Thanks complement. Your last sentence breaks the no-political-statements-in-the-choir rule. But since it cleverly can be read either way I'm goign to let it stand. Your feelings about nuclear should not depend on yr politics. With the election coming up, perhaps everybody should reread https://jackdevanney.substack.com/p/gk-news-choir-rules
Jack - Good creative writing! Lets hope for reform in 2025 and not wait till 2027. I like your plan for handling risk with compensation covered by insurance. Unfortunately, the extensive blackouts mentioned in your Orwell-type predictive story will continue for quite a few years before new nuclear power plants can be built - but at least it's a plan for the future.
I stopped reading when the “president” started basing everything on CO2 output. Already in 2024, people are beginning to admit to the absurdity of wanting to control CO2 emissions.
Dunno but as an electrical engineer the power grid needs updates. As well as faster internet. In Tokyo and China and other Asian countries the speed is quick anywhere pretty much. But it is not per se that we all need to be at the speed of light either.
Jack, thank you for this marvelous, balanced piece. Perhaps it will help bring the right and left together to act sensibly.
A quotation from Emerson's "The American Scholar" seems appropriate: "The world is his who can see through its pretension. What deafness, what stone-blind custom, what overgrown error you behold is there only by sufferance--by your sufferance. See it to be a lie and you have already dealt it its mortal blow."
Jack, you seem to have taken the natural monopoly status of electricity distribution as a given. Contrary to common perception, the evidence for this is quite poor. In fact, I would say the evidence suggests it is a myth (see https://mises.org/review-austrian-economics/myth-natural-monopoly). That being said, the coop model clearly does have benefits over the predominant modes of electricity regulation today. However, it seems to me that "people controlling the power" is better realized by a free market in electricity (see https://www.aier.org/article/free-market-electricity-a-primer/). Shifting to such a market is not infeasible—Advocates for Consumer Regulated Electricity have some ideas for how it could be done. The implications for nuclear would be profound.
I don't think you read the piece very carefully. I did not say textbook competition was impossible in this market. I explicitly said it was, but the resulting price spikes such as we saw in storm Uri are deemed unacceptable. So we come up with a hodge podge of measures to try and shield the ratepayer from those price signals, and end up with the current mess.
Odd, both links still work when I click them, but in any case you can find it if you google "AIER free market..."
I did read your whole piece carefully. Perhaps I misinterpreted it, but I took the portion you mentioned to be referring to one of the current "markets" like the one that exists in Texas, which is the most efficient of the "deregulated markets," but has the ratepayer drawbacks you mentioned. But those aren't really markets, they are probably more appropriately called administrative schemes. And, critically, they still take the transmission and distribution to be natural monopolies, including in Texas. Only the power production and retail sectors are marketized.
I don't see any reason why in a real free electricity market arrangements wouldn't emerge that would shield ratepayers from wild price spikes and without government intervention. It would be in the best interests of the market competitors to achieve such an outcome. A utility with very inconsistent prices woudn't last long. I really suggest you check out the Consumer Regulated Electricity model from the group I mentioned.
At the link, I get a teaser and a Read the Full Explainer button.
When I click on that button, I get the Page Not Found Message.
There is nothing inconsistent with massive price spikes in a market subject to high fixed costs and highly inelastic demand. They are a necessary signal to make the system work.
My point is that the market would tend to favor firms or market arrangements that reduced the impact of price swings on ratepayers. A free market would very likely not look like the energy-only market that exists in Texas.
I see no real plan in that paper. The author seems to have only two specific points:
a) we had competition for the first two decades when electricity was being introduced, and it was a period of rapidly falling prices.
b) we don't need regulation since buyers can form a monopsony which can threaten to change the seller.
With respect to (a), this was also a period of remarkable technological progress. Further, a large part of the fall in prices was due to consolidation as a dominate provider emerged, eliminated duplication, and took advantage of economies of scale. (a) only shows how quickly these factors destroyed competition,
(b) can work in some areas such as garbage collection. In the Keys, the county held an auction every year to see who would get the contract for that year's service. The same guy won it every year. But he knew if he got too greedy or inefficient he'd be out of work. So the service was pretty good and reasonably priced.
But I cant imagine how that would work for power unless the public owned the distribution network in the same way that it owns the streets on which the garbage trucks traveled; and the paper certainly does not tell us.
Nobody is claiming ERCOT is textbook competition or anything close.
But yeah if you could somehow overcome the duplication issue (say wireless power transmission) then the market would come up with some form of insurance against the price spikes.
You seem pretty sure about (a) above, but I disagree. Consolidation and competition can coexist (see Schumpeter), and perhaps both drove the immense technological progress in the early electricity industry. The move to natural monopoly regulation was a policy decision (and supported by incumbent utilities), not an inevitable fact of life.
& until now I had never read about or known anything about RICA or this speech, thank you
Good job on reforming our electric power policy system! How do we reform our governance system to serve people instead of political power seekers?
We cannot forget this , Americans! You/We will get bamboozled again and again : see: stream.gigaohm.bio
This is great! I am an avid follower and thank you Jack Devanney very much
This is a well thought document. Send a copy to Kamala Harris.
Charles,
Thanks complement. Your last sentence breaks the no-political-statements-in-the-choir rule. But since it cleverly can be read either way I'm goign to let it stand. Your feelings about nuclear should not depend on yr politics. With the election coming up, perhaps everybody should reread https://jackdevanney.substack.com/p/gk-news-choir-rules
You Sir have my vote for president…!
This might be the best thing you’ve written. Hats off!
It's a wonderful fantasy, but I don't think any president since George Washington has been this honest with the public. :)
Eisenhower's "military industrial complex" echoed Washington's "spirit of party".
Jack - Good creative writing! Lets hope for reform in 2025 and not wait till 2027. I like your plan for handling risk with compensation covered by insurance. Unfortunately, the extensive blackouts mentioned in your Orwell-type predictive story will continue for quite a few years before new nuclear power plants can be built - but at least it's a plan for the future.
Dear choir - please do all you can to share Jack's work with the popular media - mainstream, independent or otherwise. The word needs to get out!
I stopped reading when the “president” started basing everything on CO2 output. Already in 2024, people are beginning to admit to the absurdity of wanting to control CO2 emissions.
Check out stream.gigaohm.bio. Find out the real deal ..
Dunno but as an electrical engineer the power grid needs updates. As well as faster internet. In Tokyo and China and other Asian countries the speed is quick anywhere pretty much. But it is not per se that we all need to be at the speed of light either.
Jack, thank you for this marvelous, balanced piece. Perhaps it will help bring the right and left together to act sensibly.
A quotation from Emerson's "The American Scholar" seems appropriate: "The world is his who can see through its pretension. What deafness, what stone-blind custom, what overgrown error you behold is there only by sufferance--by your sufferance. See it to be a lie and you have already dealt it its mortal blow."
Jack, you seem to have taken the natural monopoly status of electricity distribution as a given. Contrary to common perception, the evidence for this is quite poor. In fact, I would say the evidence suggests it is a myth (see https://mises.org/review-austrian-economics/myth-natural-monopoly). That being said, the coop model clearly does have benefits over the predominant modes of electricity regulation today. However, it seems to me that "people controlling the power" is better realized by a free market in electricity (see https://www.aier.org/article/free-market-electricity-a-primer/). Shifting to such a market is not infeasible—Advocates for Consumer Regulated Electricity have some ideas for how it could be done. The implications for nuclear would be profound.
Power
Got a 404 on the aier link.
I don't think you read the piece very carefully. I did not say textbook competition was impossible in this market. I explicitly said it was, but the resulting price spikes such as we saw in storm Uri are deemed unacceptable. So we come up with a hodge podge of measures to try and shield the ratepayer from those price signals, and end up with the current mess.
Odd, both links still work when I click them, but in any case you can find it if you google "AIER free market..."
I did read your whole piece carefully. Perhaps I misinterpreted it, but I took the portion you mentioned to be referring to one of the current "markets" like the one that exists in Texas, which is the most efficient of the "deregulated markets," but has the ratepayer drawbacks you mentioned. But those aren't really markets, they are probably more appropriately called administrative schemes. And, critically, they still take the transmission and distribution to be natural monopolies, including in Texas. Only the power production and retail sectors are marketized.
I don't see any reason why in a real free electricity market arrangements wouldn't emerge that would shield ratepayers from wild price spikes and without government intervention. It would be in the best interests of the market competitors to achieve such an outcome. A utility with very inconsistent prices woudn't last long. I really suggest you check out the Consumer Regulated Electricity model from the group I mentioned.
At the link, I get a teaser and a Read the Full Explainer button.
When I click on that button, I get the Page Not Found Message.
There is nothing inconsistent with massive price spikes in a market subject to high fixed costs and highly inelastic demand. They are a necessary signal to make the system work.
I just emailed you the article.
My point is that the market would tend to favor firms or market arrangements that reduced the impact of price swings on ratepayers. A free market would very likely not look like the energy-only market that exists in Texas.
Thanks.
I see no real plan in that paper. The author seems to have only two specific points:
a) we had competition for the first two decades when electricity was being introduced, and it was a period of rapidly falling prices.
b) we don't need regulation since buyers can form a monopsony which can threaten to change the seller.
With respect to (a), this was also a period of remarkable technological progress. Further, a large part of the fall in prices was due to consolidation as a dominate provider emerged, eliminated duplication, and took advantage of economies of scale. (a) only shows how quickly these factors destroyed competition,
(b) can work in some areas such as garbage collection. In the Keys, the county held an auction every year to see who would get the contract for that year's service. The same guy won it every year. But he knew if he got too greedy or inefficient he'd be out of work. So the service was pretty good and reasonably priced.
But I cant imagine how that would work for power unless the public owned the distribution network in the same way that it owns the streets on which the garbage trucks traveled; and the paper certainly does not tell us.
Nobody is claiming ERCOT is textbook competition or anything close.
But yeah if you could somehow overcome the duplication issue (say wireless power transmission) then the market would come up with some form of insurance against the price spikes.
Here is an article on the "Consumer Regulated Electricity" concept raised by Power Points: https://www.cato.org/blog/what-would-consumer-regulated-electricity-look.
You seem pretty sure about (a) above, but I disagree. Consolidation and competition can coexist (see Schumpeter), and perhaps both drove the immense technological progress in the early electricity industry. The move to natural monopoly regulation was a policy decision (and supported by incumbent utilities), not an inevitable fact of life.
Regarding (b), although I prefer the CRE concept, Demsetz outlined how franchise competition could work in local electricity distribution too. See https://www.sfu.ca/~wainwrig/Econ400/documents/demsetz68-JLE-utilities.pdf