From: Harvey Newstrom (mail@HarveyNewstrom.com)
Date: Sat Jan 27 2001 - 09:37:19 MST
At 9:32 PM -0800 1/26/01, hal@finney.org wrote:
>Russell forwards a column by James C. Bennett:
>> In California, some dim bulb (so to speak) had the amazing concept of
>> deregulating the prices power companies would have to pay to power
>> suppliers for their power, without deregulating the price at which they
> > could sell power to consumers.
>From what I've read about the crisis, this is not why the price freeze was
>put into place. It was actually done to benefit the utility companies,
>to guarantee them profits. At the time of deregulation wholesale prices
>had been low for decades, and the reason for deregulation was to bring
>down retail prices, which had remained stubbornly high.
I agree with your analysis, as far as I can tell.
What confuses me about this crisis is all the blame on NIMBYs and
environmental laws for causing the problem. The talk of opening up
Alaska and Florida oil drilling also confuses me. Although these
might be worthy issues to discuss, they have nothing to do with the
current crisis. The problem is not being caused by a shortage of
power plants (caused by NIMBYs) or lack or oil (caused by
environmental restrictions on drilling). The problem is a shortage
of money. The power is there, but nobody will pay for it. End-user
prices don't cover the cost of the electricity. The utilities are
bankrupt so they can't pay.
The California utilities had their power cut off because they failed
to pay their last bill. Utilities in other states who can still pay
for power are still getting it. When President Bush ordered the
other states to not cut off power, the power came back on. There is
no lack of power. There is a lack of solvent utility companies.
There is no question about how to get the power back on. The only
question is who is going to pay for it.
-- Harvey Newstrom <HarveyNewstrom.com>
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