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>This becomes a strong disincentive for the construction and operation of these plants that are vital for steady, dependable electricity supply. The market stru

>This becomes a strong disincentive for the construction and operation of these plants that are vital for steady, dependable electricity supply. The market structure in addition to the regulatory environment in the U.S. (e.g. requiring utilities to purchase all provided wind energy at higher than natural market price) are both part of the problem. The main disincentive to invest in the grid is the fact that it is a monopoly and like all monopolies the owner's incentives are to slash investment and milk the monopoly under ALL circumstances. Comcast behaves in a similar manner. The rules whereby grids are forced to buy wind energy or only allowed to make a certain level of profit are simply hacks to prevent the monopoly from becoming too abusive. There is absolutely no reason why a grid should be privatized and this is the core problem with them in America. Ironically, this profiteering has led to outrageously high electricity prices in some areas that has also led to rooftop solar being such a good deal (while the feed in tariff still exists anyhow).

tanzam75 12y ago
> The main disincentive to invest in the grid is the fact that it is a monopoly and like all monopolies the owner's incentives are to slash investment and milk the monopoly under ALL circumstances. Quite the opposite, in fact. In most of the PJM states, power generation is deregulated and market-driven, while the grid itself remains a regulated monopoly. Regulated monopolies operate under a fixed rate-of-return. They would much rather spend $6 billion and earn 10%, instead of spending $5 billion and earning 10%. That's what happens when the rate of return is fixed. The more they spend, the more they earn. Consumer groups routinely show up at regulatory commissions and complain that the electric utility is spending too much on upgrading the grid. > Comcast behaves in a similar manner. Comcast is a minimally-regulated monopoly that is not earning a fixed rate of return. The less they spend, the more they earn.

tanzam75 12y ago

> The main disincentive to invest in the grid is the fact that it is a monopoly and like all monopolies the owner's incentives are to slash investment and milk the monopoly under ALL circumstances. Quite the opposite, in fact. In most of the PJM states, power generation is deregulated and market-driven, while the grid itself remains a regulated monopoly. Regulated monopolies operate under a fixed rate-of-return. They would much rather spend $6 billion and earn 10%, instead of spending $5 billion and earning 10%. That's what happens when the rate of return is fixed. The more they spend, the more they earn. Consumer groups routinely show up at regulatory commissions and complain that the electric utility is spending too much on upgrading the grid. > Comcast behaves in a similar manner. Comcast is a minimally-regulated monopoly that is not earning a fixed rate of return. The less they spend, the more they earn.