Guest Post by Willis Eschenbach
I got to thinking about the way that California prices its electricity, which is never a good thing for a man’s blood pressure.
When I was a kid, the goal of the Public Utilities Commission and Pacific Gas and Electric was to provide cheap electricity. The Bonneville Dam and the Shasta Dam were lauded for bringing cheap, renewable electric power to the farms, just like the renewable electricity the Tennessee Valley Authority had supplied earlier. This cheap electricity was seen as liberating housewives from domestic slavery, and supporting business and manufacturing. It was hailed as the wave of the future and the path to success, and rightly so—cheap energy is the reason the developed world was able to lift itself out of poverty. And since we generated our own electric power when I was a kid, and had to live with the results when it went out, I know all about the ability of electricity to lessen even a kid’s load around a cattle ranch.
So … when did expensive energy become the new goal? When did raising the price of energy become a good thing? That’s topsy-turvy thinking.
I started this train of thought when I had occasion to revisit Anthony Watts’ outrageous electricity bill, which he discusses here.
Figure 1. Why California is circling the drain …
Ninety-two cents a freakin’ kilowatt-hour? The utility companies have a monopoly, and they are allowed to charge ninety-two cents a kilowatt-hour? How can that be? Isn’t the California Public Utilities Commission supposed to stop that kind of thing?
The most aggravating part of all of this to me is that so many people see this kind of pricing as being a good thing. Not the ninety-two cents part, most folks find that outrageous.
But lots of folks apparently approve of the part where the higher the demand for the electricity, the more the utilities charge for it. This is called “Time Of Use” pricing, and a lot of well-meaning people think it’s a good idea … not me. I figure that’s because they just never thought it through all the way, they never saw what’s at the other end of the spoon.
Now, the utilities claim that Time Of Use pricing is a good thing because it spreads the load more evenly over the 24 hours … but why should I care? That’s their business, to provide enough power for all conditions when and as needed … but I digress. Hang on, I can likely find an example of their justification style … OK, they say the reason for Time Of Use Pricing is:
“To ensure greater power reliability and a better energy future”.
Impressive, who wouldn’t want a better future. Can I translate that for you?
“Greater power reliability” means so they won’t run out of power. If they were honest they’d say that they have Time Of Use Pricing “to avoid brownouts because we don’t have adequate generation capacity”. And ensuring a “better energy future” means “we hope we can provide future power but only if we raise prices on you today.” I’ll return to this issue in a moment.
But in any case, what kind of heartless bastards charge you more for something when you really need it? Because with “Time Of Use” pricing, when Anthony’s wife and kids are suffering in the scorching heat in Chico and really need the aircon, Pacific Gas And Electric (PG&E) and the California Public Utilities Commission say “Fine, you folks can turn on your air conditioners … but it will cost you almost a dollar a kilowatt to cool down.”
I never in my life thought I’d see electricity pricing used as a weapon against the poor and the old folks like that. That is criminal. What a plan. The seniors can afford to air condition their apartments or their rooms whenever they don’t need to … but when it’s hot, when they really need to air condition them, they can’t afford to. Catch-22, thy name is legion.
Now, don’t get me wrong here. I’m sure the Public Utilities Commission didn’t intend that outcome. I’m not accusing them of deliberately trying to cook Grandma. To do that you’d need some smarts, and anyone implementing a plan like that clearly has no smarts to spare on Grandma. Sadly, it’s just another case of Noble Cause Corruption, where the noble cause of saving the world from Thermageddon™ has overwhelmed native common sense and compassion.
Seriously, folks, this kind of pricing is madness, it’s unacceptable. If we had a water utility, and they charged 5¢ a glass when you weren’t thirsty, and $5.00 a glass when you came in dying of thirst, everyone would scream bloody murder that as a public utility you can’t screw the customers like that. Pick a dang price for a glass of water and stick with it, you can’t be jacking the price through the roof on someone just because they’re thirsty, that’s not on.
But that’s exactly what’s happening with electricity. Air conditioning in Chico is becoming the province of the wealthy, due to the “Time Of Use” pricing policies of the PUC.
However, the PUC are not the villains here. They are caught in the middle because of the stupidity of the voters and of Governor Brown. The voters put in a very destructive “20% by 2020” plan requiring 20% of the electricity supply to come from renewables by 2020 … then Governor Moonbeam had a Brilliant Idea™, so he unilaterally raised it to 33% by 2020. I don’t know how he jacked it by himself, but his daddy was the Governor and he grew up in the state house, so he knows which side of the bread the bodies are buttered on … these things are mysteries to the uninitiated like you and I.
And of course, it’s nearly impossible to build a fossil-fired plant of any kind anywhere in California anyhow. I hear these days when you apply for a license in California to generate electricity from fossil fuels, the State Government just issues you a couple of lawsuits along with the permits, in order to save time …
So you can’t build fossil plants, and renewable plants are few and far between … and as a result the system operators, a company called CAISO, are always balancing on the edge of a “brownout”, when the power doesn’t go out, but you only get 90% of the voltage, or on the verge of rolling blackouts, the next step after brownouts … and we’ve seen both.
And to put the icing on the cake, somewhere along the line, some congenital idiot ruled that hydroelectric power doesn’t count as a renewable energy source. I hope that person roasts in the place of eternal barbecue and HE doesn’t have the money to run the air conditioner. Truly don’t think I’ve heard a more expensive and destructive ruling than that one, especially after the TVA and Bonneville Dam and Shasta Dam have shown that yes, idiots, hydropower is indeed renewable. Yeah, dams have problems and there’s lots of issues, but last I looked the rain is still working both reliably and renewably …
So by 2020 we’re suppose to get a third of our power from solar, and rainbows, and wind, and hydrogen, and biomass, and methane from the digestive apparati of unicorns, and fuel cells, anything expensive and out of reach will do. The suppliers of these nostrums have the state over a barrel, of course, and demand outrageous prices.
And as you would predict, this unbelievable idiocy has left the state woefully short of power. And as a result, the whole program has gone into reverse.
So now, rather than increasing the amount of cheap electric power available to the consumer like a utility should, we’re going the other way. The PUC and PGE aren’t encouraging people to utilize cheap power in order to better their lives. They aren’t doing their job of ensuring an adequate supply of inexpensive power. Far from it.
Instead, they’re doing whatever they can to push people back into the dark ages, because they are UNABLE TO GENERATE ENOUGH LIGHT OUT OF UNICORN ERUCTATIONS TO FILL THE DEMAND …
So that’s why, when they say the pricing is to “assure greater power reliability”, that’s a lie. They are using that pricing to discourage demand. Have you ever heard a dumber thing than a business working to discourage demand? Who anywhere tells their customers to buy less? Why jack your prices to force them to buy less?
Well, because they don’t have the power generating capacity. And this in turn is because for every two fossil-fueled or hydroelectric power plants you build, you need one unicorn-fueled plant, and those damn unicorns are proving much harder to catch than Governor Moonbeam figured …
But even given that that is the case, and given that the PUC is caught in the middle, there has to be a better plan than cooking Grandma to deal with that problem.
The people pushing these rattle-trap schemes, like “Death Train” Jim Hansen, always talk about the grandchildren … meanwhile, every one of their damn plans, of carbon taxes, and cap-and-trade, and subsidies, and requirements for “renewables”, and regulations, and all the rest, every one of them does nothing but screw Grandma and the rest of the poor.
Those plans do nothing but raise the cost of energy with almost no benefit to the environment.
They don’t reduce CO2. They don’t save the planet. They don’t help the environment. At best, with a following wind they might make a difference of a couple hundredths of a degree in a century. And indeed, because they further impoverish Grandma and the poor, they are actively harming the environment.
And meanwhile in the present, far from the ivory towers where they entertain their century-long fantasies, on the other side of the tracks, out of sight from the houses of the wealthy, the reality of these destructive, ugly policies hit Grandma and the poor of California the hardest. The head of the PUC doesn’t have to worry whether he can afford to air condition his sick child’s room … the CEO of PG&E isn’t losing sleep over his electric bill.
I fear I have no magic bullet to solve this. It will be a slow slog back to sanity. All I can do is to highlight the issues, and trust that at some point people will come to their senses.
So all of you folks that think that fighting CO2 will make a difference decades from now, remember the difference that this pseudo-green insanity is making today. Your actions are cooking Grandma, impoverishing the poor, and harming the environment today, and history will not find your part in inflicting pain and deprivation on society’s weakest members to be funny in the slightest. I truly don’t care if you think the poor in 2050 desperately need help from some imagined tragedy. You are screwing the poor today.
My best Independence Day wishes to you all, and remember, the beauty of America is that you’re all free to air condition your houses … but only when it’s not hot.
w.
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We have met the Enron and he is PG&E.
Roger Sowell says:
Actually, California law now prohibits importing any electric power from power plants (like coal) that produce more than a very low amount of CO2 per kWh. This effectively erases coal-power from being imported, but does allow nuclear, wind, solar, and natural gas power if it is produced in the very efficient combined cycle gas turbine system. There is a brief time extension for existing contracts with coal-fired plants. Those contracts are not allowed to be renewed when they expire.
It seems to me that this policy is in violation of the Federal Constitution – Article 1 Section 8 gives Congress (and only Congress)s power to restrict and regulate commerce with both states and foreign governments.
Mr. Sowell, You might be technically correct that “no one is cooking grandmother” but I would argue that “we are invalidating grandmother as a person.” But the thing to remember is this: Perhaps grandmother WILL be baked like a lasagne at a later date? How can you ensure us that grandmother decides to NOT use an AC and that it bakes her for making that choice and if that choice is made DUE to higher energy costs, did California not just bank grandmother into a cheese and sauce filled dish? Excuse the language, just trying to be colorful and extend the metaphors.
In all seriousness, you tell grandmother that she has “government assistance” she can apply for and that there are free “Government buildings that are heated and cooled.” But you are also telling her that her time is worthless, that instead of spending time relaxing or getting things done in the comfort of her own home, she has to clean-up nicely, get on a dirty bus, and spend all day at a different location where she is going to be bored, and the kicker? She is actually going to increase pollution with her use of mass transit and/or her car. How is that for environmental justice? Now the poor neighborhood she lives in has that much more smog in it because that many more people are required to commute every-day it gets warm or cold. I personally don’t see that as a relevant solution and I see those solutions as callous, and over-simplified. If you really want to help her out, fight to have her power bill turned down so she can make her own decisions. Fight so that she can afford to keep her home comfortable and that no matter where in California she lives whether it be in the “nice climate areas” or in the heat of the Mohave.
That is my take on environmental justice, if you truly want people to have justice, give them the ability to fight for this justice instead of being forced to waste all time on Government assistance. Now for Willis’ post, if you wanted Willis to edit the post above I think the better solution than arguing like you were was to ask him to add simple corrections. If you do not think the title is proper, explain it and ask him to change it. Or perhaps you just want him to change the detail about hydro to put a small except on how smaller projects are considered renewable but larger hydro installations are lumped with coal as non-renewable.
Sandor Ferenczi, re your comment about population reduction:
So, are you going to go first matey?
Nah, thought not.
J Martin says: @ur momisugly July 4, 2013 at 10:21 pm
… Though in a revival of true British Imperial tradition I believe that plans have been mooted to relive past glories and overtake the world, as some congenital imbeciles (h/t to w. for the phrase ) think we should legislate an 80% reduction in co2 output….
>>>>>>>>>>>>>>>>
Well Obama has even the Brits congenital imbeciles beat. He wants an 83% reduction in CO2.
On a slightly off topic note, I stumbled onto this site: The Energy Collective
Here is one of the articles: Obama Carbon-Shames Keystone Pipeline In Climate Change Speech
ERRRrrrr, what was that again about skeptics being in the pay of the EVIL ENERGY Co.s?
Roger Sowell,
IMO your entire premise is a convoluted and disingenuous contradiction.
You have been defending California’s unnecessary and purposeless high energy cost while at the same time claiming to be
“for the cheapest power prices, that bring safe, reliable power to customers.”
You have suggested poor people can request brochure offered assistance or seek refuge while ignoring the fact that it too adds to the cost of energy with relatively few people able to use it.
You pretend that the offered assistance and refuge is somehow sufficient to offset or balance the high energy cost they cannot afford.
That’s like a state lottery spending millions addressing gambling addictions and claiming they are offsetting any harm their lottery does.
All the while you have avoided the most cogent point and query Ellis raised.
“WHAT ARE WE GETTING FOR THE SACRIFICE? AND WHY MUST THE POOR SACRIFICE THE MOST?”
Because its sure not affecting the damn temperature … so tell us, Roger, you have the floor—what good has or will come from the California madness that justifies cooking Grandma? It won’t cool the planet enough to even be measurable? How is an unmeasurable benefit justify harming the poor?”
Roger, if you ignore the absence of benefits while justifying the sacrifice you are indeed a “callous, cold-hearted person.”
Would you have every state adopt California’s approach?
There is no upside to artificially high energy costs. And you have not provided any justification for the needless sacrifice.
Hmm. Sowell has gotten persnickety in this post. Sometimes agree w/him otherwise, but he must have a hidden dog in this fight — how else to explain the Stokes-like behavior?
kramer says:
July 5, 2013 at 6:06 am
“From what I’ve read, global warming looks to be a tool to redistribute wealth both within and between nations.”
Of course. Fighting an imaginary problem turned out great for expansion of the state’s powers. The only thing necessary is to relentlessly keep up the propaganda campaign. Therefore the controlled media; therefore the “climate scientists”.
Gamecock says:
July 5, 2013 at 8:04 am
We have back up for wind and solar running at all times. A few small plants in rotation and able to add in for peak demand would not require them to be running all the time. It is called planing.
Well, Willis, anybody that lives in a home with AC isn’t exactly POOR in my book.
In fact, when 1 billion people are starving in this world, nobody living in California is poor in my book, and complaining about your Granny not being able to afford AC is ridiculous.
As to “what kind of heartless bastards charge you more for something when you really need it?”:
That’s called supply and demand. It’s one of the key concepts of capitalism – the system that got most of the world to rely on (cheap! – but only for the power company) coal for electricity in the first place, when everybody knows the plants’ dust is hurting people’s lungs (including your granny, and mine).
HelmutG says:
July 5, 2013 at 9:38 am (Edit)
—————————————-
What a strange response. You, HelmutG, are far richer than billions of others on the planet so by your logic until we are all equally poor we have no grounds to complain. However I take the view that my society has progressed to the extent that many things are my right by dint of my society having been able to organise itself to the point we find ourselves at and that would include clothes, food, cars and AC to say nothing of having a home, food and a government to protect me and my interests.
As for capitalism, well that would be fine except we now have artificially created shortages of energy resulting in increasing prices and no way for the market to adequately respond thanks to mandated restrictions on what fuels can be used.
Perhaps you believe that the plants are causing damage to people’s lungs but there is no evidence of that from todays coal fired plants. Today we live longer than at any time in history, if you are fortunate enough to live in a western democracy, that is thanks to our ability to harness cheap, ubiquitous and reliable energy. Hating the success of the society in which you live has become an all too common theme in these times but I suspect you would rather live in a modern, market driven democracy than anywhere else as many from the third world show they would by trying to get here by hook or by crook.
High energy prices are iniquitous, and totally driven by green activists like yourself.
timc says:
July 5, 2013 at 9:29 am
Gamecock says:
July 5, 2013 at 8:04 am
We have back up for wind and solar running at all times. A few small plants in rotation and able to add in for peak demand would not require them to be running all the time. It is called planing.
=============================================================
It’s called “fixed cost.”
Keitho says:
July 5, 2013 at 9:53 am
“Perhaps you believe that the plants are causing damage to people’s lungs but there is no evidence of that from todays coal fired plants.”
Well guess what, there is, and lots of it, and I believe it.
Even in western europe (where coal plants are far cleaner than in most of the US), surveys find that they cause medical costs to the society.
@Willis –
You are correct, that small hydro (up to 30 MW) s counted as renewable in California, But even that has been the subject of a lot of green whining, and PacifiCorp is now proceeding with plans to tear down three dams on the Klamath River that are small hydro. Also, small hydro provides only a small portion of the hydro power consumed in California – the vast bulk of it comes from the Bonneville Power Administration’s operations in the Pacific Northwest.
The greens demonize all hydro, which I would have to assume is because they demonize any kind of cheap energy – and demonize human well-being in general.
ferd berple says:
July 5, 2013 at 7:04 am
Willis, the State of California should be able to regulate that 33% of the power generated in the state be renewable. What they should not be able to regulate is that consumer’s in California must buy California power as opposed to Oregon power.
That should be illegal under numerous federal anti-trust and anti-racketeering laws. Every person in California should be free to buy power from the lowest cost producer as they see fit, regardless of which state it is made in, in the same way they are able to buy goods and services from any state, not just those made in California.
Interesting idea. I’m not a lawyer -and therefore by definition a productive member of society- but it seems to me that restricting the type of imported electricity should run afoul of the commerce clause. I think the long distance phone experience is a good analogy. Anyone should be able to pay a reasonable tariff for the use of your electrical utility line just like they paid a reasonable tariff for the use of your phone line. Now THAT would really shake up the power market and could completely destroy all of the silly renewable mandates. “Power” states which did not require expensive green mandates could sell their electricity directly to consumers and the green companies would no longer have a captive market they could screw at will… I LIKE it!
Tsk Tsk says:
July 5, 2013 at 10:09 am
I think the long distance phone experience is a good analogy. Anyone should be able to pay a reasonable tariff for the use of your electrical utility line just like they paid a reasonable tariff for the use of your phone line.
==================================================================
Be careful what you wish for. Electrical power is a capital intensive business. You start screwing with the power companies’ ability to make money, covering their cost of investments like for power lines, and there will be no power lines.
Willis Eschenbach says: @ur momisugly July 4, 2013 at 10:35 pm
What Roger means is that he can’t see Grandma from his house.
Because if he could see her, he’d know that she’s illiterate, doesn’t have a computer, and won’t be following his link any time soon …
Your justification is that it’s OK to screw the poor as a class as long as you offer assistance, which might reach 5% of those affected … it sounds like that salves your conscience….
>>>>>>>>>>>>>>>>>>>>
Just try jumping through all the hoops the government wants you to jump through to get assistance.
For example:
Most lower income older folks are eligible but wouldn’t even know where to start and then there is PRIDE. You worked all your life and paid your own way and now the S.O.B.s have jacked up the price of everything so your hard earned savings is now worth pennies on the dollar. – That is the reason I HATE fractional reserve banking.
“Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money. This is the most effectual of inventions to fertilize the rich man’s fields by the sweat of the poor man’s brow. Ordinary tyranny, oppression, excessive taxation–these bear lightly on the happiness of the mass of the community compared with a fraudulent currency and the robberies committed by depreciated paper.” ~ Andrew Johnson (December 9, 1868)
Now the rich have found another way to rob and control the working class.
Gamecock says:
July 5, 2013 at 5:16 am
Eric Worrall says:
July 5, 2013 at 4:52 am
China and India are investing in Thorium nuclear technology in a big way. Its only a matter of time before they commercialise this technology, and start undercutting the cost base of economies too stupid to follow their lead.
==================================================================
Jeeeeze . . . not the thorium hoax again.
“Its only a matter of time” is not the same as “they have gotten it to work.”
In the real world, nuclear fuel created by thorium alchemy must compete with other sources of nuclear fuel. We are hundreds of years from that happening.
That’s a silly, arbitrary, and incorrect statement. The source of the fuel is not the problem with the Thorium cycle. Continuously reprocessing it is. We already have all of the Thorium we need to provide decades it not centuries of grid-scale nuclear power to the US (and world for that matter). It’s the engineering work we need to do on the reprocessors that requires the time and investment (OK, we need to do some work on the reactor as well but that was already mostly demonstrated 40 years ago). The current uranium cycle has relatively expensive fuel because of all the enrichment activities and the limited supplies not to mention the fact that we throw away 90+% of the energy in the assembly because solid assemblies are intrinsically inflexible and inefficient. Fast breeders? Been there, done that. Thorium lost out to them for purely political reasons and then for technical reasons they crapped out. Sea water harvesting? That’s awfully expensive compared to just using the rare earth tailings that are already heaped up.
I don’t have a problem with current nuclear technology but there are serious issues with it that we are simply unwilling to resolve, i.e. waste. We won’t reprocess it, and we won’t sequester it. Do you honestly think dry cask storage is a good solution for millennia? Even Gen III+ designs have meltdown and containment risks, not to mention the intrinsic proliferation risks involved with uranium enrichment. Thorium (LFTR to be specific) resolves most of these and reduces the last concern. So why exactly is it “hundreds of years” away? I’d certainly prefer having our $10B+ subsidies go to bringing up a Thorium pilot plant than giving GE shareholders and Elon Musk more of my money.
Oh, and we’ve got plenty of alchemy going on in current nuclear reactors today. Precisely where do you think plutonium came from? Hint: it’s virtually all man-made.
“We already have all of the Thorium we need to provide decades it not centuries of grid-scale nuclear power to the US”
Sir, thorium is not fuel. It can’t power anything.
DirkH says: July 5, 2013 at 1:06 am
Roger; please explain the logic behind that.
First the state allows a monopoly provider to jack up prices to unaffordable levels to reduce demand (and “unaffordable” is the explicit goal). Next the state gives tax money to the customers who can’t afford the inflated prices.
____________________________________
Why? Its socialist politics – creating a loyal client state. We had loads of this during the miserable Blair and Brown years in the UK.
The logic goes – you tax people up to their eyeballs. You then give loads of rebates and credits to the poor and even to the middle classes. This means that a great swathe of the population now has to come to you, the government, and doff their cap in gratitude as they receive their rebate or tax credit. ‘Bless you Mr Socialist Politician, for giving me a credit.’
And of course this great client state you have just created has to vote for you, otherwise they will lose all their credits and rebates. All power to the party. Communism by the back door.
.
Fred Berple says”
“Every person in California should be free to buy power from the lowest cost producer as they see fit, regardless of which state it is made in, in the same way they are able to buy goods and services from any state, not just those made in California.”
Fred, its not as easy as that. Let me tell you a bit about CAISO. I am far from an expert, but I did work on building this monstrosity – a very minor part, but it gave me access to the “brains” and I did ask questions. For those that don’t know, CAISO (the California Independent System Operator) manages the electricity market for the state of CA.
As originally conceived, CAISO does two things: First it provides the platform for people to trade electricity in several different markets (more on that below), and secondly, it manages the distribution network. It *has* to manage the distribution network, because if someone buys power from a specific generator, the network has to be capable of transferring that load from the generator to the buyer. If a buyer wants to skip his local generators because they are all too expensive, and buy only from some remote generator with better prices, but the capacity of the network isn’t there, maybe because other customers are also taking energy from their suppliers over part of the same network, the result could easily be blown transformers and melted transmission lines.
It is just not on to even imagine that consumers could switch supplier on a whim.
The opportunity to buy “green” power is a con. In most cases the electrons that those people consume will have been generated in a coal, gas, or (gasp!) nuclear power station.
To complicate all this, a bit more about the multiple markets.
This may have changes slightly since the inception, but this is essentially the way it was:
There is a “long-term” market. You can buy your electricity well in advance, at good rates, to cover what you estimate your load to be in X months hence.
However, electricity consumption varies a lot, depending on things like weather, and generators breaking. So there is a week-ahead market where you can buy more to cover what looks like a shortfall, or sell the excess that you bought. Of course, a week out, the prices are higher.
Then the is the hour-ahead market, this is to cover very short-term problems that you made in your purchases. Prices are again higher.
Then there is the real-time market, you couldn’t get what you wanted on the hour-ahead market, so you pay through the nose for energy to patch up your shortfall. This gets expensive because this is when the really expensive generators based on things like jet engines get fired up.
Being a simple-minded soul, I asked one of the market managers what was to stop me buying as much as I wanted on the long-term market, much more than I would ever need, and sitting on it, refusing to sell it, knowing that I had bought enough to ensure that the lights would go out in large areas of California if people didn’t pay my exorbitant price on the hour ahead or real-time markets.
The answer was a long stare, followed by, well, if you had the money, you could do that, but no-one ever would.
No-one but Enron that is.
pretty good screed.
another fact is that the California reform required the utilities to buy the electricity daily on the spot market auction, instead of writing long-term contracts. Somebody persuaded the Assembly that the spot market would almost always have lower prices than long-term contracts. When Gray Davis took over the purchasing of electricity and ran the govt into debt, he used his emergency power to declare that the state, but not the local utilities, could buy long-term contracts; the emergency staff who were hired were all from the energy industry, and they negotiated high prices for the long-term contracts. Anyway, those high prices reflect the prices bid in the spot market for short-term production (i.e. a few hours) of electricity.
If renewable energy is so great why does it have to be subsidized? Forgot socialists don’t believe in the free market, they’re just smarter than the rest of us, they know what’s best.
Philip Peake says:
July 5, 2013 at 11:18 am
Are not the utilities required to buy on the spot market, as I wrote? Or am I out of date on this detail?
HelmutG says:
July 5, 2013 at 9:38 am
In France a few years ago, a whole bunch of people died in a heat wave, simply because they didn’t have air conditioning. And while it is true that by world standards nobody in France is poor … they still died. So I fear your objection is meaningless.
Thanks, Helmut, but you’ve forgotten a very important concept—monopolies.
Supply and demand works very well as you point out … except when there are monopolies, including state-allowed monopolies, like with power and water. Where there is a monopoly, people can charge what they damn well please because there’s no competition … which is why in most capitalist societies, there are laws against monopolies (except state-run monopolies like power and water utilities).
It is also why state-approved utility monopolies almost always have a body (usually called the Public Utilities Commission), to prevent the state-approved monopolies from screwing people over … a job which the CPUC appears to have abandoned, and instead is aiding and abetting the monopoly.
It’s one of the curiosities of capitalism, you might google “monopolies” for further education on the subject.
w.