Subject: Re: California blackouts and conservation From: [EMAIL PROTECTED] Date: Thu, 18 Jan 2001 18:17:04 -0700 Patrick, I'm sympathetic to your plight and those of other Californians = suffering through the "dangerous and colossal failure" that is California's = attempt at electricity market de-regulation. However, I must disagree strongly = with your first statement. I would also suggest that we view this process as = one of changing regulations, rather than de-regulation, which is a = misnomer. All legitimate markets are regulated. Think for example of the New York Stock Exchange, or the Chicago Board of Trade's commodity exchange. = These "free markets" are heavily regulated, by state authorities, by the Securities Exchange Commission, by the body of contract law which = supports transactions, and, in the example of commodities, by product quality = and safety standards. Many jurisdictions are changing the regulation of electricity markets to allow for competition; none are creating free-for-alls which provide for no protections. My understanding of the situation is that the California has a very = tight supply demand balance, with no new generation (clean or dirty) having = been developed in the past decade. Electricity transmission = inter-connections into the state are constrained as are natural gas pipelines. In those = 10 years, demand has grown considerably. When California restructured its electricity system it provided for wholesale competition, allowing the wholesale price for power to vary according to the forces of supply and demand. However, California did = not allow these prices to be passed on to consumers, shielding consumers = from efficient price signals. In efficient markets, remember, high prices = are signals for scarcity; if consumers see high prices we expect them to = modify their behaviour, reducing consumption during peak hours (e.g., turning = off the lights, washing clothes in the evening, and setting electric water heaters to operate during off-peak night-time hours). Since consumers = were insulated from these signals in California, we might have expected that they would have no incentive to conserve. A recent poll suggested that almost half of Californians felt that there were no problems with electricity supplies in the state. And why should they? They haven't = had to pay the true cost of power; for the most part, they would have no idea = what the situation was. At the same time, responding to political expediency, the California = system operator imposed caps on maximum wholesale prices, providing further disincentives for generators to develop new supplies in the state. = Combined with some of the most stringent siting requirements in the world, this situation has effectively barred the construction of new generation in California, where (as the current situation illustrates) it is needed = most. Of course, it's complicated and I'm giving the counter-argument in = simple terms; but I hope you will agree that there is at least a = counter-argument to the one you presented. In any case, I'm sure we can agree that California has blundered, and blundered badly. In other jurisdictions, it has gone much better. In Australia, prices = are stable and declining since market restructuring and privatization. Also = in Scandinavia and Great Britain. In the United States, succesful market restructuring has already occurred in Pennsylvania, New Jersey, = Maryland, New York and the New England states. We're not seeing these stories in = the newspapers. If we want conservation, the most direct way to influence appropriate behaviour by consumers is at a minimum to allow them to see the true = price of the products and services they consume. In LEAD Canada, there are a number of us employed in the energy = industry. I'm sure we'd be delighted to continue this conversation. Regards, Adam White LEAD Fellow (Cohort 4) and Manager, Regulatory Affairs TransAlta Energy Corporation WHAT WE CAN LEARN. 1. Private markets work well for some things but not for a necessarycommodity like energy. Government regulation is necessary to preventpredatory supplier behavior (the power suppliers were willing = to riskthe welfare and jobs of 40 million people and the sixth largest economyin the world to continue making obscene profits. 2. Conservation is absolutely necessary. 3. Sustainable economic development must include conservation of = energy and alternative sources. 4. There is a sustainable business in energy conservation and alternative sources. 5. There are some lessons here that can be useful to LEAD, and = whichwill undoubtedly be taught when LEAD USA starts up later this year. Dr. Patrick O'Heffernan Director of Development LEAD International www.lead.org 415-721-0738 --------------------------------------------------------------------- Mulai langganan: kirim e-mail ke [EMAIL PROTECTED] Stop langganan: kirim e-mail ke [EMAIL PROTECTED] Archive ada di http://www.mail-archive.com/[email protected]
