Is there an economist in the house?

Last week the OC Register referred to an interesting observation by some economists. According to the Register, "Economists say a healthy market for ratepayers will only come when generation exceeds consumption by at least 20 percent. " These "economists" clearly have not read the updated version of How Markets Work, because in the new edition it is made clear that unregulated markets tend toward a point at which supply meets demand. They call it efficiency. So why in the world would an electric company flood the market with their product and drive prices down? (Farmers burn their crop to protect profits.) The answer is, of course, the energy industry willl never ensure an excess of power... unless we regulate it and require additional capacity. It is foolish to think that the free market for electricity will do anything but tighten supplies, raise prices and generally stick it to the average consumer.

source:Democrat email list

I would add it is far too important an issue NOT to have a built in excess. Is power something which we can allow to be "out of stock"?

-- Anonymous, March 29, 2001

Answers

BTW, I signed up months ago for the Bush/Cheney newsletter. Have not received a single issue. I wonder if Datapoint filters this list as well for "undesirables"?

-- Anonymous, March 30, 2001

Doc:

I have talked to the CEO of my power provider. He actually answers emails personally. He said that their policy is to keep generating capacity at 15% above peak demands. They also have a fund to buy power if there is an unexpected outage. I forget how long they have planned for. It sounds like a pretty responsible approach to me. Of course, they aren't allowed to make a profit. All profit, beyond cost, is returned to the consumers. By the way, this isn't that small of a provider. It covers one state and large parts of two adjoining states.

Best Wishes,,,,

Z

-- Anonymous, March 30, 2001