The GOP created the meltdown, ignored the American people, started unwarranted wars, took us from a $236 billion dollar surplus to $1.3 trillion dollar deficit, and now tells us they are the ones to fix it! Even though they have no plan!
A return to the failed GOP Bush policies is no plan, which will only fail yet again. On 10/19/10, Keith In Tampa <[email protected]> wrote: > Yes, Tommy, the articles totally debunk the horse hockey that you wrote. > > On Tue, Oct 19, 2010 at 12:27 PM, Tommy News <[email protected]> wrote: > >> Thanks for all this. >> >> >> >> On 10/19/10, MJ <[email protected]> wrote: >> > The Myth of Energy Deregulation >> > Monday, November 07, 2005 >> > by Adam Summers >> > >> > While the initiatives on the upcoming November 8 California special >> election >> > ballot backed by Governor Arnold Schwarzenegger have been receiving all >> of >> > the media attention, another initiative that addresses an important >> > issue >> is >> > being overlooked. Proposition 80, the so-called "Repeal of Electricity >> > Deregulation and Blackout Prevention" initiative, would make some >> > significant and detrimental changes in the state's energy policy. >> > >> > The fact that even a government regulatory body such as the California >> > Public Utilities Commission (PUC) is actually against a measure that >> would >> > increase its regulatory powers should tell you something right off the >> bat >> > about the merits of Prop. 80. >> > >> > California energy consumers are currently served by one of three types >> > of >> > providers: investor-owned utilities (IOUs), local publicly-owned >> > electric >> > utilities, and independent electric service providers (ESPs). Before the >> > state's "deregulation" experiment of the 1990s was suspended in 2001 >> during >> > California's energy crisis, customers could choose to purchase their >> > electricity services directly from ESPs through "direct access" >> contracts, >> > rather than through an intermediary such as the local IOU or public >> utility. >> > >> > >> > Proposition 80 Would Reduce Consumer Choice and Increase Costs >> > >> > Proposition 80 would permanently prevent all customers receiving >> electricity >> > services from an IOU from switching to an ESP, effectively eliminating >> any >> > new direct access (existing direct access contracts would be >> grandfathered >> > in).[1] Thus, under Prop. 80, instead of having the option to buy >> > electricity directly from independent producers, consumers would have no >> > choice but to buy their electricity from utilities. By effectively >> > eliminating an entire class of providers, the state has stifled >> competition >> > (and would continue to do so), thereby leading to higher prices and, >> likely, >> > lower-quality service. >> > >> > The effect of this provision on prices would be significant. ESP >> customers >> > include hospitals, local governments, the California State University >> > system, several University of California campuses, community college >> > districts, and local school districts. The nonpartisan Legislative >> Analyst's >> > Office (LAO) estimates that the UC system alone saves about $12 million >> per >> > year by purchasing its electricity from a lower-cost independent >> provider. >> > >> > According to Mike Florio, an attorney for The Utility Reform Network >> (TURN, >> > one of the chief proponents of Prop. 80 that helped craft the measure), >> the >> > ability of consumers to purchase electricity directly from independent >> > service providers "destabilizes the whole business … and we'll truly be >> at >> > the mercy of the gods of the free market."[2] How dare people be able to >> > choose whom they want to do business with! I suppose TURN hired Mr. >> Florio >> > not for his legal expertise, but rather by the sheer providence of the >> > "free-market gods." >> > >> > >> > Proposition 80 Would Impede Innovation and Efficiency >> > >> > Another provision of Prop. 80 would prohibit the broader implementation >> of >> > "dynamic pricing" of electricity without the consent of the consumer. >> > Currently, all but the largest energy consumers pay a flat rate for >> > electricity that does not vary by the time of day. Clearly, energy use >> > is >> > not constant throughout the day, however. There are certain "peak" hours >> of >> > the day when consumers use lots of electricity, and "non-peak" hours >> > when >> > they use very little. The costs of providing electricity vary >> accordingly. >> > As such, the IOUs have submitted proposals to the PUC to charge all >> > consumers higher rates during peak hours and lower rates during non-peak >> > hours. This price discrimination would be accomplished through the use >> > of >> > high-tech "smart" meters. >> > >> > In addition to making good sense one should pay more for something >> > when >> it >> > is in higher demand dynamic pricing would encourage conservation via >> the >> > pricing mechanism. Dynamic pricing would be a more efficient system >> because >> > higher prices would discourage some from consuming such a scarce >> > resource >> > while ensuring that those who place the highest value on energy use are >> > still able to consume it. Similarly, those who have some flexibility >> > over >> > when they consume their energy would be encouraged to utilize it during >> > non-peak hours, thus placing less strain on the system. >> > >> > Allowing the consumer to opt out of a dynamic pricing model would be >> > like >> > forcing a hotel owner to offer customers the choice of the nightly room >> rate >> > or an average of the nightly room rates throughout the week. Since >> > significantly more people stay at hotels during the weekend, rates are >> much >> > higher on Friday and Saturday nights. The average weekly rate, however, >> > would be higher than normal weekday rates but lower than normal weekend >> > rates. The cheaper "opt-out" weekend rates and higher weekday rates >> > would >> > encourage even more people to stay during the weekend and fewer to stay >> > during the week. The result would be a shortage of hotel rooms during >> > the >> > weekend and a loss of revenue for the hotel owner. No wonder demand >> strains >> > the electrical grids during hot summer days. >> > >> > >> > Environmental Issues >> > >> > Under current regulations, energy producers must increase the portion of >> > energy derived from renewable energy sources such as solar, wind, and >> > hydroelectric by one percent per year until 2017, when 20 percent of >> the >> > energy produced must come from these sources. Proposition 80 would >> > accelerate this deadline to 2010. Interestingly, some environmentalists >> > oppose Prop. 80 because a provision requiring a two-thirds vote of the >> > Legislature to amend the measure could make it more difficult to >> > increase >> > the renewable energy standard in the future. >> > >> > According to the LAO's analysis, Prop. 80 would also require that "the >> first >> > priority for IOUs in procuring new electricity is to be from >> > 'cost-effective' energy efficiency and conservation programs, followed >> > by >> > 'cost-effective' renewable resources, and then from traditional sources >> such >> > as fossil fuel burning power plants."[3] Of course, if renewable energy >> > sources and energy efficiency and conservation programs were truly "cost >> > effective," producers would already be utilizing them in higher numbers >> > because it would make them more profitable. This clearly is not the >> > case. >> > Forcing companies to invest significant amounts of their scarce >> > resources >> on >> > more costly energy-production methods, which make up a relatively small >> > share of total energy production (for good reason), will only ensure >> > that >> > costs and, ultimately, consumers' electricity bills remain higher >> than >> > necessary. >> > >> > As new technologies and energy-production methods are developed, this >> > may >> > change, but for now, it is best for both producers and consumers to >> > focus >> on >> > the most efficient means of producing energy. Of course, if consumers >> demand >> > "cleaner" energy, in a truly free market, producers will have an >> incentive >> > to provide it. Indeed, after Pennsylvania successfully implemented its >> > electricity deregulation effort in 1999 (without the pitfalls >> > experienced >> by >> > California), 20 percent of consumers chose to switch to suppliers of >> "green >> > power," despite the fact that they had to pay a small premium to do so. >> > Proposition 80 eliminates this choice, instead demanding that all >> consumers >> > support the higher cost of investing more in renewable energy whether >> they >> > want to >> > or not. >> > >> > >> > Misconceptions Over Electricity "Deregulation" in California >> > >> > Some blame deregulation for the rolling blackouts, soaring spot market >> > prices, and utility bankruptcies that sprang from the energy crisis of >> 2000 >> > and 2001. But this anger is misplaced. California has never experienced >> true >> > deregulation. The "deregulation" implemented in 1996 left price controls >> in >> > place and created "artificial" markets ripe for manipulation and >> disparities >> > between supply and demand. >> > >> > By setting price caps below market prices, California limited the >> > profitability of the industry. When wholesale energy costs increased, >> > the >> > price caps prevented energy producers from passing them on to consumers. >> > Wholesale prices rose dramatically for a number of reasons: natural gas >> > prices rose, hot weather in the Southwest increased demand, a relative >> lack >> > of water in the Northwest minimized the production of hydroelectric >> energy, >> > and pollution-control permits, which allow industrial companies that >> produce >> > less pollution than allowed by regulations to sell the difference as >> > "credits" to higher-pollution-producing companies, rose ten-fold, from >> > $4 >> to >> > $40. >> > >> > The price caps additionally discouraged potential producers from >> > entering >> > the market and increasing competition, and they discouraged existing >> > producers from investing profits in adding capacity, of which >> Californians >> > were (and continue to be) in dire need. As a result of the price caps >> > and >> > pressure from politicians and environmentalists, the building of plants >> and >> > transmission lines slowed dramatically and energy producers were not >> > able >> to >> > keep up with demand, particularly in the Silicon Valley, where the >> booming >> > computer and "dot-com" industries led to even sharper increases in >> > electricity demand. >> > >> > After the big three investor-owned utilities Pacific Gas & Electric, >> > Southern California Edison, and SEMPRA (San Diego Gas & Electric) were >> > forced to sell many of their fossil-fuel-burning generators to private >> > firms, regulators prohibited them from entering into long-term contracts >> > with these firms, forcing them to rely upon the much more volatile >> > short-term and spot markets. In addition, California forced generators >> and >> > utilities to trade power through the Power Exchange, a state-run pool. >> > >> > While that requirement was designed to give every company the same >> wholesale >> > price for power, it also guaranteed that they would be unable to >> negotiate >> > lower-priced power on their own. The California rules essentially barred >> > utilities from buying power on the futures market, meaning they were >> unable >> > to lock in supplies and prices.[4] >> > >> > This is as if Wal-Mart and Marshall Field's were forced to acquire their >> > goods from a non-profit, state-run pool that would guarantee that they >> would >> > acquire the goods for the same price. Wal-Mart never would have been >> > able >> to >> > develop its efficient and innovative purchasing and distribution system, >> > meaning it could not generate savings to pass on to customers in the >> > form >> of >> > lower prices. >> > >> > At the time of the increase in wholesale prices, PG&E and Edison were >> still >> > in the deregulation "transition" period, and thus still subject to PUC >> rate >> > regulations. As a result, PG&E went bankrupt and Edison teetered on the >> edge >> > of insolvency. To add insult to injury, when the government stepped in >> > to >> > purchase electricity on behalf of the struggling IOUs to try to quell >> > the >> > crisis, not only did it do so at the height of the emergency, when >> > energy >> > prices were highest, it locked in these prices with long-term contracts >> > costing billions of dollars. >> > >> > >> > The Natural Monopoly Justification for Regulation >> > >> > The main argument against the full privatization of public utilities >> > such >> as >> > electricity and water service is that such industries are "natural >> > monopolies." That is, they require such high fixed costs (it is easier >> > to >> > start a new restaurant than to invest in the infrastructure for a new >> > electric grid) that it is inefficient for there to exist more than one >> > producer in a particular location. This, it is feared, will lead the >> > producer to engage in price gouging. >> > >> > There are several problems with this rationale, not the least of which >> > is >> > the notion that "public utilities" somehow constitute a unique set of >> goods >> > that must be "protected" by government intervention. As economist Murray >> > Rothbard noted in Power and Market: >> > >> > The very term "public utility" … is an absurd one. Every good is useful >> "to >> > the public," and almost every good … may be considered "necessary." Any >> > designation of a few industries as "public utilities" is completely >> > arbitrary and unjustified.[5] >> > >> > High capital costs certainly will limit the number of actual and >> potential >> > providers, but there is still a profit motive in a free market that >> creates >> > opportunities for lower-cost producers. In addition, it is important to >> note >> > that markets are not static; technological innovations may allow for >> > additional competition in the future. >> > >> > Another misconception opponents of free markets have concerns the very >> > understanding of the nature of competition. Even if there is only one >> > producer of a certain good or service in town, this does not mean that >> the >> > producer is "gouging" customers through monopolistic practices. Indeed, >> just >> > because he is the sole supplier today does not mean he will be the sole >> > supplier tomorrow. As economist Thomas J. DiLorenzo explains: >> > >> > If competition is viewed as a dynamic, rivalrous process of >> > entrepreneurship, then the fact that a single producer happens to have >> the >> > lowest costs at any one point in time is of little or no consequence. >> > The >> > enduring forces of competition including potential competition will >> > render free-market monopoly an impossibility.[6] >> > >> > In other words, even if there happens to be only one current provider of >> a >> > particular good or service, in a free market that provider is held in >> check >> > by the mere threat of competition if he charges prices that are too >> high >> > or provides poor service, there will be an incentive for a competitor to >> > come in and take market share from him by offering lower prices or >> > better >> > service. >> > >> > The rules change, however, when government regulation erects barriers to >> > entry or otherwise suppresses competition. In addition to the many >> > government regulations purportedly enacted in the "public interest," >> there >> > are numerous instances where private-sector businesses have been able to >> > successfully lobby policymakers to use the power of government to >> establish >> > barriers to competition and protect them from existing or potential >> rivals. >> > Unlike the free-market case, there is no possibility of these >> > monopolists >> > losing out to lower-cost providers (barring the elimination of the >> > regulations), and they are able to "exploit" consumers. These are the >> truly >> > harmful monopolies. Thus, the only "bad" monopoly is a >> > government-created >> or >> > government-preserved >> > monopoly. >> > >> > >> > Conclusions >> > >> > Proposition 80 would be a step backward for California. It would >> > restrict >> > consumer choice, discourage competition, and impose more of the kinds of >> > regulations that got the California power industry into trouble in the >> first >> > place. >> > >> > As awful as Proposition 80 is, however, there is good news. It is >> trailing >> > in recent public opinion polls, and even if it should end up passing it >> is >> > likely to be discarded by the courts. It was removed from the ballot on >> July >> > 22 by the Court of Appeals in Sacramento because the court found that, >> > according to the state constitution, the PUC's authority can only be >> > increased by the Legislature, not by initiative. The initiative was >> restored >> > a few days later by the California Supreme Court, which did not offer an >> > opinion on the merits of the case but felt that the public should have >> the >> > chance to vote on the initiative before the legal challenge is heard. >> > (Of >> > course, if voters reject the measure, this will be a moot point and the >> > courts will not have to waste their time on it a fact that surely was >> not >> > lost on the Supreme Court.) >> > >> > Politicians and regulators forced a sham of a "deregulation" scheme upon >> the >> > energy industry in California, and then blamed the free market when it >> > inevitably failed! The problem was not too much free-market competition; >> it >> > was too much regulation (despite the "deregulation" doublespeak). The >> real >> > solution to California's energy problem is to eliminate price caps and >> all >> > government regulation, thereby removing barriers to entry, fostering >> > competition, offering consumers maximum choice, and affording providers >> the >> > greatest incentives to increase capacity and best serve their customers. >> > >> > Adam Summers is a policy analyst for the Reason Foundation >> > ([email protected]). Comment on the blog. >> > >> > [1] This option was suspended during the electricity crisis of 2000 and >> > 2001, but is scheduled to be reinstated when the last of the power >> contracts >> > signed on behalf of the IOUs by the Department of Water Resources >> > expires >> in >> > 2015. >> > >> > [2] Carrie Peyton Dahlberg, "Electricity proposition crackles: Will >> prices >> > go up? Will it avert an energy crisis? It all depends on who's talking," >> > Sacramento Bee, October 15, 2005, >> > http://www.sacbee.com/content/politics/story/13717834p-14560232c.html(free >> > registration required). >> > >> > [3] California Secretary of State, Official Voter Information Guide, >> > Statewide Special Election, November 8, 2005, p. 52, >> > http://www.ss.ca.gov/elections/bp_nov05/voter_info_pdf/entire80.pdf . >> > >> > [4] Terry Maxon, "Power Woes Unlikely in Texas, Officials Say," Dallas >> > Morning News, January 19, 2001, cited in Lynne Kiesling, "Getting >> > Electricity Deregulation Right: How Other States and Nations Have >> > Avoided >> > California's Mistakes," Reason Foundation Policy Study No. 281, April >> 2001, >> > p. 18, http://www.reason.org/ps281.pdf. >> > >> > [5] Murray N. Rothbard, Power and Market: Government and the Economy, >> > (Kansas City: Sheed Andrews and McMeel, 1977), p. 76, >> > http://mises.org/rothbard/power&market.pdf. Now integrated into Man, >> > Economy, and State. >> > >> > [6] Thomas J. DiLorenzo, "The Myth of Natural Monopoly," The Review of >> > Austrian Economics, Vol. 9, No. 2 (1996), p. 44, >> > http://mises.org/journals/rae/pdf/rae9_2_3.pdf. >> > >> > http://mises.org/daily/1954 >> > >> > -- >> > Thanks for being part of "PoliticalForum" at Google Groups. >> > For options & help see http://groups.google.com/group/PoliticalForum >> > >> > * Visit our other community at >> > http://www.PoliticalForum.com/<http://www.politicalforum.com/> >> > * It's active and moderated. Register and vote in our polls. >> > * Read the latest breaking news, and more. >> >> >> -- >> Together, we can change the world, one mind at a time. >> Have a great day, >> Tommy >> >> -- >> Thanks for being part of "PoliticalForum" at Google Groups. >> For options & help see http://groups.google.com/group/PoliticalForum >> >> * Visit our other community at >> http://www.PoliticalForum.com/<http://www.politicalforum.com/> >> * It's active and moderated. Register and vote in our polls. >> * Read the latest breaking news, and more. >> > > -- > Thanks for being part of "PoliticalForum" at Google Groups. > For options & help see http://groups.google.com/group/PoliticalForum > > * Visit our other community at http://www.PoliticalForum.com/ > * It's active and moderated. Register and vote in our polls. > * Read the latest breaking news, and more. -- Together, we can change the world, one mind at a time. Have a great day, Tommy -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more.
