Power deregulation in Kaliforia designed to fail?

O

Ought Six

New member
It occurred to me that there is no way that the power deregulation scheme in Kalifornicateya could ever work. Suppliers can raise prices to any level they wish, while distributors who must buy power from those suppliers are still price-regulated and unable to raise customer charges to cover their costs. This, in a market where the shortage of capacity is a well-known fact. This is a system designed to fail. Why?

The liberal Kali politicos that wrote the power deregulation legislation were forced to do so against their will by popular opinion. By creating a system that would quickly fall into crisis and threaten to drastically escalate costs to consumers, they could sell the idea that the 'free market' is bad (although the distributors have no free market under the plan), and socialist government control of utilities is good. This scare-tactic is designed to reinstitute socialism in utilities not only in Kali, but across the country. This is a brilliant disinformation campaign, portraying this as a failure of free-market capitalism and a triumph of socialist government (mis)management of resources.
 
To say deregulation was designed to fail is to assume the politicians new enough about free market economics to pick and choose damaging provisions.

No, I think this is the result of a typical half-*ssed attempt at stepping away from total gov't control. It failed miserably. Now Prettyboy Gray is able to scapegoat the private sector. He is now free to demogog at will.
 
I have to agree with Waitone - what happened in CA was politics - an attempt to please everyone when the legislation was written instead of coming up with a true free market plan and letting it work itself out. We have it in PA and it seems to work fine.
 
I agree with Ought Six. The politico's new what they were doing. In a free market you can't unregulate the price of the supply and put a price freeze on the selling price. They have known for years that we were headed for short supply. Short supply three things happen.... one the consummer pays more, since with power they can only conserve so much a basic level of usage will result and third as the price increases, more company's will invest to create more power at the higher prices. This is a very basic concept you lean in econ 101. So if it was not planned then why did they have the price freeze?
 
Ought six, you nailed it.

Those pols that should have known better looked the other way, and the rest simply have no idea how these things work. Now they're trying to blame the deregulation for the problem.

Not to mention that Kali is in desperate need for new power plants which the enviro-nazis will not allow.

And now they've proprosed to have the state purchase all of the land-lines from the utilities, effectively removing all of the hard value from them which will eliminate their business and value. Can you say Junk Bonds?

What a mess!

~USP
 
Why won't Red Davis answer the real question?

Red Davis continues to spew forth the veiled story of the de-regulation crap. He always selectively fails to speak to the real problem...of needing new power generating facilities. He continues to dodge the issue because he doesn't want to get the enviro-wackos in an uproar.

I say pressure him and our elected representatives daily (which is what I do through telephone calls to Sacramento) about what they are going to do to create an energy policy that makes sense!

This insane "Government Takeover" of power assets is wrong!
God I hate this Socialist state I was born in!

My countdown continues to retirement in Idaho (2 yrs, 7 mos, 20 days). (THANK GOD)
 
Wow ... interesting articles

I agree that this is a setup. Think about it.

How do most bureaucrats feel about losing power and control? They have little else. They're paid relatively low compensation relative to private sector jobs, but they can retire after 20 years, usually. The real prize? They control the lives of many people, and too many of these bureaucrats enjoy the rush. And, we've allowed them to steadily increase their power over the years.

Read some of James Bovard's books ... he does a great job of detailing the steady growth of government.

Many of us have seen how this kind of thing happens. People working within a system can sabotage it in countless ways. This is always a danger when you don't have buy-in from the worker bees.

So, while I'm hardly an expert regarding CA utility regulation, this is the first thought I had when I heard about their electricity woes. I'm biased. But, I'll bet lunch and dinner that this is a man-made, politically-motivated 'disaster'.

From the articles:
Davis has indicated that he is willing to seize power plants to “force” them to produce cheap electrical power.
Click to expand...
He [Davis] blames the crisis not on the perverse incentives created by California itself, but on evil corporations that refuse to sell power at below-market rates.

In his Tuesday state of the state speech, he asked for expanded authority to sue such companies -- lawsuits being one thing that there will never be a shortage of in California. And he proposed the creation of a new state-owned energy company that would generate its own electricity to sell in California. His fellow Democrats in the state legislature want to go even further, reimposing wholesale price controls and sealing California off from the national power grid so that cheap California power doesn't seep out to other states willing to pay the market price.
Click to expand...

Gun-related? Well, I'll say this ... fascists aren't just fascists regarding the RKBA. Their boundless faith in governmental control, and subjugation of the individual, comes out in all of their policies. If Californian's aren't mature enough to have other than state-approved firearms, then why should we allow them to participate in a free market for energy?

'Course, I'm not entirely accurate on the 'fascist' designation ... Davis is actually moving directly into socialism with his bid for state-owned power plants.

How disgusting. I hope Californian's wake up and vote these turkeys out.

Regards from AZ
 
I have my doubts. Ya'll are giving a lot of credit to the CA state mucky-mucks. I think that they were just bending over for the ecogeeks and now they're suprised that their neighbors aren't giving them electricity welfare. What power plants is Davis going to seize? The ones in Nevada? I guess he's going to sue the power plants in Nevada, too. Or he can sue the California power companies that are almost belly up already. Then he's going to apply even MORE California gubmint wisdom to this mess? I'm sorry, but from this side of the Mississippi, California looks more like the collapsing USSR right now than Great Socialist Britain.
 
They just didn't think it through properly. You can't partially de-regulate a market and expect prices to fall or stay the same. The de-regulated power plants could either sell power to others at a larger bidded price, or they could sell power locally at a fixed price. What would you do?

The gov't prevented the increase in power-generating capacity due to environmentalist demands, and then they circumvented the law of supply and demand by holding the price to a constant. What happens when demand goes up and supply stays the same?

The entire market needs to be de-regulated at once, and prices will stabilize. Then more plants need to be built to satisfy demand and to keep the plants from operating at capacity 100% of the time and to allow for maintenance down time. It's a gov't regulation fiasco and the blame falls on the free market by the ignorant and stupid. We need nuclear power plants big time.

Eric
 
I bailed from Kalif in 1988 because of their "tax-the-auto-owner-to-death" approach as well as just too damn many laws being enacted. You could feel the walls closing in.

I remember talking to some of the smug environuts then who bragged, "Yeah, we don't need any more plants, we can always buy from others. Let them screw up THEIR air." I have little sympathy for the state now.

On a parallel note, I was working in Venezuela when they devalued the Bolivar but froze prices at pre-devaluation levels. Businesses were going under left and right and the pols claimed it was a mystery why.

Stupidity knows no nationality or boundary.
 
Yes, as some have already said in this thread, it's nuts to pretend to "deregulate," while at the same time enforcing a price freeze on the utilities. That's regulating, not deregulating.

Meanwhile, although CA has grown, new power generating facilities have not been built. This, I think, is due to the influence of environmental extremists, as well the atmosphere of regulatory confusion that keeps utilities from making the tremendous investment that new facilities would require.

Meanwhile Ralph Nader, spewing like the socialist he is, says the solution is for the government to take over the utilities. As a matter of fact, the service-oriented CA utilities were doing just fine until the government went too far.

If I lived in CA I'd sure want to run out of office the socialist bums that created this mess.

My 1 1/2 cent.
 
No kidding.....

I live in alberta and my power bill has doubled. We just deregulated too and are facing major problems because we are shipping all of our power south of the 49 to you guys. Same with our water. I think with gas prices the way they are we should all look into solar power. reason enough.............

Canuck84
 
Deregulation has already failed. We are in a "Stage Three power alert at the moment and being threatened with 'rollong blackouts'. The only real question is what can be done abou it.
 
There is a pretty good summary of what went wrong with "deregulation" in the current Reason Online:
http://reason.com/sullum/010901.html

What happened was that Pennsylvania tried a deregulation scheme that worked pretty well, and some Californian potentates decided it might be a good idea to try here. Only what happened was that in the "give and take" of politics virtually every special interest group in the state gave their demands and took their prizes in terms of anti-market provisions.

The California electricity market masquerades as "deregulated" in much the same way as the World Trade Organization masquerades as a "free-trade" institution, or that gun-grabbers masquerade as promoters of "gun safety." (Just to keep this barely on-topic.)

What no one expected was that the wholesale price of electricity would skyrocket the way it has, which is what precipitated the immediate crisis. Of course, the rise is caused by rising demand from our booming economy and static generating capacity caused by myriad governmental regulations.

I think what will happen is the Democrats now in power will clamp on a new ham-handed set of controls. The "crisis" will elongate into a protracted calamity, causing much of the hi-tech industry to leave the state and a regionalized recession (which could spread). If the GOP is smarter than it have heretofore shown itself, it may take advantage of this debacle to make a comeback in 2004. (First it will have to go through a painful purging of existing leaders who are closely identified with the "degregulation" plan.)

In the meantime we should take every opportunity to hammer on the point that what happened was not deregulation, or anything resembling a free-market.
 
There is no solution in the short run. This is a problem created by the Chief Thief, err Executive, Prince Albert, and all the sick, wacko environmentalists. Once again elitists thought they could nullify the laws of economics and physics. Guess who was wrong and guess again who will suffer. I really feel for the people of California because there is no reason for the power crisis they face. This did not sneak up in the last few months. Its been coming on like a freight train for the last 5 years. The same figures available to the legislature predicting population growth and economic activity are available to those responsible "under deregulation" for capacity management. Californina is now facing the consequences of the establishment of a radical environmentalist agenda. For that I'm not sorry. Those who are responsible will do their damnest to shift the blame.

I live in the southeast where we have taken more s*it from the environmental lobby because of the profusion of nuclear power. I'm here to tell ya, California's problems are not our problems. Thankfully we did not surrender to the wacko's even though they are around and quite noisy.

The mess California is in will take a minimum of 10 years to start correct. In the meantime look for distortions in western power in attempts to satisfy Cali. Also look for some major companies to pull up stakes.
 
The short term solution is to let the price be what it may. It's the only way to reduce demand. Power will probably be rationed. CA f'ed itself.
 
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