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NV Energy is heavily regulated. A rate base utility is allowed to earn a certain % profit each year. This is specified by the authorities. They then work up the

by Riod 11y ago

NV Energy is heavily regulated. A rate base utility is allowed to earn a certain % profit each year. This is specified by the authorities. They then work up the income statement to how much they can charge and justify that to the government. Trust me when I say every line item is scrutinised. Don't envy anyone on the utility's side. What's the opacity here?

prostoalex 11y ago
We can have a committee (of politicians who might or might not had accepted political contributions campaigns from the energy sector) doing the regulation and another committee (of appointees with various levels of connections to energy sector) doing the scrutinization, or we can have those broken out as two separate businesses arriving at their numbers independently. Why can't consumers buy kWs from a variety of competing providers, and have them delivered via grid owned and serviced by a third-party? If a major utility decides they can outbid everyone else on grid maintenance contracts due to their superior cost structure or some technological know-how, so be it. Such tight vertical integration does not make sense if you extend the analogy to other infrastructure projects. Grid operator is the toll road operator, energy distributors are the UPSes, FedExes and other trucking companies paying for access to that road, and energy generators are the Amazon.coms and Wal-Marts pitching their kWs to final consumers. The billing is done by three separate parties, and we don't have to establish a supreme committee that decides whether Amazon charges us a fair price on shipping costs and toll road surcharges.
- Riod 11y ago
  Economics dont always work to split the three because each business needs to have sufficient competition for it to work. You can't exactly build 5+ grids running parallel to each other. The generation part is already competitive FYI. IPPs are a thing (as pointed out in the article). Deregulated markets tend to have spikes or lots of space for IPPs to build and compete. Have you ever looked at the financials of a utility and understood the different rate regimes? Your suggestions come across as pretty naive tbh. Power generation, distribution and retailing is not equivalent to setting up a Walmart. Texas has a deregulated regime and regulators there are always looking into price spikes because customers don't like their bill to change radically from month to month. And their bills aren't exactly lower. And customers can already buy electricity from different providers. One of them is solar city (under a lease). Or resellers.
  - prostoalex 11y ago
    Do you have a reading suggestion on understanding the economics of IPPs and effects of regulation/deregulation? I am also curious about more in-depth reading of Texas situation. Understood that a natural monopoly exists precisely because we don't want to run 5 competitive grids, but it also doesn't prevent a city (or county, or township, or HOA) from owning their last-mile distribution network (and having servicing/maintenance done by a contractor).
    - Riod 11y ago
      Look up primers on us power generation, should be a section mentioning ercot and highlighting its unique features. Agree that cities could own last mile (preferable really). But, and this is a big but, they're not always well equipped to do so. Mismanagement on their part could be even worse. Though Canadian provinces seem to be pretty successful with their crown corporations like Hydo One. But I understand those are separately managed utilities that buy some power, make some power, and transmit power. Interestingly hydro one ipo'd last year. Could look at their ipo filings to understand its history.

by Riod 11y ago

prostoalex 11y ago

We can have a committee (of politicians who might or might not had accepted political contributions campaigns from the energy sector) doing the regulation and another committee (of appointees with various levels of connections to energy sector) doing the scrutinization, or we can have those broken out as two separate businesses arriving at their numbers independently. Why can't consumers buy kWs from a variety of competing providers, and have them delivered via grid owned and serviced by a third-party? If a major utility decides they can outbid everyone else on grid maintenance contracts due to their superior cost structure or some technological know-how, so be it. Such tight vertical integration does not make sense if you extend the analogy to other infrastructure projects. Grid operator is the toll road operator, energy distributors are the UPSes, FedExes and other trucking companies paying for access to that road, and energy generators are the Amazon.coms and Wal-Marts pitching their kWs to final consumers. The billing is done by three separate parties, and we don't have to establish a supreme committee that decides whether Amazon charges us a fair price on shipping costs and toll road surcharges.

Riod 11y ago
Economics dont always work to split the three because each business needs to have sufficient competition for it to work. You can't exactly build 5+ grids running parallel to each other. The generation part is already competitive FYI. IPPs are a thing (as pointed out in the article). Deregulated markets tend to have spikes or lots of space for IPPs to build and compete. Have you ever looked at the financials of a utility and understood the different rate regimes? Your suggestions come across as pretty naive tbh. Power generation, distribution and retailing is not equivalent to setting up a Walmart. Texas has a deregulated regime and regulators there are always looking into price spikes because customers don't like their bill to change radically from month to month. And their bills aren't exactly lower. And customers can already buy electricity from different providers. One of them is solar city (under a lease). Or resellers.
- prostoalex 11y ago
  Do you have a reading suggestion on understanding the economics of IPPs and effects of regulation/deregulation? I am also curious about more in-depth reading of Texas situation. Understood that a natural monopoly exists precisely because we don't want to run 5 competitive grids, but it also doesn't prevent a city (or county, or township, or HOA) from owning their last-mile distribution network (and having servicing/maintenance done by a contractor).
  - Riod 11y ago
    Look up primers on us power generation, should be a section mentioning ercot and highlighting its unique features. Agree that cities could own last mile (preferable really). But, and this is a big but, they're not always well equipped to do so. Mismanagement on their part could be even worse. Though Canadian provinces seem to be pretty successful with their crown corporations like Hydo One. But I understand those are separately managed utilities that buy some power, make some power, and transmit power. Interestingly hydro one ipo'd last year. Could look at their ipo filings to understand its history.