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- Path: sparky!uunet!news.univie.ac.at!scsing.switch.ch!univ-lyon1.fr!ghost.dsi.unimi.it!rpi!usc!cs.utexas.edu!swrinde!gatech!kd4nc!ke4zv!gary
- From: gary@ke4zv.uucp (Gary Coffman)
- Subject: Re: Real vs Govt Energy costs (Re: Roads and Taxes)
- Message-ID: <1993Jan27.162935.15560@ke4zv.uucp>
- Reply-To: gary@ke4zv.UUCP (Gary Coffman)
- Organization: Destructive Testing Systems
- References: <51868@seismo.CSS.GOV> <=b#s4vc@dixie.com> <30539@castle.ed.ac.uk> <1993Jan22.190333.10528@ttinews.tti.com> <30755@castle.ed.ac.uk> <1993Jan25.174753@aifh.ed.ac.uk>
- Date: Wed, 27 Jan 1993 16:29:35 GMT
- Lines: 43
-
- In article <1993Jan25.174753@aifh.ed.ac.uk> jamesh@aifh.ed.ac.uk (James Hammerton) writes:
- >
- >Hmmm, I think I agree with these points, and would add that in the USA
- >where they have allowed market forces to govern things to a large
- >extent(though it's not perfect), it has allowed utilities who have
- >spotted new ways to make money to go ahead with their ideas. For example
- >there have been several cases of utilities realising that instead of
- >producing new electricity, it was cheaper to subsidise energy efficient
- >technology to their users, and use the energy saved for other purposes.
- >Also there are many utilities now operating on least cost planning,
- >which encourages energy efficiency over new supply, and those that are
- >sensitive to their environmental image can rightly point out that doing
- >these things leads to less pollution overall. In Britain it would be
- >interesting to see the result of a publicly owned grid whose mandate
- >was to supply electricity from the cheapest sources, according to
- >least cost guidelines, whilst allowing any company to produce
- >plans for supplying the demand for electrical services and make bids
- >for contracts based on those plans. Such planning has had interesting
- >results in the US, see particularly the example of the Southern
- >California Edison company which gave free quadruple efficiency bulbs to
- >it's low income customers and their neighbourhood shops, because it was
- >cheaper than generating the required extra electricity.
-
- Now wait a minute James. Residential electricity is priced at the
- highest rate, it should offer the highest profit per unit of production
- since it's retail sales rather than wholesale. Utilities are regulated
- monopolies, however, not free market entities. If they were free market
- entities, it would make no business sense whatsoever to *pay* your
- highest profit customers to use less of your product. Instead what
- has happened is that government regulators have *decreed* that
- residential electricity use be subsidized. Thus utilities are starting
- to *lose money* on residential customers because of distribution costs
- and *restrictions* on pricing. Therefore, selling *at a loss* is minimized
- by paying customers not to buy. This is completely alien to the free market
- and most emphatically does *not* show that paying customers not to buy
- is cheaper than selling them the product at a profit.
-
- Gary
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