Thursday, August 21, 2003

Electric Utilities Dereg, redux

Here's a hint: The electric utilities were *not* deregulated. Instead,
they were subjected to a cockamamie set of new regulations that
eventually led to the catastrophe we face today. Here's an example:
"The new regulations forced utilities to sell off their gas and
oil-powered plants, which caused utilities to lose control over power
production and to become dependent on power plants for the electricity
they needed to serve their customers. California legislators also
forced utilities to buy electricity strictly on a daily basis. The
rationale put forth was that in such a setup utilities would be
prevented from closing long-term deals with power plants that might keep
competitors out of their market. The chaotic effect of this regulation
was that utilities had to renegotiate their electricity prices with
power plants every day, and therefore endure huge energy-price
fluctuations." < >.



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