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Re: Summary: Bay Area Power (2000-06-14)
From: "Steven M. Bellovin" <smb () research att com>
Date: Thu, 15 Jun 2000 23:05:00 -0400


In message <200006152243.SAA24809 () montu connix com>, gwright () thebiz net writes:


I was under the impression that these power shortages were the
result of less over-engineering on the part of power companies due
to deregulation but maybe this isn't such a new situation after all?


There was an interesting article in the May 11 Wall Street Journal
about how deregulation has led to this situation.  I quote:

        Deregulation, now under way in 24 states, upsets that
        structure and allows new players -- some affiliated with
        utilities, some not -- to build power plants and sell
        electricity. Prices are set by competitive markets; risks
        are borne by investors, not ratepayers. At the same time,
        utilities are surrendering control of long-haul transmission
        lines to new nonprofit operators whose job it is to ensure
        fair access to the grid -- the multistate system of
        high-voltage lines.


        The result: a national electricity system that is vulnerable
        to disruptions caused by equipment breakdowns and human
        error as newly established regional grid operators assume
        responsibility for much larger areas than those formerly
        overseen by individual local utilities. For big energy
        users, who expected deregulation to bring lower prices,
        not lower reliability, it has been a worrisome experience.

Briefly, established power companies were worried that decreasing
prices would prevent them from earning money on their investment; new
players held off until they could figure out what markets would be
most profitable.

The transmission system is in bad shape, too -- San Francisco is
specifically identified as having poor connections to the larger power
grid.

There's a lot more in the article, including notes about how incomplete
deregulation has contributed.  If you subscribe, you can find it at
http://interactive.wsj.com/archive/retrieve.cgi?id=SB957998459784551619.djm



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