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
>> >
>> > --
>> > Thanks for being part of "PoliticalForum" at Google Groups.
>> > For options & help see http://groups.google.com/group/PoliticalForum
>> >
>> > * Visit our other community at
>> > http://www.PoliticalForum.com/<http://www.politicalforum.com/>
>> > * It's active and moderated. Register and vote in our polls.
>> > * Read the latest breaking news, and more.
>>
>>
>> --
>> Together, we can change the world, one mind at a time.
>> Have a great day,
>> Tommy
>>
>> --
>> Thanks for being part of "PoliticalForum" at Google Groups.
>> For options & help see http://groups.google.com/group/PoliticalForum
>>
>> * Visit our other community at
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>> * It's active and moderated. Register and vote in our polls.
>> * Read the latest breaking news, and more.
>>
>
> --
> Thanks for being part of "PoliticalForum" at Google Groups.
> For options & help see http://groups.google.com/group/PoliticalForum
>
> * Visit our other community at http://www.PoliticalForum.com/
> * It's active and moderated. Register and vote in our polls.
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--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
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