regulators are looking out for California consumers?

That'll show us for voting for the wrong guy.

pseudobrit
Sep 3, 2003, 05:13 PM
Originally posted by mcrain
Well, considering we have no idea what Cheney and the Enron types did in their little secret meetings, how do we know whether or not the Bush administration is an agent of the energy companies?

They promised. Isn't their word good enough for you?

Frohickey
Sep 3, 2003, 08:51 PM
Ahh...

Another biased tirade from liberal Paul Krugman.

In the California energy crisis, there was no failure of the transmission grid, here, Paul Krugman is confusing recent history with past history. What caused the energy crisis is shackling power companies to buying energy in the spot market instead of making long term contracts... this is not deregulation.

A watchdog agency already is there to prevent price manipulation, its called the Federal Trade Commission, and such acts are investigated by the Justice Department. This is what happened to Microsoft.

As to preconditions to a deregulated energy market, there is only a handful of preconditions. One is a true deregulated market, allowing power providers to make or not make long term contracts. Also to make or not make power generation plants on property it owns without the burden of ligitation threats by parties claiming environmental or other imaginary perceived harm. Another is a fair way of compensating the owner of the transmission grid for using it to deliver power. This could be via contracts or outright purchase of the transmission grid. And finally, clear and concise billing that shows the amount charged per kilowatt-hour. Ever looked at your electricity bill, and wondered why all of these charges are there? Couldn't it be displayed as a cost per kilowatt-hour, like you see displayed on supermarkets for a can of Spam? Then, you would have various companies advertising their prices.

zimv20
Sep 3, 2003, 08:59 PM
Originally posted by Frohickey

A watchdog agency already is there to prevent price manipulation, its called the Federal Trade Commission, and such acts are investigated by the Justice Department.

do you feel the ruling against the energy companies is fair and just?

wwworry
Sep 3, 2003, 09:33 PM
Originally posted by Frohickey
Ahh...

Another biased tirade from liberal Paul Krugman.

....

really, can anyone defend what the energy companies did in california? Maybe it was "legal" but a lot of people got screwed and the energy comapnies made a LOT of money off it. There is a lot of eveidence of price gouging.

I agree that California deregulation was flawed.

IJ Reilly
Sep 4, 2003, 12:23 AM
Originally posted by Frohickey
A watchdog agency already is there to prevent price manipulation, its called the Federal Trade Commission, and such acts are investigated by the Justice Department. This is what happened to Microsoft.

No, it isn't. The FTC is part of the Commerce Department. The FTC took up the Microsoft question back in the early 1990s, but deadlocked and was unable to produce an outcome. Shortly thereafter, the Department of Justice began its investigation of Microsoft, and we know how that worked out. The agency charged with overseeing energy pricing is called the FERC. When it became apparent that the energy traders were gaming the California market, the state pleaded its case to the FERC, which ignored the issues being raised. More recently, in the face of overwhelming evidence, the FERC admitted that something was wrong, but refunded to the state only a tiny percentage of the money the energy traders had stolen from California's rate payers.

It's nice work if you can get it.

Frohickey
Sep 6, 2003, 10:47 PM
Originally posted by wwworry
really, can anyone defend what the energy companies did in california? Maybe it was "legal" but a lot of people got screwed and the energy comapnies made a LOT of money off it. There is a lot of eveidence of price gouging.

I agree that California deregulation was flawed.

Only way that people got screwed was when Gov Gray 'Recall-Me' Davis decided to use the state's coffers to pay for electricity. What should have happened is that electricity prices should have been allowed to rise to drive down demand.

When you have multiple companies that some claim to have been conspiring to drive up prices, its pretty simple to use simple GREED to fix the solution. Let prices rise, this will drive down demand. If the prices were artificially high, then some enterprising GREEDY power provider will undercut their competitors to get a bigger slice of the shrinking pie. Consumers get a better deal since prices dropped. Now, and multiple GREEDY power providers jockeying for marketshare, and you get more lower prices until prices and demand/supply are in balance again.

Power 'deregulation' where prices are artificially capped/floored is a market distortion, allowing all sorts of shennigans to occur.

IJ Reilly
Sep 7, 2003, 12:17 AM
Nonsense.

It isn't a question of "claiming" conspiracy, it's already been proven. It isn't a question of whether we've been robbed, only the amount is in dispute.

Ugg
Sep 7, 2003, 01:07 AM
Originally posted by Frohickey
Ahh...

Another biased tirade from liberal Paul Krugman.

In the California energy crisis, there was no failure of the transmission grid, here, Paul Krugman is confusing recent history with past history.
.

False. The lack of sufficient transmission capacity north of Sacramento made it impossible to buy power from Oregon and Washington. Had there been sufficient capacity some of the fiasco could have been avoided.

Ugg
Sep 7, 2003, 01:11 AM
Originally posted by Frohickey
When you have multiple companies that some claim to have been conspiring to drive up prices, its pretty simple to use simple GREED to fix the solution. Let prices rise, this will drive down demand. If the prices were artificially high, then some enterprising GREEDY power provider will undercut their competitors to get a bigger slice of the shrinking pie. Consumers get a better deal since prices dropped. Now, and multiple GREEDY power providers jockeying for marketshare, and you get more lower prices until prices and demand/supply are in balance again.



So we were supposed to unplug our refrigerators, go without hot water and essentially be forced back into the stone age in order to drive prices down. What about those who rely on electricity for their jobs? "OK, everyone, you're all on unpaid leave until those market forces bring electricity prices back to the levels where we can afford it again."

Get real, electricity has become an integral part of daily life, while most of us can get by with less, the reality is that electricity has become as important as air and water in our everyday lives.

Sayhey
Sep 7, 2003, 02:18 AM
Originally posted by Frohickey
...What should have happened is that electricity prices should have been allowed to rise to drive down demand.


Frohickey, free market forces don't work in cases of monopoly or fraud. These corportations, starting with Eron, fraudulently manipulated the market to gouge consumers to the tune of billions of dollars. Now they are getting away with it for a fraction of penny on the dollar. Somehow, I don't think our problem is that we didn't just turn our electricity needs over to the "wisdom of the market."

IJ Reilly
Sep 7, 2003, 01:27 PM
Originally posted by Ugg
Get real, electricity has become an integral part of daily life, while most of us can get by with less, the reality is that electricity has become as important as air and water in our everyday lives.

Demand for electric power isn't entirely inelastic, but it's not very elastic either. Significant reductions require major investments on the part of industry and homeowners, and this won't occur over night. We went on a major campaign at our house, replacing all of the high-service light bulbs with compact fluorescents, and buying a new refrigerator. The CRT displays on our computers were replaced with flat panels. Our energy consumption is down only about 15% and the cost of getting there was pretty huge.

Overall, Californians did drive down their energy consumption during this (artificial) crisis by around 10% if memory serves. I didn't matter much because demand hadn't been up significantly before the crisis started, and demand wasn't the reason it happened. The cause was the manipulation of supply by the energy traders.

Frohickey
Sep 11, 2003, 08:28 PM
Krugman the Keynesian (http://www.freerepublic.com/focus/f-news/980765/posts)

This is harsh criticism, I realize, so I must explain my views in full. Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity.

Sayhey
Sep 12, 2003, 01:00 AM
Frohickey, the quote from Mr. Anderson only shows his own political bias. To describe Krugman as a "socialist" is just silly. Because an economist believes in regulation and government intervention in the economy doesn't make him a socialist. If Krugman was advocating the government take over of industry - that would qualify him as a socialist. Of course, Mr. Anderson's work with the Ludwig von Mises Institute, named after the guru of Libertarianism, would eliminate him from any bias, right?

Frohickey
Sep 12, 2003, 05:13 PM
Nope. Of course not. The Von Mises institute is a known libertarian think tank.

Desertrat
Sep 12, 2003, 08:40 PM
Ugg, you commented, "The lack of sufficient transmission capacity north of Sacramento made it impossible to buy power from Oregon and Washington. Had there been sufficient capacity some of the fiasco could have been avoided."

This may well be the case, although I've read that part of the problem was a general decrease in the amount of hydropower available from the Columbia River (drouth; low flow) and the refusal of Oregon and Washington states to sell beyond local surplus.

At any rate, if capacity was an issue, you might ask why that was the case. California's need for an additional six thousand megawatts of either generating capacity or import-supply in the 2000-2010 period has been discussed for quite a while.

When you add up a shortage in supply, an increase in demand, and government intervention in the market place, how come the usual answer to an Eco 101 question is "More gummint regulation!"?

:), 'Rat

pseudobrit
Sep 12, 2003, 08:51 PM
Originally posted by Frohickey
Nope. Of course not. The Von Mises institute is a known libertarian think tank.

Do you see the fallacy of using an openly biased source to dismiss him as a biased source? Twice on this board?

If you don't like the message and you can't argue with it, shoot the messenger.

Sayhey
Sep 12, 2003, 08:53 PM
'Rat, how come you excuse the ultimate in government intervention, the invasion of another country, to guarantee stable oil prices, but when it comes to stable energy prices in California through government intervention to stop illegal manipulation of the market, you are all against it? Seems to me to be a contradiction, my friend.

I think that some commodities, like electrical energy, are so critical to all sectors of the economy, we can not just allow market forces to go through the wide natural swings they would take, much less let companies get away with highway robbery.

Ugg
Sep 12, 2003, 11:50 PM
Originally posted by Desertrat
Ugg, you commented, "The lack of sufficient transmission capacity north of Sacramento made it impossible to buy power from Oregon and Washington. Had there been sufficient capacity some of the fiasco could have been avoided."

This may well be the case, although I've read that part of the problem was a general decrease in the amount of hydropower available from the Columbia River (drouth; low flow) and the refusal of Oregon and Washington states to sell beyond local surplus.

At any rate, if capacity was an issue, you might ask why that was the case. California's need for an additional six thousand megawatts of either generating capacity or import-supply in the 2000-2010 period has been discussed for quite a while.

When you add up a shortage in supply, an increase in demand, and government intervention in the market place, how come the usual answer to an Eco 101 question is "More gummint regulation!"?

:), 'Rat

The PNW with its ample supply of federally funded hydropower (The BPA) has always supplied CA with power when it had extra. The PNW also trades back and forth with BC and Alberta. It is true, that due to low water flows that year, the PNW had less to sell to CA than usual, but a couple of new plants in Oregon had gone online that year and were unable to sell excess capacity to CA due to insufficient transmission capacity even though they built them with that in mind.

The bottleneck has been a problem for years and is a result of nimbyism, regulation, the lack thereof, the explosive growth of energy intensive high tech companies, no federal or regional overseer of the transmission lines, etc, etc.

The power system in the US is in a mess, I think we can all agree on that but the lack of a cohesive, long-term plan is what caused the problem. Isn't that what government is all about, to ensure that all the bits and pieces fit together?

The transmission grid is the ugly little sister that no one wants tagging along but without it, we are all lost. How do we solve it? I dunno, but it sure ain't gonna happen if the govt. throws in the towel.

wwworry
Sep 13, 2003, 08:39 AM
Yes there is no money in building transmission capacity. Californina demonstrates that lack of capacity can actually drive up profits, not to mention faux lack of supply. From the way some people talk you'd think govt. regulation was a dirty word.

Desertrat
Sep 13, 2003, 10:30 AM
My problem is not with governmental regulation, in and of itself. My problem has to do with the "one size fits all" and "cast in stone" nature of the regulations or the thinking of those in the bureaucracies. I say this because of my own eleven years' experience in a state agency in Texas, and four years of working with various state and federal people in numerous environmental agencies.

One problem I know of as to transmission of electricity is that of population shifts. Demographics. Ugg's comment, "The bottleneck has been a problem for years and is a result of nimbyism, regulation, the lack thereof, the explosive growth of energy intensive high tech companies, no federal or regional overseer of the transmission lines, etc, etc." certainly applies. However, the Nimbyism and threat of lawsuits over various issues--environmental, e.g.--has meant that federal or regional oversight couldn't help. The world's best plan is easily stalled for years by a lawsuit.

Look. The Texas Coastal Zone Management Program had a Citizen's Advisory Council. It included every identifiable special interest on the Texas coast. We had folks from USF&WS, Natl Marine Fisheries, the head of the Texas Env. Coalition, and the head of the Audubon Society included. We also had politicos and industry people, plus farmers/ranchers. We had over 20 public hearings all up and down the coast for over two years, for "just folks" input.

Didn't keep individual Sierra Clubbers from threatening lawsuits because we weren't doing enough to protect some danged thing or another...

So I dunno. I've worked on two major planning efforts. I guess that at some point you get hard nosed and just figure to do the best you can for the most people you can, and to hell with the naysayers...

Frankly, I'm not sure that you don't get equal results from back-room deals as you do from broad-spectrum public-input "plans". Sometimes I think maybe it's better for the "crooks" to make some money up front and get a job finished, than to be ten years behind and a lot more crooks make a lot more money--as happened in California.

'Rat

'Rat

mactastic
Sep 13, 2003, 10:44 AM
You know what 'Rat... There certainly are Sierra Clubbers who threaten lawsuits, but there are also "to hell with those environmentalists" developers who build things they know they could never get past the city council and just wait to pay the fine for their misdeeds. It's the "It's easier to ask for forgiveness than for permission" attitude I've run into among developers many times. I'm surprised you only see one side of this issue.

Desertrat
Sep 13, 2003, 10:56 AM
It's less government regulation itself that's the dirty word; it's how regulation is performed. Much of the problem has to do with the nature of some of the people employed. Same deal as in the military. Regulations aren't seen as guidelines; too many bureaucrats see them as biblical.

I worked eleven years in a Texas state agency, and then spent four years working with state and federal folks on an environmental protection program. Two major planning efforts during that era; one with little public input and one with extensive input from all interest groups as well as the public.

The commonality was that not a lot of real accomplishment came from either. (I'm omitting the very positive aspect of a tremendous amount of new information, which was quite valuable in itself.) Reports on a shelf that don't translate into either necessary public works projects, or into protective legislation, are quite often taxpaid exercises in futility.

You Californios are familiar with the Cal Water Project, right? From Oroville dam to the Delta, and thence down the Aqueduct to Tehachapi? Then, through the mountains to LA? I did the preliminary design and cost estimating for a similar animal in Texas, to take water from the Miss. R. to the high plains of Texas, plus some 62 dams/reservoirs. (Unlike Cali, our deal involved 3,000 feet of lift, so there was no way it could be feasible. I so told the Speaker of the Texas House of Rep, and, natcherlly, got chewed out by my boss. The Speaker later bought me a beer. :D ) But, over time, some 20 of the dams got built, providing municipal/industrial water to Houston, Dallas, Ft. Worth, etc. Some four years of work by many got shelved, although we learned a lot. Business activity projections, population projections, other trends. We built a foundation for what's now going on, some 35 years later.

More, later. Football time.

'Rat

IJ Reilly
Sep 13, 2003, 08:44 PM
Originally posted by Desertrat
It's less government regulation itself that's the dirty word; it's how regulation is performed. Much of the problem has to do with the nature of some of the people employed. Same deal as in the military. Regulations aren't seen as guidelines; too many bureaucrats see them as biblical.

I've never heard of a bureaucrat, governmental or otherwise, who was ever rewarded for stretching the rules. More often, they will be disciplined or fired. The rules have to be "biblical," otherwise interpretation is for sale to the highest bidder. The idea in regulation is to get the rules right and have them be well explained -- not to make bad rules and then find ways to circumvent them.

Desertrat
Sep 14, 2003, 12:09 AM
Pardon the sorta-double post. My software or my ISP was giving me grief, and I thought I had lost the first post about regulation.

mac, I've seen both sides a bunch of times. One of the things I've been good at is interpreting between environmentalists and developers. These two groups commonly talk past each other, with (sometimes) as little understanding as if they were in different dictionaries.

Again: It's not the regulation, it's how it's set up and carried out.

Back in my bureaucratic daze, I wuz regularly getting chewed out for "exceeding my authority". "Who said you could approve (or disapprove) that?" "Who said I couldn't?" "Oh." I always figured if there was some sort of common-sense solution or compromise solution that was within the spirit of the regs, okay. I wasn't always loved, but I wasn't fired.

Here's a freebie: A minimal impact on the flow of water, whether in a stream or across the ground, is a minimal environmental impact. The severity increases as there is an increase in changing the flow. For example, look on either side of any highway built across sloping ground. The impacts are quite visible. (Determining them is left as an exercise for the student. :D )

'Rat

Ugg
Sep 16, 2003, 03:15 PM
Originally posted by Frohickey
In the California energy crisis, there was no failure of the transmission grid, here, Paul Krugman is confusing recent history with past history.

It's soon to be past history:

http://www.pressdemocrat.com/local/california/16electric.html

Construction set to start on grid bottleneck

September 16, 2003

THE ASSOCIATED PRESS


SACRAMENTO -- Financing for the $330 million upgrade to a bottleneck in California's electricity grid is complete, and construction can begin, officials involved with the project said Tuesday.

Energy officials say Path 15, the 84-mile stretch of high-voltage transmission lines in the Central Valley, needs to be expanded to better move power between Northern and Southern California.

The Western Area Power Administration, Pacific Gas and Electric Co., and Virginia-based Trans-Elect formed a unique public-private partnership to build the new line.

With the financing complete, the contractor can begin preliminary work, such as moving equipment in and arranging for suppliers, said WAPA spokesman Dave Christy.

PG&E will pay to upgrade the interconnections so the line can join the existing grid, WAPA will own the lines and maintain them, and Trans-Elect raised $250 million in financing for the line's construction. In return, Trans-Elect gets about 72 percent of the transmission rights on the new line.

Bob Mitchell, president of Trans-Elect's new transmission development arm, said a groundbreaking ceremony would be scheduled to accommodate Energy Secretary Spencer Abraham's schedule.

The Mesa, Ariz.-based firm Maslonka & Associates was chosen as the contractor, Mitchell said.

Grid officials in California say the clogged transmission lines, which narrow from three to two along Path 15, contributed to the state's power woes during the 2001 energy crisis.

Federal regulators authorized a slightly higher rate of return for Trans-Elect. The upgrade, expected to be completed by the end of 2004, is expected to add about 20 cents per month to California electric bills.

Looks like a pretty good solution, public/private cooperation with little cost to the consumer. Wonder what the NE is planning now that they are in the same boat?

Ugg
Sep 18, 2003, 08:01 PM
Link (http://www.nature.com/nsu/030915/030915-4.html)

If they want to stimulate technological innovation, governments must do more than pour money into research, according to a new study. They should legislate in favour of the goal, it suggests.

Regulation spurs technological development, say Margaret Taylor and colleagues at Carnegie Mellon University in Pittsburgh, Pennsylvania1

Frohickey
Sep 24, 2003, 10:30 PM
Originally posted by Ugg
Looks like a pretty good solution, public/private cooperation with little cost to the consumer. Wonder what the NE is planning now that they are in the same boat?

Where do you thing the public sector gets its money from? Its certainly not from boxes of Cracker Jacks! :p