 | The UK Energy White Paper: An Academic Critique | The Oil Drum: Europe | ODAC Newsletter, Monday 08 October |  |
39 comments on Even CATO libertarians say energy deregulation does not work
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The only unanswered question remains why? Why is EC pushing for this madness? It has been demonstrated to fail everywhere, with results varying from poor to disastrous. Are these people plain stupid or have they not heard of natural monopolies? Its in Econ 101, AFAIR. Why is not the EC for example splitting water or rail utilities? Isn't this going to encourage competition too? Just separate water pumping and treatment from piping it to the consumers, sit back and enjoy the view.
The answer in my opinion is blindingly simple. Corruption. Plain ol' corruption on a grandiose scale. Regulated utilities are not very profitable. They are hard to be used as milk cows by middleman companies too. Consequently, they don't bring bucks to the "right" corporations. So... how can we make users pay up their throught and let "our" companies make easy cache? Yeap we have an easy answer for that. The mechanism has been exercised and tested extensively in the Third World, Eastern Europe and other places. Privatize, liberalize, deregulate. Split up, privatize and exploit all there is of public value. If applicable - bring it completely to the ground and then profit from rebuilding it. Oh yes, and we even have a neat ideological justification for all of this. It's in the name of free market and competition. Next round - prepare for the split up and privatization of the health system, social security, education... in the end EU will look even more "pure" than USA.
On a more personal note - you guys are going to taste the policy you've exported or coercively exercised in other countries for many years, including my own. Should I cry for you? Somehow I don't feel like it.
The question of "who profits" is an important one.
I quip that deregulation is a jobs programme for investment bankers (& market consultants & assorted "parasites") and rightwing politicians, but there is a hard nugget of truth in it.
That is not just a quip or a nugget of truth. It is the essence of the whole thing. A jobs creations programme. Just keep things churning. musical chairs with endless fees sucking the lifeblood out of the economy for consultants. German consultants make billions writing reports for the government. Privatization is propelled forward by these people to make a quick buck. This is reality.
“Without a video the people perish”-Is. 13:24
I follow this here in Germany. The deregulated energy industry is just a monopoly with several companies controlling everything and nobody els has any access so prices remain extremely high and no investments are made(ancient equipment). Access is the reason for separating the production from distribution. Like with telecoms they want to force the access to lines, if neccessary by taking them away from the big prodcution companies(RWE, Vatenfall,etc.) The big companies corrupt the politicians who play musical chairs between corporate and giovernment jobs and they sit in on the govt. and write the laws
as they please at the country level. So the EU thinks they are the uncorrupted Robin Hood coming to save the day. If what is said here concerning California is true then it won't work. Loads will be sent hither and thither disregardign cpacities and cause massive blackouts.Tjhe spot market here is a corrupted joke as well apparently with manipulation behind the scenes so that energy companies all together control the prices to get the highest possible pürice regardless of generation costs. Nationalization or regulation would be best.
“Without a video the people perish”-Is. 13:24
EU required deregulation in Iceland makes zero sense. Isolated island with unique reliability issues and 280,000 people.
Landsvirkjun was the national power company with the major national grid power lines, almost all of the dams and some geothermal power. Reykjavik City Government ran a competing company (they competed over the suburbs and some energy intensive industry in the area) and most of the geothermal (2/3rd of the population lives near the capital).
A rural co-op owned a few small dams, some feeder transmission lines and rural customers. Bought most of their electricity from Landsvirkjun and talked of buying half of a new geothermal project with Landsvirkjun.
Landsvirkjun has been split between transmission & generation (bad with reliability such an issue) and everyone has been deregulated. Landsvirkjun no longer keeps a safety surplus of generation. Landsvirkjun & Reykjavik Energy still compete over the suburbs & industry in the area (no change). Landsvirkjun is no longer interested in a joint geothermal project with the rural co-op.
I really see no benefit for deregulation is such a small market with so few players. EVERYBODY knows everybody, they used to get along (2 gov't owned utilities & rural co-op).
Alan