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How the Free Market Rocked the Grid

Soulskill posted more than 3 years ago | from the current-events dept.

Businesses 551

sean_nestor sends in a story at IEEE Spectrum that begins: "Most of us take for granted that the lights will work when we flip them on, without worrying too much about the staggeringly complex things needed to make that happen. Thank the engineers who designed and built the power grids for that — but don't thank them too much. Their main goal was reliability; keeping the cost of electricity down was less of a concern. That's in part why so many people in the United States complain about high electricity prices. Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation. After all, many other US industries have been deregulated — take, for instance, oil, natural gas, or trucking — and greater competition in those sectors swiftly brought prices down. Why not electricity?"

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No More Deregulation (5, Insightful)

DarkVader (121278) | more than 3 years ago | (#34662626)

No, the solution is MORE regulation, not less.

The rates need to be regulated, and the private companies need to be taken over by nonprofit public organizations.

Every time deregulation is tried, consumers get shafted.

Re:No More Deregulation (5, Informative)

blackraven14250 (902843) | more than 3 years ago | (#34662648)

No, the real free market solution (a.k.a. the ones politicians would never propose) is that you get a whole bunch of power companies competing on the same grid, attempting to be a lower cost than one another, and give consumers a choice of who to pay for their power. You don't regulate the price directly, or directly control the companies providing the power; that's a recipe for disaster. Granting a monopoly, whether government or private, is going to cause bloat and high prices, then eventual failure of the system.

Re:No More Deregulation (0)

Anonymous Coward | more than 3 years ago | (#34662674)

Who maintains and builds the grid? The electrical system is more than generation.

Re:No More Deregulation (1)

GigsVT (208848) | more than 3 years ago | (#34662692)

People who get paid to maintain and build the grid... by charging for it. This isn't rocket science.

Re:No More Deregulation (4, Informative)

bit trollent (824666) | more than 3 years ago | (#34662714)

The system you describe is exactly what we have in Texas. The only thing we got out of deregulation is a bunch of sleazy 'energy companies' that don't do anything more than tack on sleazy and underhanded fees to our electric bill.

Thanks to this scheme Texans pay higher prices for our electricity than surrounding states. Fortunately for our corrupt politicians like Rick Perry, most Texans are too dumb to notice that we've been taken advantage of.

When you consider that Governor Perry still managed to get re-elected after skipping the only debate against Democrat Bill White, its clear that Texas is the perfect state to let the 'free market' raise costs for everyone while the ignorant masses cheer them on.

Re:No More Deregulation (0, Flamebait)

blackraven14250 (902843) | more than 3 years ago | (#34662836)

That's not free market if there's companies tacking on random fees and trying to nickel and dime you. You misunderstand "free market", as most of the other people in this country do. You force competition, based on the rate of purchase, and if there's any additional fee, it's regulated to be the same between all companies.

Re:No More Deregulation (5, Insightful)

hedwards (940851) | more than 3 years ago | (#34662886)

I'm sorry, but you're wrong. What you're describing is a well regulated market. Definitely not a free market. Adam Smith was quite clear that a free market will lead to the sorts of behaviors that the GP was complaining about unless somebody steps in and puts in place regulations which prevent it.

Re:No More Deregulation (1, Insightful)

dave562 (969951) | more than 3 years ago | (#34662924)

How do you use the terms "free market" and "force competition" in the same thought? Are you sure that YOU understand "free market"? A free market is a market free from regulation, of any sort. In a FREE market, companies are FREE to tack on whatever fees they want.

Re:No More Deregulation (1)

colk99 (315674) | more than 3 years ago | (#34662782)

This is Texas you have one company that is maintaining the lines and multiple companies resell it

Re:No More Deregulation (0)

Anonymous Coward | more than 3 years ago | (#34662860)

Ahh yes, the NO TRUE SCOTSMAN argument. Communists used to say exactly the same kind of thing when people pointed at the long bread lines. "Oh but this is not REAL communism because of blah blah blah".

Face it libertarian-tards, there are NO easy answers in life. The "invisible hand" is not the solution to every problem. People can and do make bad choices all the time primarily because there is no such thing as "perfect information" so consumers can easily be fucked over by sleazy corporations, particularly when they band together into cartels.

Re:No More Deregulation (5, Informative)

HeLLFiRe1151 (743468) | more than 3 years ago | (#34662966)

We tried this crap in California 10 years ago. All the utility companies did was shut down their plants to cause demand and high prices. Remember that company....Enron? PG&E bankruptcy? It ends up being collusion and not competition.

Re:No More Deregulation (2, Insightful)

Russ Nelson (33911) | more than 3 years ago | (#34662710)

There is no such thing as deregulation. Markets are regulated by their customers. The only way to get deregulation is to NOT regulate by government, and yet force the customers to buy anyway. And gee, that's exactly what happened in California when it deregulated.

Re:No More Deregulation (1)

hedwards (940851) | more than 3 years ago | (#34662906)

Not true. Deregulation as the term is defined, means that the government gets out of the way and lets what will happen happen. Customers do not regulate a market, never have and never will, they just don't buy and refuse to buy in lock step.

On top of that if none of the providers are willing to offer what the customers want, it won't happen. In a regulated economy, what tends to happen is the government steps in and provides it at tax payer expense.

Re:No More Deregulation (5, Informative)

frisket (149522) | more than 3 years ago | (#34662730)

Exactly. In every country I have been in where it has been deregulated, the result has been higher prices and lower service. Somehow we must nail this myth that deregulation means competition: it doesn't, it means cartels, and it means the ownership of the productive capacity passes into the hands of ignorant investors and greedy bankers instead of the producers, so you end up with energy companies being owned by anonymous, uninterested, and incompetent asset-strippers.

Re:No More Deregulation (1)

Russ Nelson (33911) | more than 3 years ago | (#34662872)

Okay, but note that we're talking about linear infrastructure here. It's a hard problem to solve no matter who's doing it. No matter how you solve it, 1) there will be problems and 2) people hankering to solve it the other way.

Re:No More Deregulation (4, Insightful)

diegocg (1680514) | more than 3 years ago | (#34662850)

The regulation vs deregulation discussion is stupid. There are things that need to be regulated (banks shouldn't be allowed to play casino with my money) and there are things that need to be deregulated. Good politics is about choosing wisely between them. Dumb politicians who claim that regulating/deregulating everything will solve all problems only mess everything up.

Re:No More Deregulation (1)

Chris Mattern (191822) | more than 3 years ago | (#34662856)

Your solution has been tried too, in dozens of countries. It generally results in massive corruption, and such a complete lack of funds for maintenance of the electrical grid that power outages of several hours a day is the norm.

Re:No More Deregulation (1)

Anonymous Coward | more than 3 years ago | (#34662900)

I just love it when people call politically motivated re-regulation "deregulation".

The "deregulation" of the '90's was just about anything but a free market. People think that Enron was pushing a free market, but they weren't. Enron was pushing for (and got) a system under which they could control key portions of the market with gov't approval. The skyrocketing natural gas prices referred to in the article (which is mostly based on the California experience) came as a direct result of selling the only natural gas pipeline into California to Enron. That wasn't deregulation, that was state sanctioned monopolization. From that point, it was a simple matter for Enron to choke off natural gas supplies to California, causing a spike in natural gas and energy prices from which Enron profited mightily. That is not deregulation or a free market.

Deregulation has gotten a bad name due to many experiences such as these. It was similar in the banking market as well. The number of regulations on just about any market has not decreased in the last twenty years, but increased at a steady pace, most notably during Bush's early years (look it up for yourself if you don't believe me).

Re:No More Deregulation (5, Informative)

MickyTheIdiot (1032226) | more than 3 years ago | (#34662958)

I sent this in to Slashdot yesterday and it was, of course, not used.

http://www.businessweek.com/news/2010-12-23/why-businesses-can-t-stand-free-markets-veronique-de-rugy.html [businessweek.com]

It's a great article in Bloomberg businessweek about how so many companies DON'T want a free market and all the hypocrisy going around about the term...

Re:No More Deregulation (2)

gsgriffin (1195771) | more than 3 years ago | (#34662912)

I wish your assumptions were true. I've lived in other countries where there was no free market and the electricity was completely regulated by the government. The results will be: 1) Less motivation to keep providing a good infrastructure (why should they if their profits are reduced?) 2) Less capable people being hired (help reduce their costs) and fewer of them 3) Everyone complaining that even what they pay is too much!!!

We do the same thing here in the US when gas gets too expensive for our cheap over-consumption. Living in other countries where electricity is ACTUALLY expensive you will find people living in harsh conditions and barely able to afford any power. We need to be thankful for what we have and realize that WE REALLY HAVE IT GOOD!!

Re:No More Deregulation (1)

MrScary (39957) | more than 3 years ago | (#34662954)

Did not the state of California try this with tragic consequences? Rolling blackouts to keep prices artificially high.

Airplane tickets. (3, Insightful)

flogger (524072) | more than 3 years ago | (#34662632)

Yeah, Look at airplane tickets and how much they have gone down...
Or better yet, Phone companies! My bill is as low as... Egads! It isn;t. Help!

Re:Airplane tickets. (5, Informative)

Russ Nelson (33911) | more than 3 years ago | (#34662698)

Airplane tickets are fantastically cheap relative to 30 years ago when the deregulation started. You could pay $1,000 to fly coast to coast in 1980 dollars. Now, the last time I flew it was $450 in 2010 dollars.

Re:Airplane tickets. (2, Interesting)

Anonymous Coward | more than 3 years ago | (#34662824)

A 2010 dollar is worth about 1/3 of a 1980 dollar, so tickets are actually more expensive than they used to be.

http://www.dollartimes.com/calculators/inflation.htm

Re:Airplane tickets. (2, Informative)

Chris Mattern (191822) | more than 3 years ago | (#34662878)

Wow, I can see you learned math at a public school. If tickets used to be $1000 and are now $450 in dollars that are worth a third as much then prices are only *fifteen percent* of what they once were. That's less than *one-sixth* the former price.

Re:Airplane tickets. (-1)

Anonymous Coward | more than 3 years ago | (#34662922)

Are you on crack?

Re:Airplane tickets. (0)

Anonymous Coward | more than 3 years ago | (#34662890)

by your logic $1000 in 1980 = $3000 in 2010.

Or the cost of flying coat to coat is 15% of what it used to be... Much less expensive.

Re:Airplane tickets. (2)

DamienRBlack (1165691) | more than 3 years ago | (#34662894)

I'm glad math is your strong point, or you might come to the conclusion that the price has dropped 85%. Oh no wait, that's the right conclusion.

Re:Airplane tickets. (2)

causality (777677) | more than 3 years ago | (#34662948)

A 2010 dollar is worth about 1/3 of a 1980 dollar, so tickets are actually more expensive than they used to be.

http://www.dollartimes.com/calculators/inflation.htm

I think you have that backwards. 2010 dollars are worth about 1/3 of a 1980 dollar, granted. So if you paid $1000 in 1980 and pay $1000 now, you're still paying less now because that $1000 has a lower value than it did before.

That you're paying 45% of the previous price AND paying it with dollars that aren't worth as much means two different ways that the tickets cost less than they once did.

Re:Airplane tickets. (1)

Javajunk (1957446) | more than 3 years ago | (#34662892)

You guys need a Ryanair style low cost airline to shake things up. I recently flew Dublin - London - Spain return for less than 40 euro.

Re:Airplane tickets. (3, Interesting)

GigsVT (208848) | more than 3 years ago | (#34662706)

Airlines are constantly bailed out by the government (including the TSA, which was a huge airline subsidy), and they are only allowed to fly routes that the government(s) allows them to fly. They are hardly a free market.

Re:Airplane tickets. (2)

Russ Nelson (33911) | more than 3 years ago | (#34662754)

They're a lot more free than they used to be, and the prices are a lot lower. Do you want to see them even lower yet? Give customers more freedom to regulate.

Re:Airplane tickets. (4, Interesting)

GigsVT (208848) | more than 3 years ago | (#34662800)

If we went back to airlines handling security, the market would handle any rogue airline that required the security people to make people choose between groping and naked scanners. That's for sure.

By taking away the choice, we have all lost freedom.

Re:Airplane tickets. (0)

Anonymous Coward | more than 3 years ago | (#34662734)

Wow - you're a moron. Look at how much plane tickets cost as recently as the early 80's and compare them to today.

You even got better service back then!

Re:Airplane tickets. (1)

AnonGCB (1398517) | more than 3 years ago | (#34662746)

You're obviously using the wrong service then. Not to mention the fact that Airlines are HEAVILY regulated.

Re:Airplane tickets. (1)

MickyTheIdiot (1032226) | more than 3 years ago | (#34662970)

why SHOULDN'T they be heavily regulated? Most flights take 100s of people up on a potentially dangerous trip, and there are thousands of flights a day. I sure hope someone says they have to be safe and not gamble with my life.

Bad idea (1)

Anonymous Coward | more than 3 years ago | (#34662640)

Bad idea. Ask Adam Curtis.

PS - Cheaper oil? Cheaper natural gas? What have you been sniffing?

Deregulate? (2, Insightful)

Anonymous Coward | more than 3 years ago | (#34662644)

You mean like Wall Street or Enron?

Free Market is the best way to drain your money (-1)

Anonymous Coward | more than 3 years ago | (#34662646)

the 'free' market republicans laud is really just shorthand for removing whatever meager protections we have left against the corporations that bribe our politicians with 'campaign contributions'

Never vote Republican.

Re:Free Market is the best way to drain your money (1)

yuberries (1766190) | more than 3 years ago | (#34662780)

Republicans aren't particularly free market either...
In fact, the "deregulation" talking point has been used and abused so much by both parties it barely means anything anymore. Turning a government-provided service into a government-mandated one shouldn't be called deregulating, as it is often done. It paints the illusion of a free market where there isn't.

Re:Free Market is the best way to drain your money (1)

MickyTheIdiot (1032226) | more than 3 years ago | (#34662976)

The fact is they are just for re-regulation where the big guy gets to bully the little guy out of business. No one in the U.S. is for a free market where you have to actually compete on your service and the strength of your product. Ask Comcast...

Re:Free Market is the best way to drain your money (1)

hedwards (940851) | more than 3 years ago | (#34662980)

Citation needed. Turning a government provided service into a government mandated one isn't something I've ever seen called deregulation.

Uhh... (3, Informative)

betterunixthanunix (980855) | more than 3 years ago | (#34662652)

From TFA:

Such arguments were compelling enough to convince two dozen or so U.S. states to deregulate their electric industries. Most began in the mid-1990s, and problems emerged soon after, most famously in the rolling blackouts that Californians suffered through in the summer of 2000 and the months that followed. At the root of these troubles is the fact that free markets can be messy and volatile, something few took into account when deregulation began. But the consequences have since proved so chaotic that a quarter of these states have now suspended plans to revamp the way they manage their electric utilities, and few (if any) additional states are rushing to jump on the deregulation bandwagon.

Yeah, so, how about not continuing this experiment with our critical infrastructure?

See California, and the recall election. (1)

Anonymous Coward | more than 3 years ago | (#34662680)

The deregulation put in place by the Governor of Cali before Gray Davis pretty effectively showed that deregulating power in California doesn't work. I don't remember the specifics of it but they ended up shutting down a whole bunch of power plants in order to keep the electricity prices artificially high. In addition to brownouts/blackouts and other issues they were raking in money hand over fist until re-regulation got passed. Davis did a horrible job of handling that, but the foundation for it had been set by the republicans the previous term.

Point? Major infrastructure services don't need less regulation, they need less collusion and more competition, something that can only happen when there's an abundance of supply that's at odds with it's competitions to fill a limited amount of demand (relatively speaking.)

Re:See California, and the recall election. (1)

yuberries (1766190) | more than 3 years ago | (#34662808)

I don't even have to know the specifics to say that, in order for the prices to be artificially high in the scenario above, the plant owners had to have a superior advantage over other entrepreneurs. Most likely, outside entrepreneurs weren't allowed to build a competing plant, or build a competing grid. The "monopolist's" prices can only be as high as the return on investment isn't high enough for others to undercut them.

Not a free market.

Re:See California, and the recall election. (0)

ShanghaiBill (739463) | more than 3 years ago | (#34662888)

deregulating power in California doesn't work.

What happened in California was the exact opposite of deregulation. It was a massive collusion of politicians and incumbent energy companies to rig the market. Prices were fixed to prevent competitors from entering the market and competing on price. But the plan backfired because wholesale prices rose instead of falling.

I never cease to be amazed that people use this as an example of "deregulation gone wrong", when it is actually an example of over regulation by a lobbyist corrupted government.

There are no free markets (4, Insightful)

Russ Nelson (33911) | more than 3 years ago | (#34662682)

There are no free markets. There are only markets controlled by governments and markets controlled by customers. The markets controlled by customers work out pretty well for customers. The markets controlled by governments work out pretty well for governments and the politicians that run them and the lobbyists who fund them and the corporations who make money because the politicians control the markets in their favor.

Re:There are no free markets (4, Insightful)

GigsVT (208848) | more than 3 years ago | (#34662718)

A free market is one controlled by customers.

Just because the authoritarians have redefined "free market" to mean "laws to benefit corporations with government help" doesn't mean that the original concept no longer exists.

Re:There are no free markets (1)

Russ Nelson (33911) | more than 3 years ago | (#34662748)

But my point -- that corporations are not free to do anything they want in so-called "free" markets -- remains.

Re:There are no free markets (1)

yuberries (1766190) | more than 3 years ago | (#34662814)

They are still free to do anything they want - with their money.

Re:There are no free markets (1)

hedwards (940851) | more than 3 years ago | (#34662934)

A genuine free markets can't exist for very long. That was established a really long time ago that a free market ends in a single source provider over every thing, assuming that there isn't a revolution and that the government doesn't step in to stop it from happening.

Show me a free market in which that isn't the case and I'll show you a free market that isn't anywhere near mature.

Re:There are no free markets (1)

yuberries (1766190) | more than 3 years ago | (#34662988)

The question I think you should ask yourself is, why is a single provider bad? It may very well be that the end result of a free market is that one person or group is found to be more efficient (and trustworthy) than all others, and so people voluntarily decide to give him all the resources for him to work on what he can do best. So what? What keeps the "free market monopolist"'s prices low isn't the anti-trust board, it's his performance and revenue below the market ROI rate. That competing entrepreneurs are able to come in if he dare make to much of a profit - there doesn't even need to be any, actually competing, at all. The threat is stronger than the execution.

Re:There are no free markets (0)

Anonymous Coward | more than 3 years ago | (#34662802)

"There are only markets controlled by governments and markets controlled by customers."

So, corporations such as Enron, who found "clever ways to manipulate the market" (TFA), have no control over the market? And Wall Street corporations have no control over the financial market?

Why not electricity? (1)

hergs (1964994) | more than 3 years ago | (#34662684)

One word: Enron.

Re:Why not electricity? (1)

f3rret (1776822) | more than 3 years ago | (#34662700)

You stole my point!

Re:Why not electricity? (1)

Cheech Wizard (698728) | more than 3 years ago | (#34662794)

I was thinking the same thing. Enron, those fine people who darned well showed the world how well deregulation of electricity would reduce prices... ROTFL. People forget so quickly. The IEEE has its head up it's political ass to suggest deregulation.

Suicide! (1)

girlintraining (1395911) | more than 3 years ago | (#34662690)

Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation.

You mean like they did with the telecos? Or the cable companies? Or any other kind of infrastructure? I challenge anyone here that can name a deregulation of a public utility or infrastructure that has lead to increased competition in the market in question over time.

Re:Suicide! (1)

Russ Nelson (33911) | more than 3 years ago | (#34662736)

ITYM Linear infrastructure, which is hard to regulate whether by governments or customers. There's no magic wand.

Re:Suicide! (1)

GigsVT (208848) | more than 3 years ago | (#34662784)

The telcos are not a complete failure.

You may be too young to know, but you used to not be allowed to own your own phone. You had to rent one from the government monopoly. It was a crime to hook an unapproved device to your telephone line.

Deregulation allowed people to do evil unapproved things like run BBSs in their houses and hook modems up to their phone lines. It allowed rogue networks to form like sprintnet which formed the backbone for services like AOL and compuserv.

None of this could have happened without deregulation of the telephone system. We wouldn't be having this conversation right now if we still have a government monopoly in telephone systems.

Re:Suicide! (4, Informative)

makomk (752139) | more than 3 years ago | (#34662862)

You may be too young to know, but you used to not be allowed to own your own phone. You had to rent one from the government monopoly. It was a crime to hook an unapproved device to your telephone line. Deregulation allowed people to do evil unapproved things like run BBSs in their houses and hook modems up to their phone lines.

If you're talking about the US, that's exactly backwards. It was a breach of your contract with the telephone company - which was allowed to become a monopoly by the US government - but not a crime, and it was actually government regulation that forced the phone companies to allow you to connect phones and other devices not rented from the company.

Deregulating a bad idea for essential services (1)

san_SS! (1964930) | more than 3 years ago | (#34662704)

I don't think deregulating people's essential services is a good choice, electricity is a service that everyone needs and you would have to pay it anyways even if you disagree with the price they are charging you. It is not the same as other type of services where you can choose not to apply until a good offer is put on the table or even not having it at all.

Re:Deregulating a bad idea for essential services (2)

LordNacho (1909280) | more than 3 years ago | (#34662786)

I agree. The free market works well for most stuff, but certain things, not so well. How to tell them apart: imagine whatever service you're discussing breaking down, for instance through the bankruptcy of a private provider. Is it thinkable that the government would not have to step in and provide it? Yes: Go private. No? Go public.

So, suppose you have an electricity grid. Will people be content with blackouts? I doubt it.
Suppose you have a toy manufacturer. That seems like something for private firms to do.
Banks? Apparently, we don't really want the big banks to fail. So we'll have to regulate.

Note your public/private (or regulated/unregulated) depends on your tolerance for breakdown. Some people (and countries) care a lot that healthcare works, for instance.

Re:Deregulating a bad idea for essential services (1)

yuberries (1766190) | more than 3 years ago | (#34662826)

Anything and everything can be argued to be "essential"... where's my free food, free water, free house?
What remains of the argument is simply an appeal to tradition.

Re:Deregulating a bad idea for essential services (4, Informative)

Rising Ape (1620461) | more than 3 years ago | (#34662876)

Nobody said those things should be free. But developed countries have measures to ensure that people can obtain them even if they couldn't afford them in a pure free market - precisely because they are essential. But that's unrelated.

Infrastructure is a prime candidate for regulation, because of its "natural monopoly" character - in the absence of regulation, it's very easy for a dominant company to squeeze everyone else out and then exploit their monopoly. Telephone and internet connections got a lot cheaper and faster here (UK) when the dominant phone company were required to let other providers use their network.

Re:Deregulating a bad idea for essential services (0)

yuberries (1766190) | more than 3 years ago | (#34662916)

I believe it wasn't uncommon for multiple utility grids to be made, before the state mandated that there could only be one... http://mises.org/journals/rae/pdf/rae9_2_3.pdf [mises.org] But I don't blame you if you don't believe it, because after all, yours is the most recited story taught in government schools.

this is joke right? (1)

breagerey (758928) | more than 3 years ago | (#34662726)

Death Star anyone?

IEEE discredits itself (2, Insightful)

GigsVT (208848) | more than 3 years ago | (#34662728)

The IEEE publishing a political editorial like this really discredits them as a professional organization.

Your house must be wired (1)

Trip6 (1184883) | more than 3 years ago | (#34662740)

All other services to your house - phone, cable TV, internet, can be shipped in by other means than a hard wire now. Not electricity (or gas). By definition, some monopoly must own that last mile. This is why such services should be regulated, and the regulators be knowledgeable enough to shop for competitive rates.

Re:Your house must be wired (1)

GigsVT (208848) | more than 3 years ago | (#34662756)

"Shop for competitive rates" implies that there is a free market, at least somewhere in your equation.

Re:Your house must be wired (0)

Anonymous Coward | more than 3 years ago | (#34662788)

Is there something wrong with solar energy on site?

Re:Your house must be wired (1)

Russ Nelson (33911) | more than 3 years ago | (#34662864)

Two words: Public Choice. Here, let me google that for you: http://lmgtfy.com?q=Public%20Choice [lmgtfy.com]

Re:Your house must be wired (1)

hedwards (940851) | more than 3 years ago | (#34662956)

Why? There is at least a couple alternatives, the local municipality or you could own it. And whomever the service provider is could be required to maintain it as a part of the service agreement. I suppose it could even be a third party that you contract to maintain that bit of infrastructure.

Just because we've made a system where the utility owns the last mile, does not mean that there aren't other ways of doing it. Some which may work better and others which work worse, but which have a different set of tradeoffs to consider.

I'm from California, ask me... (4, Interesting)

HotNeedleOfInquiry (598897) | more than 3 years ago | (#34662744)

About deregulation and about how my butt still hurts from the Enron assrape. I'm normally a free-market kind of guy, but I learned a lesson on this one.

Re:I'm from California, ask me... (1)

Russ Nelson (33911) | more than 3 years ago | (#34662846)

And you would be right if it were "deregulation", but it wasn't. It was just "bad reregulation". There was never a customer-regulated market for electricity in California, so nobody can say that it failed!

regulated decentalization (1)

fadethepolice (689344) | more than 3 years ago | (#34662762)

Wouldn't it be better to invest in renewable energy so that every house is a positive contributor to the grid that sells energy to industry? For example, cooperative developments that purchase micro fault tolerant nuclear reactors from hyperion energy that produce heat and electricity and push the excess to the grid.

Capitalism 102 (5, Informative)

cowboy76Spain (815442) | more than 3 years ago | (#34662770)

<sarcasm>I am always surprised of how easily these "neocons" forget the most basic economic concepts of the system they worship... They forget things basic concepts like ROI, entry barriers and so on, as long as forgetting them favours their dogmas.</sarcasm>

In short, in Capitalism 101 we saw that, in a pure free market, if sector A has profits better than sector B, then inversions will flow from sector B to sector A, increasing supply until price drops, and profits in both sectors are the same.

In Capitalism 102, we saw that, in real life, maybe building a new enterprise in sector A is not just as easy... it may require huge inversions, a big risk (if by entering the market they lower collective profits, maybe the ROI won't be positive), and outright collusions (for example, all enterprises in sector A join and tell you "if you enter into our sector, we will presure our suppliers so nobody does provide you with the materials you need if they want to do bussiness with us").

In Campitalism 103, we all saw what happened to Enron.

In my country, the former monopoly of telcos (Telefónica, now Movistar) still is the only supplier when you need some services in some geographical areas (not by law, but the other telcos do have wanted to get the infrastructure). Sometimes when they have lost a contract with us, they have blocked providing the service through the winner to the maximum that the law allowed them (and at least we have some law forcing them to provide the service in a limit time).

Of course, some illuminated people will only repeat Capitalism 101 lessons while covering the ears to avoid realising what they are really saying...

Re:Capitalism 102 (1)

yuberries (1766190) | more than 3 years ago | (#34662842)

There is just no possible way that telcos anywhere, in any civilized state, doesn't have an agreement by law with the state to utilize the common infrastructure. Whenever roads and electric poles are "public", cable and telephone markets are necessarily, not a free market.

One Word: (2)

140Mandak262Jamuna (970587) | more than 3 years ago | (#34662772)

The Tragedy of the Commons. Also known as the Race to the Bottom.

Let me get this straight... (3, Insightful)

damburger (981828) | more than 3 years ago | (#34662774)

...a market for electricity will ensure nobody goes without electricity, presumably by the same process by which a housing market ensures nobody is homeless and an international food market has caused an end to world hunger.

The ideologues are back with a vengeance. After all that has happened, after the finance system collapsed (and showed that it wasn't really made of anything substantial in the first place) how can anyone still listen to market fundamentalists?

Re:Let me get this straight... (1)

yuberries (1766190) | more than 3 years ago | (#34662870)

The banking system is a complete cartel (do I have to introduce you to Ben Bernanke?), and the housing market has at least a dozen federal agencies regulating it; tons of price floor regulations, mandated easy credit to inflate prices all over; etc.
It's not a clear cut case as you make it to be. I would also go on and say that the free market has indeed solved famine whenever it's been allowed to exist in the food market. The poorest places in Africa where thousands (millions?) still die of hunger, are the same places where private property is disallowed by law/custom.

Re:Let me get this straight... (0)

Russ Nelson (33911) | more than 3 years ago | (#34662898)

The housing market is greatly hampered by various levels of government. Look at Fannie Mae / Freddie Mac. Look at building codes. Look at zoning regulations.

In the US, pretty much nobody goes without food unless they have mental problems, in which case their problem is mental, not foodal.

Re:Let me get this straight... (0)

Anonymous Coward | more than 3 years ago | (#34662964)

It sounds like you have an alternate suggestion for providing food, housing and electricity for everyone. One not involving money or markets, and one not requiring the sort of leaps of faith that might be made by a "fundamentalist".

Please, enlighten us with your wisdom.

More libertarian "free" market bullshit (0)

PeakPerformance (1964996) | more than 3 years ago | (#34662778)

The premise of this article is stupid, and the logic is full of holes. It equates state-sanctioned capitalist monopolies with publicly owned nonprofit utilities and then proceeds to glory in how private utilities solves their fictional straw-man "problem." Privatization is regressive and only serves to make the rich richer at the expense of everyone else.

Did we already forget the lessons learned during California's manufactured energy crisis in the early 2000s?
Did we forget about Enron?
Did we forget about Pinochet?

Gee, privatization sure worked out great for other basic necessities, like the barbaric USA health care system! Basic services should not be subject to the exploitative forces of the so-called "free market" -- leave that to the gamblers on Wall Street.

Re:More libertarian "free" market bullshit (1)

yuberries (1766190) | more than 3 years ago | (#34662882)

How the hell did you come to blame the free market for the actions of a dictator?
I mean... really?

Natural Monopolies and deregulation (0)

Anonymous Coward | more than 3 years ago | (#34662818)

Deregulation will bring down prices in most markets through competition. However, this is not the case for natural monopolies. When deregulation occurs under a natural monopoly market, there is a battle to become the dominate player and then all the reset of the competition dies. This is why public utilities should not be deregulated.

please, somewhat tag this "enron" (2)

10am-bedtime (11106) | more than 3 years ago | (#34662848)

WTF, 1.5 months after the U.S. change of guard and we're already recycling Enron?

Bad call. Trust me. (4, Interesting)

6Yankee (597075) | more than 3 years ago | (#34662858)

For a couple of years, I worked in the UK electricity industry, which was at least partially deregulated in 1998. People look at me funny when I say I've got candles and tinned food stashed away, but I expect every winter to be the one where it all comes crashing down.

A big part of the problem, at least for us poor schlubs charged with getting the billing right, was that all these deregulated entities keep getting bought and sold. And every time they do that, there's a data migration, which almost invariably gets screwed up. Bad data piles on bad data on bad data, with fixes promised but never delivered in time for the next buyout. One region in particular had one standard evening/weekend meter set-up and no fewer than four different versions of that reality in their database. The net effect was to flip their predicted e/w usage pattern upside down. That usage pattern is what gets fed into the National Grid computers for demand forecasting. See where this is going?

I'm told that the larger "half-hourly" stuff is in somewhat better shape, which is probably why the whole thing's held together so far. But if what I saw was what you can expect from a deregulated energy industry, I'd say there's good reason to be afraid...

Re:Bad call. Trust me. (1)

xaxa (988988) | more than 3 years ago | (#34662952)

I don't know any other system, at the UK one at least has the various electricity companies competing with each other pretty well. I see lots of advert for other companies, and bad press coverage when one provider lags behind with a decrease in cost.

Deregulation? Let's ask Enron! (4, Insightful)

gethoht (757871) | more than 3 years ago | (#34662880)

Just look at all the "innovation" that companies like Enron brought to a deregulated energy market! Let's ask California how well that worked out for the average consumer. While we're at it we can look at deregulatory laws like the Commodity Futures Modernization Act and the repeal of Glass-Steagal that enabled such "innovation". The "free market" for oil is now run by speculators who can buy and sell contracts for millions of barrels of oil but never have to take delivery, creating false demand and squeezing millions of dollars a day from average americans as they have to pay over $3.00/gal to fuel their vehicles. What else has deregulation done? How about all those nasty little unregulated derivatives such as MBS(mortgage backed securities) that imploded the world economy? That's financial "innovation" like the world had never seen before. All thanks to deregulation, yay!

Deregulation = Freedom (1)

beaker8000 (1815376) | more than 3 years ago | (#34662902)

Prices are set in free markets by the interaction of thousands of self-interested individuals. The market price is controlled by no one entity. Further the market price serves as a signal to energy suppliers and consumers. If the price of electricity rises consumers should buy products that consume less electricity (say more efficient computers). Thus the market price organizes society.

In a rate-regulated system one entity (politicians which may be bought) controls the price - this is antithetical to freedom (see F.A. Hayek). Also, if the politicians put the price too low, more electricity is demanded than can be supplied (this is why there were bread lines in the USSR). Further, consumers don't receive the signal to switch to more energy efficient products, which exacerbates the problem.

The most economically efficient electricity market is one with, "bid-based, security-constrained, economic dispatch with nodal prices" - William Hogan, Harvard

No such thing as a free market (5, Insightful)

geek (5680) | more than 3 years ago | (#34662914)

For the same reason "life isn't fair"

As long as 1% of the total population controls 90% of the wealth, there is no such thing as competition or free market capitalism.

I like competition and I dislike government intrusion but there is a reason FOR government and that is to protect it's citizens, that includes protection from economic crimes as well as physical ones.

The middle class is shrinking regardless of which ideology is popular that month. People are losing their homes left and right, jobs are going over seas and yet still so many people are ignorant to the real issues.

Deregulating natural monopolies doesn't solve the problem. It just hands a blank check to a corporation chosen by the government to fuck it's customers however it chooses.

Free market is an oxymoron to anyone that actually understands what the two words mean.

Ontario did this (0)

Anonymous Coward | more than 3 years ago | (#34662918)

Ontario deregulated the energy market and all it did was raise the hell out of our electricity rates. The only "competition" is between which energy resellers can sell you the more ridiculous contract.

regulations (1)

wizardforce (1005805) | more than 3 years ago | (#34662920)

There are good and bad regulations. The SOX/NOX cap and trade regulations as part of the clean air act were good regulations. The goal wasn't to reduce prices so much as make sure that our air didn't have so much Sulfur Oxides in it to make rain as "acidic as vinegar." Subsidies are bad. NIMBY regulations that obstruct wind farms, nuclear plants, recycling etc. are bad. The problem is entirely about which regulations are useful not necessarily the quantity. If regulations go far beyond what is useful to society, prices go up; too few useful regulations and you get rent seeking behavior and rain like vinegar.

It's bad (1)

Vanderhoth (1582661) | more than 3 years ago | (#34662928)

Look at how things are going for Nova Scotia, Canada. I'll give you a hint. Not good.

The cult of deregulation... (1)

blahplusplus (757119) | more than 3 years ago | (#34662930)

... doesn't understand that technological advancement has limits, you cannot infinitely drive the cost of something down towards zero and you can't count on the universe to have some unknown undiscovered technology just waiting in the wings.

In the physical universe processes take scientifically measurable amounts of time, resources and computation to complete.

This cult of the market always forgets that natural law trumps ideology.

Wtf?! Electricity are NOT high via infrastructure (1)

Blymie (231220) | more than 3 years ago | (#34662932)

Uh.

Right.

Electricity prices for commercial usage in California is what? 27cents/kwh? And it's what... FIVE CENTS per kwh in Quebec?

Sure.... SUUUUURE... that's all due to regulation, or infrastructure, or reliability. Suuuure.

Sorry for the MASSIVE sarcasm, but frankly -- have you seen how large/complex Quebec's infrastructure is?

The real difference in costs here, is the cost of the power source. Hydro in Quebec's case, or the fact that California buys so much of its power from out of state ....

There ain't no free market (1)

Wansu (846) | more than 3 years ago | (#34662944)

There ain't never been a free market. There ain't never gonna be a free market.

Power, water, sewer, transportation and communications will be monopolies. The question is whether they'll be regulated or not. If not, consumers will get reamed.

Lets see.... California rolling blackouts? (0)

Anonymous Coward | more than 3 years ago | (#34662972)

California did get deregulation. The greedy providers took plants off-line to bid up the prices, there wasn't enough capacity left, rolling blackouts ensued. Rolling back deregulation and we have stable power again.

If all power generators and distributors were community owned not for profit entities, we probably would need no regulation. But, these are the exception today. In order to reign in the greed of those controlling our power, we need more regulation, not less. These folks are just as criminal as the banksters who destroyed the lives of millions with their deregulated greed.

Besides, its not like the PUC isn't heavily influenced by industry. Name two places an energy analyst can get a job... hmmmm... a utility, or the PUC. And, yes the folks move freely between the two. A friend of mine who now works for the PUC helped write the deregulation legislation, for California, when she was with a large utility.

Really, I expect better of articles to slashdot than some idiotic right-wing propaganda that has been proved to be a failure every time it is acted upon. Oh yeah, the OP wing-nut said too much money is being spent on safety and reliability... tell that to those poor folks in SF that were burned alive when a gas line exploded for lack of maintenance-- maintenance that the rate payers were assessed an extra fee (years prior) just for repairs to this and a few other locations with rotting natural gas infrastructure. But, the utility absconded with the extra rate payer money, and innocent people died in a fiery hell.

Sure, If you don't mind... (0)

Anonymous Coward | more than 3 years ago | (#34662982)

...littering the landscape with more towers and more high-tension wires. And have a tolerance for all the "resellers" that will jump into the market, all subsidized by the existing power company's wholesale rates (which are too high and would get higher).

The ONLY practical solution is one like that proposed by Bloom Energy: Get rid of centralized power generation and make every neighborhood its' own power generator, with the citizens who own it deciding when to add/remove capacity.

Energy Northwest (1)

eggman9713 (714915) | more than 3 years ago | (#34662984)

My local electrical utility (run by the city I live in) is a member of Energy Northwest, which if I understand it is basically a co-op of its member utilities in the pacific northwest. The power is provided basically at-cost to the utilities. Our electricity rates here are very low compared to the rest of the US and we don't have all these scheister "energy companies" running around and ripping off the consumers.
http://energy-northwest.com/ [energy-northwest.com]
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