The Neptune project is a privately-funded, high-voltage, direct current (yes, DC, not AC!) project to connect Manhattan and Long Island with other areas that have larger supplies of generated power. This type of interconnection of markets is a driving force in reducing transaction costs and increasing efficiency in energy markets. The progress of this project is very important as an indicator of the investment value of new, private transmission, and of the fact that just because electricity transmission is network infrastructure, that does not imply that it must be either provided by government or subject to government economic regulation (I am happy to concede the importance of safety standards in electricity transmission). This story, about TXU joining the investment consortium that is funding the Neptune project, illustrates the investment appeal of competitive electricity transmission to reduce bottlenecks. TXU’s development capital will expand the construction to include DC lines connecting Manhattan and New Jersey, which gives Manhattan better access to the liquid and well-supplied PJM (Pennsylvania-Jersey-Maryland) wholesale electricity market. This is a good thing.
Archive for July, 2002
GAME THEORY AND HUMAN NATURE
July 31, 2002This Wired News article highlights remarks by Martin Shubik, an eminent economist and game theorist, who is advocating pushing the use of game theory in economics beyond its grounding in rationality and strategy, to incorporate such human traits as emotion and error.
Last Wednesday, Shubik told the audience of game theorists with mathematics backgrounds that the next theories have to be hammered out “in concert” with other disciplines. The next theories, he said, have to consider emotions and their consequences, the culture and the context.
“Our simple models are no longer sufficient to answer many of the questions we have raised. The very successes of game theory are forcing us to move on,” said Shubik, an economics professor at the Yale University School of Management and a consultant to major corporations and agencies of foreign governments.
Very interesting. Perhaps the technocratic mathematization of my profession is in retreat? I’m not holding my breath, but as more prominent scholars recognize the need for interdisciplinary study of human action, I get more sanguine.
MONOPOLISTS, OLD AND NEW
July 31, 2002Microsoft and AT&T are forming a strategic alliance to provide wireless connectivity, particularly in work environments, according to this article.
FERC SETTING MARKET RULES TODAY
July 31, 2002According to this Bloomberg News article, FERC will announce rules today to govern cross-regional wholesale electricity sales, including market monitoring and pushing “regulated utilities to cede some authority over transmission lines.” This has been coming for a while, with lots of industry and public comment time. I hope Commissioner Massey’s quote in the article is not indicative of the policy stance, though:
“We now have enough information to know what works well,” Massey said in an interview.
What disturbs me most in that statement is the missing “for now” that I wish were there — we know from history of the past five years what not to do, given existing technological and regulatory environments. But what if FERC’s standard market design is not flexible and robust to changes, especially in technology? And what if it doesn’t allow for regulatory change that would be mutually beneficial for consumers and for innovative producers? Then I worry that FERC’s standard market design will freeze the institutional structure underpinning the industry, and that it will be rigid, unresponsive, and eventually obsolete, but still legally binding, to the detriment of consumers and innovative producers. It could also create vested interests who benefit from the institutional structure frozen in that way, who then have an incentive to lobby and use the political process to stymie change.
The biggest benefit is reduced transaction costs; transaction costs have been a big impediment to regional coordination that will bolster and liquify wholesale markets. See also this Reuters article on the topic.
TECH CENTRAL STATION COLUMN
July 31, 2002I have an article on Tech Central Station this morning, on how markets discipline companies who are not transparent and full of integrity.
POPE AND CRANE ON THE ENERGY BILL
July 30, 2002Anytime that Carl Pope of the Sierra Club and Ed Crane of the Cato Institute agree on something, it’s worth reading. Such is the case with this opinion piece in the Washington Post today.
HOW COOL IS THIS?
July 30, 2002Also courtesy of Slashdot, this New York Times article (registration required) describes the flywheels that the NY Port Authority has installed in the subway to collect and use the energy given off when subway trains brake. What a win-win — their energy bills go down, and subway stations are less hot!
A WIRELESS FUTURE?
July 30, 2002Courtesy of Slashdot, this Business Week article discusses the prospects and hurdles for wireless, “wi-fi” networks. My favorite quote:
Adds Ramesh Rao, director of the California Institute for Telecommunications & Information Technology: “History tells us that we cannot rely on the FCC’s ability to anticipate the future and write rules to allow progress.”
In the absence of a regulatory rescue, wireless advocates, including Rao, are trying to solve Wi-Fi’s problems through technological innovation. Right now, anyone can head down to Radio Shack and, for a few hundred dollars, wirelessly network their laptop to their cable or DSL broadband connection.
JANIS IAN GETS IT; WHY DOESN’T THE RIAA?
July 30, 2002As Janis Ian wrote in an article on her website, the internet and music downloads can and do benefit artists. This is a well-researched and well-written article. Thanks to my husband for forwarding it to me.
UPDATE: I thought that Glenn Reynolds at Instapundit had mentioned this article before, and he did, here, in reference to Reid Stott’s posting and analysis of her arguments.
CRUDE OIL UPDATE
July 30, 2002We’re drivin’, there’s political uncertainty in the Middle East, and it’s almost August, so U.S. inventories are being depleted in a typical seasonal pattern. Thus, as this Bloomberg News article reports, crude prices have gone up. But they have not gone up much, because the continuing economic malaise is countering the price-increasing factors mentioned above. (Bonus points to those of you old enough to recognize my Carter reference in the previous sentence)
