> >  A slightly different perspective from the pro-market Cato
> Institute:
> >
> >  From http://www.cato.org/dailys/01-23-01.html
>
> Of course, the Cato Institute is the think-tank mouthpiece for the
> deregulatory idealogues, and it's always good to know that
> sort of bias before reading anything that they might say, or reading
> anything from anyone.

I wrote:
"A slightly different perspective from the *pro-market* Cato Institute:"
(Added emphasis)

As you can see, I did clearly indicate that the Cato Institute was a
pro-market organization.  But this is good advice and I always try to know
the source of information to understand the interests of the writer.  It
comes in very handy when I am getting information from the New York Times,
NPR, The Union of Concerned Scientists, CNN, CBS or an evolutionary
ecologist - like my wife.  ;-)

> Nonetheless, the solution proposed by the article that Mark
> references is about as dumb an idea as you could imagine.

Oh, I bet Gray Davis could come up with something, like buying long term
contracts when the price is at its high.  :-)

> It is a complex, technological
> fix whose only advantage is that is congruent with their
> philosophy: in a
> wholly deregulated environment, every consumer, including the
> homeowner,
> becomes a free agent, essentially bidding on the
> instantaneous price of
> electricity. If the instantaneous price becomes too high, the
> consumer will recognize that price excess and switch to some form of
> locally generated
> power, perhaps with locally sited fuel cells or photovoltaics
> on the roof, in
> essence making every neighborhood in the US the technological
> equivalent of the Chicago Board of Trade commodities trading floor.

That's right, it is essentially the same complex technological method used
to buy food, clothing and gasoline.  The only difference is that the article
talks about being able to do it very rapidly, i.e. in real time.  Of course,
one would not have to use such a fine time slice.  The price of electricity
could be sold in hourly or 15 minute units and one would still see some
benefit.  Residential rates could be set by season or temperature.  Here in
Michigan, the electric companies will install a second line for your A/C
that has a lower price but can be cut off for periods of time via radio
signal I believe.  So, in essence, there is already two prices.

> We also looked at fixed point fuel cells running off of
> natural gas, and they
> looked very attractive as well. If the California
> deregulatory mess did march
> its way back to us, bringing third-world power conditions to what had
> previously been a stable and predictable power supply, we would have
> definitely done this. But, as it occurred, the balkanization
> of the grid
> began about the same time and most of the western states
> stopped their march towards deregulation.
>
> We're just barely large enough and technically adept enough
> as a company to
> contemplate doing all of this. It doesn't even begin to be a
> reasonable
> solution for every homeowner, especially among the poor.

That's one of the cool things about the market place.  Someone is going to
want to do it for the homeowner/sub division/business if they don't want to
do it themselves.

http://www.plugpower.com/product/
http://www.gm.com/cgi-bin/pr_display.pl?2403

> Nonetheless, for a
> one-time investment of $100,000, we would have been free of
> the vicissitudes
> and instabilities of a free-for-all market economy.

Actually, you would be taking part in the free-for-all economy and for
$3K-$5K a homeowner could be free from the vicissitudes and instabilities of
the FERC or a well-funded congressman.

http://www.achrnews.com/CDA/ArticleInformation/coverstory/BNPCoverStoryItem/
0,1336,8885,00.html

> Even more interesting, if
> the situation had become really bad, California-squared, it
> would stirred a
> great deal of research into methods to make every consumer
> its own local
> power producer, breaking the grip of the Enrons of the world,
> exactly as the
> the most free-market of the free-market freethinkers advocate. But it
> certainly wouldn't do it in a manner that was by all means the most
> resource-use efficient, and that's one of the primary reasons
> that none of us are doing it today.

This is where I must respectfully disagree.  Regulation is usually brought
in to "stabilize prices".  If consumers don't feel the pinch, they will not
be motivated to do much at all.  High prices serve two purposes: encourage
conservation and promote others to provide the resource.  In California we
see regulation undermining these two goals.  We claim we want consumers to
conserve, but we keep the product cheap.  We also restrict new sources of
the resource through licensing and by putting those who provide the resource
into bankruptcy.    With the price fixing, there is no incentive to conserve
or to find a new source.  Not until all hell breaks loose do regulators
decide to act.

Mark 'the ideologue' Wonsil



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