Home Electricity Use in U.S. Falling to 2001 Levels

[SCW-Greg]

When you're paying more per kWh than remote Alaskan communities that rely on diesel fuel flown in on pontoon planes, you know you're paying too much. ;-)

Where's the triple like button for this thread?!

 

[Robert.Boston]

btw, I was thinking of just the power cost, Audubon -- a big chunk of your charge is to pay for the hugely expensive distribution system. When you have such a low density of customers, it necessarily drives up the cost.

 

[neroden]

FWIW, New York's so-called "deregulated" market isn't deregulated at all. I think "deregulated" is a bad word for the things Robert.Boston is advocating.

New York's *competitive* electricity market is created by an extremely strong and long set of regulations to prevent market abuses, and a very active regulatory board which moves in at the first sign of a potential market abuse. You can't have a competitive market without regulation. Regulation is what allows for a functional competitive market with public information, rather than a market with secret information, consisting of scams and people trying to corner the market.

 

[omgwtfbyobbq]

FYI, my firm represented several power marketers in the California crisis, and I testified for one of them; my take on the subject is probably different than the official histories. ;-)

California started with a seriously flawed wholesale market design, which my colleagues saw before they were implemented; the market design, despite these visible flaws, had features that PG&E and SCE really liked, so that's what went in. Enron employees (and others) saw these flaws and drove the proverbial Mack truck through them.

What really compounded the damage, though, was California's decision to enter into long-term contracts at the top of the crisis, purportedly to spur new investment that would introduce competition. The politicos assigned this task to a complete neophyte, who signed billions of dollars of ill-considered contracts, thus prolonging the economic impacts that should have lasted no more than six months to a period of many years. This also laid the groundwork for utilities to return to the business of long-term procurement and, in some cases, direct ownership of new generation -- reversing the course towards market-tested efficiencies.

The retail market closure is a different matter. As soon as you get utilities entering into over-priced contracts, there is an incentive for customers to escape to market-priced alternatives. If the CPUC allowed that to occur, it would stick the utilities with the above-market cost of those contracts with no customers to pay, bankrupting them. Thus, you lucky Californians are held captive to your utilities instead of being provided the retail market choice most Americans have.

Sorry if this sounds bitter, but it's a really sad tale of the worst of both worlds: neither a well-regulated monopoly nor an efficient competitive market.

Well, to each their own. I think it's fair to criticize those plans, but the costs were not from poor designs, but from blatant fraud.

Top Trader for Enron Admits To Fraud in California Crisis

In terms of the electricity market, it's generally good at maximizing profit, but that tends to entail externalizing costs and reduces the efficiency of the economy as a whole. The free market isn't free, so to speak.

When you're paying more per kWh than remote Alaskan communities that rely on diesel fuel flown in on pontoon planes, you know you're paying too much. ;-)

That sounds a bit hyperbolic. Do you have any references for that? The EIA has CA electricity as less expensive than AK electricity, and with much lower Carbon intensity, which makes it more expensive than if the state used a bunch of coal like Alaska and other states.

EIA - Electricity Data

http://www.miloslick.com/EnergyLogger_files/State_Electricity_and_Emissions_Rates.pdf

 

[Robert.Boston]

Well, to each their own. I think it's fair to criticize those plans, but the costs were not from poor designs, but from blatant fraud.

Top Trader for Enron Admits To Fraud in California Crisis

In terms of the electricity market, it's generally good at maximizing profit, but that tends to entail externalizing costs and reduces the efficiency of the economy as a whole. The free market isn't free, so to speak.

I agree that Enron and others were directly to blame, but the poor market design created the opportunity. Had California simply adopted the market design that was in place in New York at that time, Enron et al. couldn't have played those games.

I disagree about your assessment of electricity markets. The wholesale prices now reveal correct marginal costs, and the sharp competition has forced companies to cut the excesses so often found in earlier days at regulated utilities. E.g. David Crane, CEO of NRG Energy, works in a 10' cubicle; nuclear refueling outages take ⅓ of what they used to; and power plants operate with many fewer employees. I'm not sure what "externalized costs" you're thinking of.

 

[omgwtfbyobbq]

They could have, but I don't think states should have design markets to minimize corporate fraud. That's close to victim blame, albeit with entities rather than individuals, and reduces economic efficiency to a small degree. I think the larger issues are inefficient punitive penalties for corporations as well as greater difficulty assigning culpability.

IMO, the bigger issue is the failure of the legal system, but practically, this does mean that entities probably have to take steps to protect themselves, which in this case is designing a system that wasn't as susceptible to fraud.

In terms of the externalized costs, I'm just referring to the usual pollutants. In some cases these costs are absorbed by other entities, eg in healthcare, and those signals do not make it back to the generators so they can correctly account for the costs of their products, and in other cases, those costs are distributed in time (eg CO2), and it's difficult if not impossible for a price signal to reach the market unless a government or other entity takes a shot at estimating/approximating that signal.

http://www.eea.europa.eu/data-and-maps/indicators/en35-external-costs-of-electricity-production-1