This is first post or news article I've read that's given me the feeling I understand what's going on and why at with formerly reliable electricity industry. Higher level more theoretical bits explained that reliability and predictable costs (what us retail customers care about) we kicked far down the list of priorities. Now I get why this is going to get worse, not better until in the near future.
This post makes a good point about environmentalists, but nothing in it says anything about how deregulation has made us captive to special interests or why there is nothing free market about electric deregulation. Simply saying that something is so does not make it true
"there’s little or nothing a company can say or actually do to reason with environmental advocates. Unfortunately, any attempt at meaningful discussion is a fool’s errand."
There's actually biblical support for what you're saying. Although I'm not calling environmentalists 'swine', the principle of avoiding hopeless argument holds: "Don't cast your pearls before swine".
Also, Jesus said "Whoever does not receive you, nor heed your words, as you go out of that house or city shake the dust off your feet". Time is short. There's no sense wasting it by arguing with someone who won't even listen. We need to focus on those who will at least listen to what we're saying, and for meaningful dialogue, we also need to be willing to listen to them.
I worked in power plants and companies for about 15 years early in my career. Part of that was deregulation. I negotiated power contracts, both between utilities and later for retail. I appreciate your perspective. I never expected it to devolve into what you describe, but understand the reality.
A most excellent summation of how the developed world came to be in this enmeshed in this mire. The only way out IMHO that is fair to all concerned, including the unreliables (of wind & solar-PV's) is by way of adoption of a sound, sensible, commercially focused, Energy Policy along the following lines.
In the absence of empirical evidence proving the case against CO2 (there is none!), our policy makers (political elite) just need to promulgate a sound, sensible Energy Policy. One that’s fair to all concerned, including the unreliables. An Energy Policy that is market driven & works from the consumers interests back, NOT from the energy industry’s interests forward.
A sensible Energy Policy that:
• Is technology agnostic (fears & favours none, including the unreliables);
• Removes anti-competitive subsidies favouring the unreliables – ie a level playing field;
• Requires industry to comply with clearly defined QOS (Quality of Service) standards of reliability & availability (i.e.; 99.98% reliability as per current AEMO specs in Australia);
• Invites industry to commit by way of auction (a day, week or a month in advance of the offered opportunity) to provide reliable 24/7, base load power at their best competitive price(s);
• Imposes SUBSTANTIAL financial penalties upon power generators for failure to deliver in accord with mandatory QOS obligations (Force Majeure notwithstanding eg earth quakes, floods, bushfires, tornados etc);
• Requires a substantial bond to restore the environment (i.e.; recycle aged solar-PV’s & wind turbine blades etc as is already common place within the coal mining industry);
• Repeals any anti-competitive CO2 Legislation (i.e., in Australia; the Safeguard Mechanism, LRET, RET etc) & doubtless similar legislation elsewhere around the developed world).
Thus, let market forces prevail on a level playing field.
Environmentalists & those so committed to power generated by way of the unreliables (of wind & solar-PV’s) can invest in their perceived market opportunities associated with the unreliables, plus of course ‘firming’ (by way of batteries, pumped hydro schemes, whatever but at their cost) to meet QOS reliability obligations.
Whereas others might be just a titch more circumspect & elect to invest in traditional, reliable, base-load hydro-carbon (coal & gas) technology.
Longer term, investment also in nuclear power, assuming of course, (in Australia, the current legislative ban is repealed &) nuclear is cost competitive V’s competing technologies. Easy.
If the power generating industry finds these sensible energy policy principles unpalatable, simply re-nationalize the industry & return it to whence it came (in Australia, the responsibility of respective State Govt’s) ie national governments & be done with it.
I agree completely, except for slight reservations about your last point. The word "nationalize" makes me shudder. However, I guess there's a case to be made, as in the international highway system, although that's a little different...?
Heh heh - I do understand Al - Indeed it was 'nationalization' here that contributed in large measure to the Energy (electricity) crisis that we're now facing Down Under!
FYI, our electricity system was originally designed, engineered, constructed & ultimately funded by respective State governments ie thus owned originally by taxpayers in each State, rather than by our Federal Govt.
However, things changed in most States (not quite all.... our Qld State Govt still has ownership of most coal fired power stations in Qld) & our Federal Govt became directly involved.
Little by little, our ageing State owned coal fired power stations (primarily on the Australian eastern seaboard), were progressively sold off. Usually for a pittance, to commercial operators who, unsurprisingly, have shareholders, who in turn, expect a reasonable return on their investment.
That financial reality, complicated by the need nowadays to help 'save the planet' from that so claimed evil demon gas CO2 (not), has conspired, in concert with the 'climate alarmist' mantra/scaremongering, to a SIGNIFICANT increase in our electricity prices. They're up some 250% since 2008 & showing little sign of easing any time soon!
Hence, my final recommendation that in the absence of support for a 'sensible Energy Policy' as above, from the current (commercial) business owners, then the electricity generation business should be migrated back (re-nationalized for the want of a better word) to whence it came ie respective Australian State Governments to be owned & operated (again) by 'The People'.
For my part, I'd prefer it remain with the commercial operators - but under the T's & C's of a technology agnostic; market driven; competitive; subsidy free; clearly defined QOS standards with substantial $penalties for failure to meet such QOS standards; sensible Energy Policy. The principles of which I suspect might be no less relevant in the US as here in Oz. What do you think?
A most excellent summation of how the developed world came to be in this enmeshed in this mire. The only way out IMHO that is fair to all concerned, including the unreliables (of wind & solar-PV's) is by way of adoption of a sound, sensible, commercially focused, Energy Policy along the following lines.
In the absence of empirical evidence proving the case against CO2 (there is none!), our policy makers (political elite) just need to promulgate a sound, sensible Energy Policy. One that’s fair to all concerned, including the unreliables. An Energy Policy that is market driven & works from the consumers interests back, NOT from the energy industry’s interests forward.
A sensible Energy Policy that:
• Is technology agnostic (fears & favours none, including the unreliables);
• Removes anti-competitive subsidies favouring the unreliables – ie a level playing field;
• Requires industry to comply with clearly defined QOS (Quality of Service) standards of reliability & availability (i.e.; 99.98% reliability as per current AEMO specs in Australia);
• Invites industry to commit by way of auction (a day, week or a month in advance of the offered opportunity) to provide reliable 24/7, base load power at their best competitive price(s);
• Imposes SUBSTANTIAL financial penalties upon power generators for failure to deliver in accord with mandatory QOS obligations (Force Majeure notwithstanding eg earth quakes, floods, bushfires, tornados etc);
• Requires a substantial bond to restore the environment (i.e.; recycle aged solar-PV’s & wind turbine blades etc as is already common place within the coal mining industry);
• Repeals any anti-competitive CO2 Legislation (i.e., in Australia; the Safeguard Mechanism, LRET, RET etc) & doubtless similar legislation elsewhere around the developed world).
Thus, let market forces prevail on a level playing field.
Environmentalists & those so committed to power generated by way of the unreliables (of wind & solar-PV’s) can invest in their perceived market opportunities associated with the unreliables, plus of course ‘firming’ (by way of batteries, pumped hydro schemes, whatever) but at their cost) to meet QOS reliability obligations.
Whereas others might be just a titch more circumspect & elect to invest in traditional, reliable, base-load hydro-carbon (coal & gas) technology.
Longer term, investment also in nuclear power, assuming of course, (in Australia, the current legislative ban is repealed &) nuclear is cost competitive V’s competing technologies. Easy.
If the power generating industry finds these sensible energy policy principles unpalatable, simply re-nationalize the industry & return it to whence it came (in Australia, the responsibility of respective State Govt’s) ie national governments & be done with it.
Electricity should not be commodified Neither should air, water critical infrastructure or other basic essentials. Since this happened across the west service went down dramatically and price rose astronomically
Deregulation brings us closer to a free market. But as you imply, there still has to be some way to hold companies responsible. The real problem is not regulation per se; it's over-regulation, which ends up hurting our businesses and our economy.
I think there are many players in the game of regulation. I suppose government was the first player, always with the premise of keeping people safe. Corporations have become big players as well. Of course the intent there is to put the small competitors out of business. More recently we have to add the activists to the player list. I could try to list their intent, but I’d be here writing all day. Mostly the latter are just crazy and have no clue that often what they propose AND usually accomplish have serious unintended consequences. I sometimes wonder if some of the things we are “conspiracy theorizing” about are simply unintended consequences?
What I get from Charlies comment is "now we wait for that opportunity (if that is what it has to be called) and when we can be "blessed" with a disaster where many people die," then maybe, just maybe, with just a bit of luck - somebody will realize that we are sliding on that slippery slope to a doomsday situation?
Enron at the urging and direction of Jeff Skilling led to a degree, to the deregulation of the natural gas “markets”, transmission and distribution became fungible, money could be made, so fast forward to the electricity markets. A system designed by geniuses to be run by idiots was ripe for deregulation. We live in a re-regulated, deregulated, quasi free market environment, with regulated utilities owning unregulated subsidiaries which can lose money, make money and do a lot of things the regulated utilities cannot. Throw in Investment bankers, private equity, developers, dreamers and enviros, with one major helping of politicians who have the collective IQ’s of about 80 and here we sit. The system is broken, so broken that a mega billionaire can create enough incentive to reopen and start up Three Mile Island. Begging the question “why was it shuttered in the first place?”
The public utilities share a good deal of the blame. They are run by MBA MIdWits and scurrilous lawyers, so much so that non utility generators back in the day defined a New York Minute as the time it took a regulated utility lawyer to begin abrogating the long term power purchase agreement (usually necessary for financing a power generating project) that they had just signed. The ink wasn’t dry on the contract and the fight was on.
But the public deserves a big share of the blame as well. Every two year old child knows exactly where electricity comes from, ask one, she or he will run to the switch on the wall and ipso facto we have light. It gets worse after the age of two.
If people were serious about the future of their electricity sources, they would start working on their own local distributed generation supply and delivery, with a connection to a larger system that the RTO/ISO’s could help to manage. Two breakers for Hooverville, one to the outside world and one for keeping the lights on. That way MISO would not have to ask every other ISO in the lower 48 and in Canada for additional power when the wind and solar resources failed to make enough power for the regional population. The poor decisions of the “people” and their duly elected politicians would be their problem. One can surmise that sooner than later a plethora of natural gas and or nuclear reactor power plants would start the permitting process and as it got darker and colder or hotter, the regulatory red tape would start falling by the wayside.
It will boil down to how many people die in a cold snap of several days duration, before the public realizes that they are ill served and take it upon themselves to do something about it. Captive special interests, paid lobbyist, greedy bankers, dumb politicians enjoy the three card Monty game right now, but two things always happen to three card Monty grifters, they either are smart enough to fold the table and move on to the next set of rubes or they are not terribly bright and their luck runs out, they get caught and bad things happen to them. My money is on them getting caught, it’s up to the people to decide what happens to them next.
Off course. The great Charlie Munger always made sense with his “show me the incentives, I’ll show you the outcomes. This has (imo) largely contributed to massive wind/solar projects that are wildly expensive and unreliable.
This post feels far too short.
It reads more like the introduction of a *crackin'* series than like a finished stand-alone thing.
This person clearly ought to go into much, much more detailed, explaining specific instances of what s/he is allluding to.
I'm not satisfied with the Cliff Notes, I want the book.
This is first post or news article I've read that's given me the feeling I understand what's going on and why at with formerly reliable electricity industry. Higher level more theoretical bits explained that reliability and predictable costs (what us retail customers care about) we kicked far down the list of priorities. Now I get why this is going to get worse, not better until in the near future.
This post makes a good point about environmentalists, but nothing in it says anything about how deregulation has made us captive to special interests or why there is nothing free market about electric deregulation. Simply saying that something is so does not make it true
"there’s little or nothing a company can say or actually do to reason with environmental advocates. Unfortunately, any attempt at meaningful discussion is a fool’s errand."
There's actually biblical support for what you're saying. Although I'm not calling environmentalists 'swine', the principle of avoiding hopeless argument holds: "Don't cast your pearls before swine".
Also, Jesus said "Whoever does not receive you, nor heed your words, as you go out of that house or city shake the dust off your feet". Time is short. There's no sense wasting it by arguing with someone who won't even listen. We need to focus on those who will at least listen to what we're saying, and for meaningful dialogue, we also need to be willing to listen to them.
I worked in power plants and companies for about 15 years early in my career. Part of that was deregulation. I negotiated power contracts, both between utilities and later for retail. I appreciate your perspective. I never expected it to devolve into what you describe, but understand the reality.
A most excellent summation of how the developed world came to be in this enmeshed in this mire. The only way out IMHO that is fair to all concerned, including the unreliables (of wind & solar-PV's) is by way of adoption of a sound, sensible, commercially focused, Energy Policy along the following lines.
In the absence of empirical evidence proving the case against CO2 (there is none!), our policy makers (political elite) just need to promulgate a sound, sensible Energy Policy. One that’s fair to all concerned, including the unreliables. An Energy Policy that is market driven & works from the consumers interests back, NOT from the energy industry’s interests forward.
A sensible Energy Policy that:
• Is technology agnostic (fears & favours none, including the unreliables);
• Removes anti-competitive subsidies favouring the unreliables – ie a level playing field;
• Requires industry to comply with clearly defined QOS (Quality of Service) standards of reliability & availability (i.e.; 99.98% reliability as per current AEMO specs in Australia);
• Invites industry to commit by way of auction (a day, week or a month in advance of the offered opportunity) to provide reliable 24/7, base load power at their best competitive price(s);
• Imposes SUBSTANTIAL financial penalties upon power generators for failure to deliver in accord with mandatory QOS obligations (Force Majeure notwithstanding eg earth quakes, floods, bushfires, tornados etc);
• Requires a substantial bond to restore the environment (i.e.; recycle aged solar-PV’s & wind turbine blades etc as is already common place within the coal mining industry);
• Repeals any anti-competitive CO2 Legislation (i.e., in Australia; the Safeguard Mechanism, LRET, RET etc) & doubtless similar legislation elsewhere around the developed world).
Thus, let market forces prevail on a level playing field.
Environmentalists & those so committed to power generated by way of the unreliables (of wind & solar-PV’s) can invest in their perceived market opportunities associated with the unreliables, plus of course ‘firming’ (by way of batteries, pumped hydro schemes, whatever but at their cost) to meet QOS reliability obligations.
Whereas others might be just a titch more circumspect & elect to invest in traditional, reliable, base-load hydro-carbon (coal & gas) technology.
Longer term, investment also in nuclear power, assuming of course, (in Australia, the current legislative ban is repealed &) nuclear is cost competitive V’s competing technologies. Easy.
If the power generating industry finds these sensible energy policy principles unpalatable, simply re-nationalize the industry & return it to whence it came (in Australia, the responsibility of respective State Govt’s) ie national governments & be done with it.
I agree completely, except for slight reservations about your last point. The word "nationalize" makes me shudder. However, I guess there's a case to be made, as in the international highway system, although that's a little different...?
Heh heh - I do understand Al - Indeed it was 'nationalization' here that contributed in large measure to the Energy (electricity) crisis that we're now facing Down Under!
FYI, our electricity system was originally designed, engineered, constructed & ultimately funded by respective State governments ie thus owned originally by taxpayers in each State, rather than by our Federal Govt.
However, things changed in most States (not quite all.... our Qld State Govt still has ownership of most coal fired power stations in Qld) & our Federal Govt became directly involved.
Little by little, our ageing State owned coal fired power stations (primarily on the Australian eastern seaboard), were progressively sold off. Usually for a pittance, to commercial operators who, unsurprisingly, have shareholders, who in turn, expect a reasonable return on their investment.
That financial reality, complicated by the need nowadays to help 'save the planet' from that so claimed evil demon gas CO2 (not), has conspired, in concert with the 'climate alarmist' mantra/scaremongering, to a SIGNIFICANT increase in our electricity prices. They're up some 250% since 2008 & showing little sign of easing any time soon!
Hence, my final recommendation that in the absence of support for a 'sensible Energy Policy' as above, from the current (commercial) business owners, then the electricity generation business should be migrated back (re-nationalized for the want of a better word) to whence it came ie respective Australian State Governments to be owned & operated (again) by 'The People'.
For my part, I'd prefer it remain with the commercial operators - but under the T's & C's of a technology agnostic; market driven; competitive; subsidy free; clearly defined QOS standards with substantial $penalties for failure to meet such QOS standards; sensible Energy Policy. The principles of which I suspect might be no less relevant in the US as here in Oz. What do you think?
A most excellent summation of how the developed world came to be in this enmeshed in this mire. The only way out IMHO that is fair to all concerned, including the unreliables (of wind & solar-PV's) is by way of adoption of a sound, sensible, commercially focused, Energy Policy along the following lines.
In the absence of empirical evidence proving the case against CO2 (there is none!), our policy makers (political elite) just need to promulgate a sound, sensible Energy Policy. One that’s fair to all concerned, including the unreliables. An Energy Policy that is market driven & works from the consumers interests back, NOT from the energy industry’s interests forward.
A sensible Energy Policy that:
• Is technology agnostic (fears & favours none, including the unreliables);
• Removes anti-competitive subsidies favouring the unreliables – ie a level playing field;
• Requires industry to comply with clearly defined QOS (Quality of Service) standards of reliability & availability (i.e.; 99.98% reliability as per current AEMO specs in Australia);
• Invites industry to commit by way of auction (a day, week or a month in advance of the offered opportunity) to provide reliable 24/7, base load power at their best competitive price(s);
• Imposes SUBSTANTIAL financial penalties upon power generators for failure to deliver in accord with mandatory QOS obligations (Force Majeure notwithstanding eg earth quakes, floods, bushfires, tornados etc);
• Requires a substantial bond to restore the environment (i.e.; recycle aged solar-PV’s & wind turbine blades etc as is already common place within the coal mining industry);
• Repeals any anti-competitive CO2 Legislation (i.e., in Australia; the Safeguard Mechanism, LRET, RET etc) & doubtless similar legislation elsewhere around the developed world).
Thus, let market forces prevail on a level playing field.
Environmentalists & those so committed to power generated by way of the unreliables (of wind & solar-PV’s) can invest in their perceived market opportunities associated with the unreliables, plus of course ‘firming’ (by way of batteries, pumped hydro schemes, whatever) but at their cost) to meet QOS reliability obligations.
Whereas others might be just a titch more circumspect & elect to invest in traditional, reliable, base-load hydro-carbon (coal & gas) technology.
Longer term, investment also in nuclear power, assuming of course, (in Australia, the current legislative ban is repealed &) nuclear is cost competitive V’s competing technologies. Easy.
If the power generating industry finds these sensible energy policy principles unpalatable, simply re-nationalize the industry & return it to whence it came (in Australia, the responsibility of respective State Govt’s) ie national governments & be done with it.
Electricity should not be commodified Neither should air, water critical infrastructure or other basic essentials. Since this happened across the west service went down dramatically and price rose astronomically
I have been pro deregulation for a long time. I had never considered this side of it. Is responsible deregulation even possible?
Deregulation brings us closer to a free market. But as you imply, there still has to be some way to hold companies responsible. The real problem is not regulation per se; it's over-regulation, which ends up hurting our businesses and our economy.
I think there are many players in the game of regulation. I suppose government was the first player, always with the premise of keeping people safe. Corporations have become big players as well. Of course the intent there is to put the small competitors out of business. More recently we have to add the activists to the player list. I could try to list their intent, but I’d be here writing all day. Mostly the latter are just crazy and have no clue that often what they propose AND usually accomplish have serious unintended consequences. I sometimes wonder if some of the things we are “conspiracy theorizing” about are simply unintended consequences?
What I get from Charlies comment is "now we wait for that opportunity (if that is what it has to be called) and when we can be "blessed" with a disaster where many people die," then maybe, just maybe, with just a bit of luck - somebody will realize that we are sliding on that slippery slope to a doomsday situation?
Enron at the urging and direction of Jeff Skilling led to a degree, to the deregulation of the natural gas “markets”, transmission and distribution became fungible, money could be made, so fast forward to the electricity markets. A system designed by geniuses to be run by idiots was ripe for deregulation. We live in a re-regulated, deregulated, quasi free market environment, with regulated utilities owning unregulated subsidiaries which can lose money, make money and do a lot of things the regulated utilities cannot. Throw in Investment bankers, private equity, developers, dreamers and enviros, with one major helping of politicians who have the collective IQ’s of about 80 and here we sit. The system is broken, so broken that a mega billionaire can create enough incentive to reopen and start up Three Mile Island. Begging the question “why was it shuttered in the first place?”
The public utilities share a good deal of the blame. They are run by MBA MIdWits and scurrilous lawyers, so much so that non utility generators back in the day defined a New York Minute as the time it took a regulated utility lawyer to begin abrogating the long term power purchase agreement (usually necessary for financing a power generating project) that they had just signed. The ink wasn’t dry on the contract and the fight was on.
But the public deserves a big share of the blame as well. Every two year old child knows exactly where electricity comes from, ask one, she or he will run to the switch on the wall and ipso facto we have light. It gets worse after the age of two.
If people were serious about the future of their electricity sources, they would start working on their own local distributed generation supply and delivery, with a connection to a larger system that the RTO/ISO’s could help to manage. Two breakers for Hooverville, one to the outside world and one for keeping the lights on. That way MISO would not have to ask every other ISO in the lower 48 and in Canada for additional power when the wind and solar resources failed to make enough power for the regional population. The poor decisions of the “people” and their duly elected politicians would be their problem. One can surmise that sooner than later a plethora of natural gas and or nuclear reactor power plants would start the permitting process and as it got darker and colder or hotter, the regulatory red tape would start falling by the wayside.
It will boil down to how many people die in a cold snap of several days duration, before the public realizes that they are ill served and take it upon themselves to do something about it. Captive special interests, paid lobbyist, greedy bankers, dumb politicians enjoy the three card Monty game right now, but two things always happen to three card Monty grifters, they either are smart enough to fold the table and move on to the next set of rubes or they are not terribly bright and their luck runs out, they get caught and bad things happen to them. My money is on them getting caught, it’s up to the people to decide what happens to them next.
Accurate to say one regulation has been replaced by another: environmental-political?
Off course. The great Charlie Munger always made sense with his “show me the incentives, I’ll show you the outcomes. This has (imo) largely contributed to massive wind/solar projects that are wildly expensive and unreliable.