Ian,
Reading the Abstract by William Boyd that you provide below reminded me
of my own analysis about regulation, electric utilities, and conservation. Back
in the early 1990s I argued in testimony before the CPUC — more than argued,
demonstrated, that utility commissions, in setting the rate of return on
equity, are determining the rate of growth of the utility. (Growth of sales,
rate base, and investment.)
This was consistent with The US Supreme Court in the Hope and Bluefield
cases that William O. Douglas was important in deciding circa 1940.
Utility management is required to maximize the value for shareholders — not
maximize profits. Maximizing profits (statically) is not the same as
maximizing shareholder value, so management must attend to growing at the rate
which will maximize the share price. Again, not the maximum rate of growth but
the rate that will maximize the share price. I showed the constraints
involved, depending heavily on the insights of Myron Gordon, then of the U. of
Toronto and others.
Needless to say, Commissioners wanted nothing to do with acknowledging
that traditional utility regulation made them responsible for setting the rate
of growth of sales. Commissioners, then, now, and before (along with utility
management) prefer to think that the market — i.e. the customers — determine
how fast the demand for utility services grow.
I hardly need to say that my testimony was not adopted. Even the enviros
steered clear, preferring to snuggle up with the utilities, offering large
profits if the utilities would support the distraction offered by Amory Lovins.
Perhaps it anticipated what William Boyd is now getting at.
Gene
> On Feb 18, 2016, at 9:27 AM, Ian Murray <[email protected]> wrote:
>
>
>
>
> Date: Thu, 18 Feb 2016 10:18:39 -0600
> From: [email protected]
> I have a somewhat different take on this. I am inclined to think of
> regulation and nationalization as points on a continuous spectrum, rather
> than as stark binary either-or choices.
>
> To put it somewhat provocatively, my claim is that a sufficiently
> well-regulated private enterprise is indistinguishable from a public one.
> From a practical perspective, is there really that much of a difference
> between a profit rate of 0.1% and 0.0%?
>
> If the nationalization is considered too radical (because Socialism!), there
> is an easy way around it - just call it regulation! My sense is that the
> right wing perceives this very clearly. It is only the Left that seems
> obsessed with words and labels.
> -raghu.
> ========
>
> For interested parties:
>
> "Stages in the Decline of the Public-Private Distinction" by Duncan Kennedy
>
> http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=4675&context=penn_law_review
>
>
> "Dialogue on Private Property" by Felix Cohen
>
> http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=5362&context=fss_papers
>
>
> "Property and Sovereignty" by Morris Cohen
>
>
> http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1260&context=clr
>
>
>
> [Lots of repurposeable analysis and argument in the below, especially on the
> legal realists]
>
>
> "Public Utility and the Low Carbon Future" by William Boyd
>
> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2473246
>
>
> Abstract:
> Substantial reductions in global power sector emissions will be needed by
> midcentury to avoid significant disruption of the climate system. Achieving
> these reductions will require greatly increased levels of financing,
> technological innovation, and policy reform. In the United States, the scale
> and complexity of the overall challenge have raised important questions
> regarding prevailing regulatory and business models, with much scrutiny
> directed at the traditional practice of public utility regulation.
> Recognizing the many valid criticisms leveled against public utility
> regulation and the important questions raised about the viability of
> traditional utility business models, particularly in the face of substantial
> growth in distributed energy resources, this Article argues that a
> revitalized and expanded notion of public utility has a critical role to play
> in efforts to decarbonize the power sector in the United States. In making
> this argument, the Article looks back to an earlier, more expansive concept
> of public utility as articulated by Progressives, legal realists, and
> institutional economists in the early twentieth century. This earlier concept
> of public utility contains valuable insights for dealing with the current
> challenges of decarbonization. The Article shows how this broader concept of
> public utility was substantially diminished by a confluence of external
> challenges and a sustained intellectual assault mounted by economists and
> lawyers starting in the 1960s. The narrowed understanding of public utility
> that resulted, it is argued, has distorted our views regarding the role of
> markets and disruptive technologies in the sector. In fact, basic public
> utility principles continue to govern a significant amount of activity across
> the power sector, including in both wholesale and retail electricity markets.
> And there are important unrealized possibilities embedded within the public
> utility concept that hold considerable promise for reforming current
> regulatory and business models in the face of rapid technological change and
> growing decarbonization imperatives. Such principles and possibilities are
> particularly important in ongoing efforts to increase renewable energy and
> finance large low-carbon generation projects. They also hold great promise
> for ongoing efforts to plan for and optimize the integration of increasingly
> large amounts of distributed energy resources such as rooftop solar, demand
> response, and energy storage. Indeed, when one looks at the overall scale,
> complexity, and sequencing of investments needed to decarbonize the power
> sector over the coming decades (however it comes to be organized), it is
> clear that the broad concept of public utility offers essential tools for
> planning and coordinating such investments over the long time horizons
> contemplated and for managing a system of increasing complexity. In all of
> these areas, a more expansive notion of public utility that draws from
> earlier understandings of the concept provides a normative foundation for
> efforts to govern a power system that is increasingly complex, participatory,
> and intelligent, and for managing the sustained, collective effort to channel
> investment and behavior in a manner necessary to realize a low-carbon future.
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