Re: Meghan McCain Slams Christine O'Donnell Seen as 'Nutjob'

There is no help for Tom.  He refuses to read, look at the facts, and just continues to spew out hatred.

 

No need to worry about me paying off Tom's mortgage, he hasn't taken the time to even read the article(s)!!

 

 

On Tue, Oct 19, 2010 at 1:49 PM, dick <rhomp2002@earthlink.net> wrote:

You keep saying those things and they are all lies.   Saying something without providing proof and when someone calls you on it you just wash, rinse, repeat does not make what you say true - and it is not.   Almost to the point where I just delete your messages as being nothing but BS.

On 10/19/2010 01:43 PM, Tommy News wrote:

The GOP created the meltdown, ignored the American people, started
unwarranted wars, took us from a $236 billion dollar surplus to $1.3
trillion dollar deficit, and now tells us they are the ones to fix it!
Even though they have no plan!

A return to the failed GOP Bush policies is no plan, which will only
fail yet again.

On 10/19/10, Keith In Tampa<keithintampa@gmail.com>  wrote:
 

Yes, Tommy, the articles totally debunk the horse hockey that you wrote.

On Tue, Oct 19, 2010 at 12:27 PM, Tommy News<tommysnews@gmail.com>  wrote:

   

Thanks for all this.



On 10/19/10, MJ<michaelj@america.net>  wrote:
 >  The Myth of Energy Deregulation
     

Monday, November 07, 2005
by Adam Summers

While the initiatives on the upcoming November 8 California special
       

election
     

ballot backed by Governor Arnold Schwarzenegger have been receiving all
       

of
     

the media attention, another initiative that addresses an important
issue
       

is
     

being overlooked. Proposition 80, the so-called "Repeal of Electricity
Deregulation and Blackout Prevention" initiative, would make some
significant ­ and detrimental ­ changes in the state's energy policy.

The fact that even a government regulatory body such as the California
Public Utilities Commission (PUC) is actually against a measure that
       

would
     

increase its regulatory powers should tell you something right off the
       

bat
     

about the merits of Prop. 80.

California energy consumers are currently served by one of three types
of
providers: investor-owned utilities (IOUs), local publicly-owned
electric
utilities, and independent electric service providers (ESPs). Before the
state's "deregulation" experiment of the 1990s was suspended in 2001
       

during
     

California's energy crisis, customers could choose to purchase their
electricity services directly from ESPs through "direct access"
       

contracts,
     

rather than through an intermediary such as the local IOU or public
       

utility.
     

Proposition 80 Would Reduce Consumer Choice and Increase Costs

Proposition 80 would permanently prevent all customers receiving
       

electricity
     

services from an IOU from switching to an ESP, effectively eliminating
       

any
     

new direct access (existing direct access contracts would be
       

grandfathered
     

in).[1] Thus, under Prop. 80, instead of having the option to buy
electricity directly from independent producers, consumers would have no
choice but to buy their electricity from utilities. By effectively
eliminating an entire class of providers, the state has stifled
       

competition
     

(and would continue to do so), thereby leading to higher prices and,
       

likely,
     

lower-quality service.

The effect of this provision on prices would be significant. ESP
       

customers
     

include hospitals, local governments, the California State University
system, several University of California campuses, community college
districts, and local school districts. The nonpartisan Legislative
       

Analyst's
     

Office (LAO) estimates that the UC system alone saves about $12 million
       

per
     

year by purchasing its electricity from a lower-cost independent
       

provider.
     

According to Mike Florio, an attorney for The Utility Reform Network
       

(TURN,
     

one of the chief proponents of Prop. 80 that helped craft the measure),
       

the
     

ability of consumers to purchase electricity directly from independent
service providers "destabilizes the whole business … and we'll truly be
       

at
     

the mercy of the gods of the free market."[2] How dare people be able to
choose whom they want to do business with! I suppose TURN hired Mr.
       

Florio
     

not for his legal expertise, but rather by the sheer providence of the
"free-market gods."


Proposition 80 Would Impede Innovation and Efficiency

Another provision of Prop. 80 would prohibit the broader implementation
       

of
     

"dynamic pricing" of electricity without the consent of the consumer.
Currently, all but the largest energy consumers pay a flat rate for
electricity that does not vary by the time of day. Clearly, energy use
is
not constant throughout the day, however. There are certain "peak" hours
       

of
     

the day when consumers use lots of electricity, and "non-peak" hours
when
they use very little. The costs of providing electricity vary
       

accordingly.
     

As such, the IOUs have submitted proposals to the PUC to charge all
consumers higher rates during peak hours and lower rates during non-peak
hours. This price discrimination would be accomplished through the use
of
high-tech "smart" meters.

In addition to making good sense ­ one should pay more for something
when
       

it
     

is in higher demand ­ dynamic pricing would encourage conservation via
       

the
     

pricing mechanism. Dynamic pricing would be a more efficient system
       

because
     

higher prices would discourage some from consuming such a scarce
resource
while ensuring that those who place the highest value on energy use are
still able to consume it. Similarly, those who have some flexibility
over
when they consume their energy would be encouraged to utilize it during
non-peak hours, thus placing less strain on the system.

Allowing the consumer to opt out of a dynamic pricing model would be
like
forcing a hotel owner to offer customers the choice of the nightly room
       

rate
     

or an average of the nightly room rates throughout the week. Since
significantly more people stay at hotels during the weekend, rates are
       

much
     

higher on Friday and Saturday nights. The average weekly rate, however,
would be higher than normal weekday rates but lower than normal weekend
rates. The cheaper "opt-out" weekend rates and higher weekday rates
would
encourage even more people to stay during the weekend and fewer to stay
during the week. The result would be a shortage of hotel rooms during
the
weekend and a loss of revenue for the hotel owner. No wonder demand
       

strains
     

the electrical grids during hot summer days.


Environmental Issues

Under current regulations, energy producers must increase the portion of
energy derived from renewable energy sources ­ such as solar, wind, and
hydroelectric ­ by one percent per year until 2017, when 20 percent of
       

the
     

energy produced must come from these sources. Proposition 80 would
accelerate this deadline to 2010. Interestingly, some environmentalists
oppose Prop. 80 because a provision requiring a two-thirds vote of the
Legislature to amend the measure could make it more difficult to
increase
the renewable energy standard in the future.

According to the LAO's analysis, Prop. 80 would also require that "the
       

first
     

priority for IOUs in procuring new electricity is to be from
'cost-effective' energy efficiency and conservation programs, followed
by
'cost-effective' renewable resources, and then from traditional sources
       

such
     

as fossil fuel burning power plants."[3] Of course, if renewable energy
sources and energy efficiency and conservation programs were truly "cost
effective," producers would already be utilizing them in higher numbers
because it would make them more profitable. This clearly is not the
case.
Forcing companies to invest significant amounts of their scarce
resources
       

on
     

more costly energy-production methods, which make up a relatively small
share of total energy production (for good reason), will only ensure
that
costs ­ and, ultimately, consumers' electricity bills ­ remain higher
       

than
     

necessary.

As new technologies and energy-production methods are developed, this
may
change, but for now, it is best for both producers and consumers to
focus
       

on
     

the most efficient means of producing energy. Of course, if consumers
       

demand
     

"cleaner" energy, in a truly free market, producers will have an
       

incentive
     

to provide it. Indeed, after Pennsylvania successfully implemented its
electricity deregulation effort in 1999 (without the pitfalls
experienced
       

by
     

California), 20 percent of consumers chose to switch to suppliers of
       

"green
     

power," despite the fact that they had to pay a small premium to do so.
Proposition 80 eliminates this choice, instead demanding that all
       

consumers
     

support the higher cost of investing more in renewable energy ­ whether
       

they
     

want to
or not.


Misconceptions Over Electricity "Deregulation" in California

Some blame deregulation for the rolling blackouts, soaring spot market
prices, and utility bankruptcies that sprang from the energy crisis of
       

2000
     

and 2001. But this anger is misplaced. California has never experienced
       

true
     

deregulation. The "deregulation" implemented in 1996 left price controls
       

in
     

place and created "artificial" markets ripe for manipulation and
       

disparities
     

between supply and demand.

By setting price caps below market prices, California limited the
profitability of the industry. When wholesale energy costs increased,
the
price caps prevented energy producers from passing them on to consumers.
Wholesale prices rose dramatically for a number of reasons: natural gas
prices rose, hot weather in the Southwest increased demand, a relative
       

lack
     

of water in the Northwest minimized the production of hydroelectric
       

energy,
     

and pollution-control permits, which allow industrial companies that
       

produce
     

less pollution than allowed by regulations to sell the difference as
"credits" to higher-pollution-producing companies, rose ten-fold, from
$4
       

to
     

$40.

The price caps additionally discouraged potential producers from
entering
the market and increasing competition, and they discouraged existing
producers from investing profits in adding capacity, of which
       

Californians
     

were (and continue to be) in dire need. As a result of the price caps
and
pressure from politicians and environmentalists, the building of plants
       

and
     

transmission lines slowed dramatically and energy producers were not
able
       

to
     

keep up with demand, particularly in the Silicon Valley, where the
       

booming
     

computer and "dot-com" industries led to even sharper increases in
electricity demand.

After the big three investor-owned utilities ­ Pacific Gas&  Electric,
Southern California Edison, and SEMPRA (San Diego Gas&  Electric) ­ were
forced to sell many of their fossil-fuel-burning generators to private
firms, regulators prohibited them from entering into long-term contracts
with these firms, forcing them to rely upon the much more volatile
short-term and spot markets. In addition, California forced generators
       

and
     

utilities to trade power through the Power Exchange, a state-run pool.

While that requirement was designed to give every company the same
       

wholesale
     

price for power, it also guaranteed that they would be unable to
       

negotiate
     

lower-priced power on their own. The California rules essentially barred
utilities from buying power on the futures market, meaning they were
       

unable
     

to lock in supplies and prices.[4]

This is as if Wal-Mart and Marshall Field's were forced to acquire their
goods from a non-profit, state-run pool that would guarantee that they
       

would
     

acquire the goods for the same price. Wal-Mart never would have been
able
       

to
     

develop its efficient and innovative purchasing and distribution system,
meaning it could not generate savings to pass on to customers in the
form
       

of
     

lower prices.

At the time of the increase in wholesale prices, PG&E and Edison were
       

still
     

in the deregulation "transition" period, and thus still subject to PUC
       

rate
     

regulations. As a result, PG&E went bankrupt and Edison teetered on the
       

edge
     

of insolvency. To add insult to injury, when the government stepped in
to
purchase electricity on behalf of the struggling IOUs to try to quell
the
crisis, not only did it do so at the height of the emergency, when
energy
prices were highest, it locked in these prices with long-term contracts
costing billions of dollars.


The Natural Monopoly Justification for Regulation

The main argument against the full privatization of public utilities
such
       

as
     

electricity and water service is that such industries are "natural
monopolies." That is, they require such high fixed costs (it is easier
to
start a new restaurant than to invest in the infrastructure for a new
electric grid) that it is inefficient for there to exist more than one
producer in a particular location. This, it is feared, will lead the
producer to engage in price gouging.

There are several problems with this rationale, not the least of which
is
the notion that "public utilities" somehow constitute a unique set of
       

goods
     

that must be "protected" by government intervention. As economist Murray
Rothbard noted in Power and Market:

The very term "public utility" … is an absurd one. Every good is useful
       

"to
     

the public," and almost every good … may be considered "necessary." Any
designation of a few industries as "public utilities" is completely
arbitrary and unjustified.[5]

High capital costs certainly will limit the number of actual and
       

potential
     

providers, but there is still a profit motive in a free market that
       

creates
     

opportunities for lower-cost producers. In addition, it is important to
       

note
     

that markets are not static; technological innovations may allow for
additional competition in the future.

Another misconception opponents of free markets have concerns the very
understanding of the nature of competition. Even if there is only one
producer of a certain good or service in town, this does not mean that
       

the
     

producer is "gouging" customers through monopolistic practices. Indeed,
       

just
     

because he is the sole supplier today does not mean he will be the sole
supplier tomorrow. As economist Thomas J. DiLorenzo explains:

If competition is viewed as a dynamic, rivalrous process of
entrepreneurship, then the fact that a single producer happens to have
       

the
     

lowest costs at any one point in time is of little or no consequence.
The
enduring forces of competition ­ including potential competition ­ will
render free-market monopoly an impossibility.[6]

In other words, even if there happens to be only one current provider of
       

a
     

particular good or service, in a free market that provider is held in
       

check
     

by the mere threat of competition ­ if he charges prices that are too
       

high
     

or provides poor service, there will be an incentive for a competitor to
come in and take market share from him by offering lower prices or
better
service.

The rules change, however, when government regulation erects barriers to
entry or otherwise suppresses competition. In addition to the many
government regulations purportedly enacted in the "public interest,"
       

there
     

are numerous instances where private-sector businesses have been able to
successfully lobby policymakers to use the power of government to
       

establish
     

barriers to competition and protect them from existing or potential
       

rivals.
     

Unlike the free-market case, there is no possibility of these
monopolists
losing out to lower-cost providers (barring the elimination of the
regulations), and they are able to "exploit" consumers. These are the
       

truly
     

harmful monopolies. Thus, the only "bad" monopoly is a
government-created
       

or
     

government-preserved
monopoly.


Conclusions

Proposition 80 would be a step backward for California. It would
restrict
consumer choice, discourage competition, and impose more of the kinds of
regulations that got the California power industry into trouble in the
       

first
     

place.

As awful as Proposition 80 is, however, there is good news. It is
       

trailing
     

in recent public opinion polls, and even if it should end up passing it
       

is
     

likely to be discarded by the courts. It was removed from the ballot on
       

July
     

22 by the Court of Appeals in Sacramento because the court found that,
according to the state constitution, the PUC's authority can only be
increased by the Legislature, not by initiative. The initiative was
       

restored
     

a few days later by the California Supreme Court, which did not offer an
opinion on the merits of the case but felt that the public should have
       

the
     

chance to vote on the initiative before the legal challenge is heard.
(Of
course, if voters reject the measure, this will be a moot point and the
courts will not have to waste their time on it ­ a fact that surely was
       

not
     

lost on the Supreme Court.)

Politicians and regulators forced a sham of a "deregulation" scheme upon
       

the
     

energy industry in California, and then blamed the free market when it
inevitably failed! The problem was not too much free-market competition;
       

it
     

was too much regulation (despite the "deregulation" doublespeak). The
       

real
     

solution to California's energy problem is to eliminate price caps and
       

all
     

government regulation, thereby removing barriers to entry, fostering
competition, offering consumers maximum choice, and affording providers
       

the
     

greatest incentives to increase capacity and best serve their customers.

Adam Summers is a policy analyst for the Reason Foundation
(asummers1@san.rr.com). Comment on the blog.

[1] This option was suspended during the electricity crisis of 2000 and
2001, but is scheduled to be reinstated when the last of the power
       

contracts
     

signed on behalf of the IOUs by the Department of Water Resources
expires
       

in
     

2015.

[2] Carrie Peyton Dahlberg, "Electricity proposition crackles: Will
       

prices
     

go up? Will it avert an energy crisis? It all depends on who's talking,"
Sacramento Bee, October 15, 2005,
http://www.sacbee.com/content/politics/story/13717834p-14560232c.html(free
registration required).

[3] California Secretary of State, Official Voter Information Guide,
Statewide Special Election, November 8, 2005, p. 52,
http://www.ss.ca.gov/elections/bp_nov05/voter_info_pdf/entire80.pdf .

[4] Terry Maxon, "Power Woes Unlikely in Texas, Officials Say," Dallas
Morning News, January 19, 2001, cited in Lynne Kiesling, "Getting
Electricity Deregulation Right: How Other States and Nations Have
Avoided
California's Mistakes," Reason Foundation Policy Study No. 281, April
       

2001,
     

p. 18, http://www.reason.org/ps281.pdf.

[5] Murray N. Rothbard, Power and Market: Government and the Economy,
(Kansas City: Sheed Andrews and McMeel, 1977), p. 76,
http://mises.org/rothbard/power&market.pdf. Now integrated into Man,
Economy, and State.

[6] Thomas J. DiLorenzo, "The Myth of Natural Monopoly," The Review of
Austrian Economics, Vol. 9, No. 2 (1996), p. 44,
http://mises.org/journals/rae/pdf/rae9_2_3.pdf.

http://mises.org/daily/1954

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