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Grid companies are tricky because there’s no market there. It is almost the textbook definition of a natural monopoly. You’re either hooked up or you’re not. O

by zxcmx 8y ago

Grid companies are tricky because there’s no market there. It is almost the textbook definition of a natural monopoly. You’re either hooked up or you’re not. Or you run multiple “grids” somehow which seems more economically wasteful and is legislatively tricky in terms of rights (to run lines, overhead or underfoot). It seems like the cost of maintaining poles and transformers goes up a lot every year... How to keep them honest? It seems like you would have to regulate to the point of ($pure distribution company) being essentially a government enterprise in all but name.

azernik 8y ago
Yes. I mean, for those reasons, PG&E is already a highly-regulated natural monopoly; they just happen to bundle in the more normal generation market with the naturally-monopolist grid market. (Which is part of what makes their lobbying work so problematic, since they're so regulated that they're almost a government branch themselves.) Splitting the company into a 1) a government or quasi-government enterprise to handle the parts not suitable to the market, and 2) a much-less-regulated company handling the more market-amenable activities, could give the system as a whole a lot more of the efficiencies of a market system.
- njarboe 8y ago
  And if you don't do it right things can get all screwed up in a hurry. California tried to do this with some really bad rules (power companies must by power in an unregulated spot market but sell into a regulated market for some number of years) in 2000 and ended up with the bankruptcy of PG&E, rolling blackouts, $40 billion lost by the state of California due to manipulated inflated prices, and the only successful recall of a California Governor in history. [1] for the gory details. [1] https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis
  - azernik 8y ago
    Yeah, designing a market is hard and needs professional economists involved, not just politicians riddled with conflicts of interest and taking all their information from lobbyists.

by zxcmx 8y ago

azernik 8y ago

Yes. I mean, for those reasons, PG&E is already a highly-regulated natural monopoly; they just happen to bundle in the more normal generation market with the naturally-monopolist grid market. (Which is part of what makes their lobbying work so problematic, since they're so regulated that they're almost a government branch themselves.) Splitting the company into a 1) a government or quasi-government enterprise to handle the parts not suitable to the market, and 2) a much-less-regulated company handling the more market-amenable activities, could give the system as a whole a lot more of the efficiencies of a market system.

njarboe 8y ago
And if you don't do it right things can get all screwed up in a hurry. California tried to do this with some really bad rules (power companies must by power in an unregulated spot market but sell into a regulated market for some number of years) in 2000 and ended up with the bankruptcy of PG&E, rolling blackouts, $40 billion lost by the state of California due to manipulated inflated prices, and the only successful recall of a California Governor in history. [1] for the gory details. [1] https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis
- azernik 8y ago
  Yeah, designing a market is hard and needs professional economists involved, not just politicians riddled with conflicts of interest and taking all their information from lobbyists.