Archive for March, 2009

« Newer Entries
Older Entries »
h1

Recommendations for smart grid policy (Part 5 of 5)

March 10, 2009

Lynne Kiesling

So far in this series I have stressed what I think are some important foundational concepts in defining smart grid, thinking about its scope and its potential for value creation, and distinguishing it as an investment category from traditional transmission construction. All of these concepts have some interaction with government policy, at either (or both) the federal or the state level.

Smart grid policy is very topical right now, because of the inclusion of $4.5 billion in smart grid funding in the federal debt-stimulus package that Congress passed in February; smart grid was also the focus of a Senate Committee on Energy and Natural Resources hearing last week. There are too many dimensions to smart grid policy for me to opine on all of them in this brief post, so I’ll restrict my attention to one point: at both the federal and the state level, smart grid policy should focus on enabling the various participants, and potential participants, in the electric power network to benefit from a smart grid’s transactive capabilities.

This recommendation sounds more straightforward than it actually is in practice. This policy prescription can mean different things to different people. Does it mean, for example, that state regulatory commissions should approve utility investments in advanced metering infrastructure (AMI) for their residential customers that will go into the utility’s rate base? That is certainly how regulated utilities are interpreting my normative prescription in many jurisdictions. But in order to create the fullest possible benefits from a smart grid’s transactive capabilities, that two-way communicating digital technology outside of the home must be coupled with dynamic pricing. If regulatory institutions do not allow consumers the freedom to choose how much price risk to bear and what price signals to receive, then they fail to deliver on that potential. The digital meter technology is only part of the enabler for this value creation.

Moreover, I would argue that the digital meter outside the home is not even the necessary enabler for this value creation (I know others disagree!), while the dynamic pricing is essential. If I had to pick one, I would choose intelligent pricing options and dumb technology over intelligent technology without intelligent pricing options to which to respond.

A different way to interpret my policy prescription is to say that smart grid’s transactive value potential can best be realized by having competitive retail electricity markets. What if we had multiple competing retailers, each of whom could offer a menu of product and service offerings to residential customers? Consumers who already have broadband connections can get price signals and the two-way communication capability over the Internet directly to their intelligent end-use devices, and can use a web portal to program their devices and to enable remote access. From the perspective of the consumer, then, the meter is superfluous!

I think the truth is a combination of these two interpretations. Digital meters are enablers of the kind of product differentiation and product-service bundling described in my third post in this series. But the combination of factors that is most likely to lead to the highest total value creation is the digital meter plus retail product differentiation and retail competition. Not only does the digital meter enable customer-facing product and service innovation, it also provides valuable real-time data back to the utility to help it do a better job of providing high reliability as a wires company and load-serving entity. Yes, the implication of what I’ve just said is that utilities should be wires companies, should be evaluated and rewarded based on their performance as wires companies, and should not be in the retail business of serving residential customers any longer.

Not surprisingly, then, I view the smart grid-designated funds in the federal debt-stimulus package as a way to overcome the intertia of a century of regulation. Regulation has made both regulated utilities and regulators very conservative with respect to the technologies they approve/invest in. To the extent that the funding overcomes that technology inertia and induces utilities to invest in value-enhancing, enabling, smart grid technologies, it may turn out to  be money well spent.

However, without regulatory reform at the state level to remove barriers to retail choice and retail competition, the net economic value of that federal stimulus spending will be truncated, and limited solely to utility-centric, operations-focused effects. The combination of regulatory change and smart grid technology can unleash lots of value creation potential, but subsidizing investments in smart grid technology alone will generate much less.

Other posts in this series:

Posted in Economics, Electricity, Regulation, Technology | Tagged , , , | 11 Comments »

h1

Power market seams and the role of arbitragers in market design

March 9, 2009

Michael Giberson

For class tomorrow I’m reading up on things Enron and California power market melt-down related.

I’m a fan, for example, of Jonathan Falk’s 2002 article in the Electricity Journal on the infamous “Smoking Gun” memo which detailed Enron’s colorfully-named trading strategies like “get shorty” and “death star.” Among other things, Falk points out the several of the strategies provided arbitrage services between the many power markets in and around California, and at least some of the strategies likely helped the California market work more efficiently.

Richard J. Pierce, Jr. has what might be seen as a follow-up article in 2003, also in the Electricity Journal.  Pierce agrees with Falk that many of Enron’s strategies could be fairly described as  arbitraging the California market, but he also asserts that many of the strategies also could be fairly described a manipulative.  As a kind of aside, Pierce said, “If the California debacle has taught us nothing else, it should persuade us that arbitragers should never be given a role in structuring a market. They have a powerful incentive to maximize the flaws in the market design in order to maximize potential arbitrage profits.” (p. 40, emphasis added)

Pierce exaggerates a bit; it is unlikely that maximizing flaws will maximize potential profits.  Rather, some optimum amount of relatively minor flaws probably promises the most overall profit for arbitragers. But Pierce reminded me of the role that arbitragers have played on seams issues between the New York ISO and ISO New England markets.

For years, market monitors for the regions and some market participants have encouraged the New York and New England markets to exchange real-time market information and coordinate power flows as necessary to eliminate price distortions along the border between the markets. For years, other market participants (primarily traders participating in both markets) have continued to support alternative market changes that have the effect of continuing the special role played by traders in determining power flows between the markets. The Federal Energy Regulatory Commission has directed the markets to fix the seams issue in cooperation with market participants, but for years the ISOs have decided that other market changes were higher priority. For years, FERC has accepted that answer from the ISOs.

An estimate by Potomac Economics, external market monitor for the New York ISO, suggested that the net cost of power to New York consumers would have been $177 million lower in 2007 had the two markets better coordinated the power flows between the regions.* Still, the issue is not a priority at the ISOs or the FERC. Maybe when someone notices that efficient market-to-market coordination of power flows between regions would make better use of renewable power and demand-side resources participating in New York and New England markets, then we will see FERC make resolving this seams issue a higher priority. Until then, FERC and the ISOs continue implicitly to support the arbitragers’ favored approach to managing the seams.

(*See Table 1 on page 28 of Potomac’s “2007 State of the Market Report: New York ISO.”

DISCLOSURE: I contributed to the drafting of the 2007 market report as an employee of Potomac Economics last year before taking my current position at Texas Tech University. Of course, nothing I post here should be taken as expressing the views of either my former or current employer.)

Posted in Electricity, Energy markets | Tagged , , , | 4 Comments »

h1

Wind power is dispatchable, down

March 9, 2009

Michael Giberson

Last week the New York ISO filed proposed tariff changes with the Federal Energy Regulatory Commission to revise how it treats wind power generation in its markets.  Under the NYISO’s current rules, wind power generators are not treated as flexible resources.  When the transmission system is overloaded, other generators can be asked to back down but wind power would not be reduced under most circumstances.  (Under current rules wind power can be backed down in extraordinary cases, via a cumbersome process, and sometimes generators back down voluntarily due to low prices.)

Under the proposed rules, wind power generators would be treated as flexible resources by the real time market system for output levels from zero up to the forecasted wind power output level.  The practical effect would be to allow the system to back down wind and non-wind generation in comparable fashion as needed to resolve congestion on the transmission grid.  Wind power generators would submit energy bids into the market like most generators and the ISO market would use the bids to work out the least cost method for resolving congestion.

While the change could result in wind power generators being directed to reduce output more frequently than under current rules, the NYISO said the change would likely increase the overall amount of wind power taken by the system. Under the current, manual procedures for directing reductions in wind power output, it is hard to get just the right amount of power off the system. The NYISO indicated that sometimes more power has been taken off the system for a longer period than was strictly necessary. In addition, even under voluntary curtailment by wind power generators due to low (and sometimes negative) prices, sometimes more power has been taken off the system longer than was needed to resolve the problem.

Both symptoms of the cumbersome approach now used have resulted in more work for the system operator and a less efficient supply of power.  The proposed changes should serve to more finely target any needed reductions in output, allowing a more efficient use of wind power when it is available.

Even with the proposed tariff changes, the NYISO expects that most of the time it will take all of the wind power available to the system. Of course, whether this remains true will depend on the pace of further wind power additions relative to the transmission improvements, if any, needed to support those additions.

The changes represent another step in the direction of the normalization of wind power resources in integrated regional power markets. The rules for wind power will never exactly be the same as the rules for, say, a combined-cycle combustion gas turbine, but then the treatment of that very flexible natural gas unit isn’t exactly the same as the treatment of a less flexible coal-fired steam turbine.

The market design goal should be to maximize the gains from trade produced through the regional power market. The process of adapting rules to the diversity inherent in the generation and demand-side resources available to the system should be undertaken with that goal in mind.

(ASIDE: Elsewhere I have been critical of the way that production tax credits available to wind power generators can distort the efficient operation of power markets. There was some talk about this issue in the recent FERC technical conference on integration of renewable resources, and I suspect I’ll have more to say on the issue in a few days when the transcript is online.

Some critics of current wind power subsidies may object to any normalization of the treatment of wind power so long as the subsidies continue, but I don’t think it desirable to try to fix market rules to compensate for the harmful effects of federal tax policy. Rather, market design should aim to maximize gains from trade given the larger legal and policy framework which the markets must operate in, and opposition to wasteful subsidies in the tax code should be directed to the legislative bodies responsible.)

Posted in Energy markets | Tagged , , , , , , | Comments Off

h1

AWOL today with a headache

March 9, 2009

Lynne Kiesling

I’m afraid I’m hitting a delay in posting the final part of my smart grid commentary because I’m battling a nasty headache. Thanks for your interest, and I’ll get it up here ASAP!

Posted in Uncategorized | Comments Off

h1

The ethanol drag on consumer value and government revenue

March 6, 2009

Michael Giberson

As usual, Geoff Styles is worth reading:

Since the administration has apparently ruled out an increase in the gasoline tax to cover declining Highway Trust Fund revenues, it’s surprising that it appears to be giving serious consideration to a proposal that would raise a hidden tax on gasoline. This is even more perplexing, when you realize that this increase would actually reduce the government’s net take on every gallon of gasoline sold, while simultaneously diminishing the value of the product for consumers.

That “hidden tax”? A push by the U.S. ethanol industry to increase the percentage of ethanol allowable in gasoline from 10 percent to 15.  The effect, according to Styles, will be to “effectively raise the price by 3.4 cents per gallon, while reducing federal tax revenue by 2.2 cents.”

(Via The Energy Collective.)

Posted in Economics | Tagged , , | 3 Comments »

h1

Smart grid and renewables interconnection (Part 4 of 5)

March 6, 2009

Lynne Kiesling

One of the reasons why smart grid is generating so much interest right now is its ability to enable the integration of renewable energy into the electric power network, leading to a broader generation portfolio and potentially beneficial carbon implications. Lots of the discussion of smart grid in policy and media (including places like Greentech Media, Cleantech, EcoGeek, GreenMonk, and the New York Times blogs Dot Earth and Green Inc.) has emphasized the potential economic and environmental value from having investments in the electric power network that make the accommodation of renewables easier, reducing transaction costs and shifting the margin at which investing in renewables is profitable.

Integrating distributed renewables into a physical electric power network that was designed for the transportation of centrally-generated electricity is both an engineering challenge and an economic challenge; not only are renewable energy sources less intense in their capability to generate electricity, they are also less controllable and less dispatchable. When the sun shines and the wind blows, the renewables owner will generate power … but that time might not match periods of high demand. Furthermore, both sun and wind are intermittent, and we humans cannot turn them on and off in value-maximizing ways that coordinate demand and supply. Both Mike and I have discussed the renewables intermittency and supply/demand timing mismatch at KP in the past, and I also recommend Mike’s excellent posts on the connection between wind power and negative power prices in ERCOT. Moreover, if the renewables are highly distributed, such as solar panels on homes and plug-in vehicles, a network with that number and range of  resources is very, very different from a network connecting large centralized generators to end-use consumers. Those differences can be physically destabilizing because of the ways that the intermittent renewables go on and off the network, produce or consume power, etc. So renewables integration changes the voltage and frequency regulation requirements drastically from those from the centralized generation model.

Smart grid can help with the intermittency problem, and with the voltage and frequency regulation and destabilization issues that arise with distributed renewables. I’m not an engineer, but my take on the real benefit there is the use of digital monitoring, switching, and relays that can get the resource in phase so it can interconnect without disruption. Importantly, note that this use of smart grid technology to enable interconnection mostly occurs in the distribution management system, at the interface of the resource and the distribution network and has nothing to do with high-voltage transmission (more on that in a minute). Smart grid in and of itself does not help with the supply/demand timing mismatch — solving that problem (which will also go a  long way to resolving intertemporal price issues in wholesale markets) requires economical storage.

However, smart grid is a separate issue, and particularly a separate investment question, from high-voltage transmission. If we do build isolated wind farms in remote areas, then part of that investment will have to include the construction of high-voltage transmission to transport the power to areas of high demand, as the Pickens Plan and others are currently recommending. If, say, a large wind farm in North Dakota wants to connect directly to high-voltage transmission, then smart grid technology can help with that interconnection. But that is really the most important transmission-related and renewable-related smart grid technology interface. With respect to renewables, some of the federal policy discussion around smart grid falsely conflates smart grid investment with transmission investment and construction beyond what is actually accurate; for example, the clean energy summit that I mentioned last week involved both Senator Harry Reid and Representative Nancy Pelosi engaging in this false conflation. Another document that engages in this false conflation is the Center for American Progress’ National Clean Energy Smart Grid 101:

The current high-voltage transmission grid imposes constraints on the deployment of new renewable energy resources such as wind, solar, and geothermal power. It simply does not go where many of these renewable energy resources will be developed. And congestion bottlenecks hurt the reliability of the grid overall, particularly where it is needed to move large volumes of new power from remote generation areas (where renewable energy is created) to major urban and industrial centers—where demand for that energy is greatest.

The monitoring and control technology for both transmission and distribution networks is also weak and outdated. The lack of smart technology to provide utilities and consumers with better information in real time hurts the entire electricity system’s security and efficiency, and places unnecessary cost burdens on consumers. It also slows the adoption and integration of new technology such as solar panels on our homes, intelligent appliances to cut our energy bills, or micro-grids to help first responders cope with natural disasters.

While most of that is correct, it elides the distinctions between transmission and distribution as the places where smart grid investments will facilitate renewable generation. The fact that the current transmission network does not go where renewable resources are most productive is not necessarily a smart grid opportunity — it’s a transmission construction opportunity. The question of whether or not it is worthwhile to build more transmission is a separate question from the economic value of any digital communication capabilities in the high-voltage transmission network. I think the two most important ways that smart grid technology creates value in the transmission network are

  • Direct interconnection of large-scale resources into the network
  • Using remote sensing (and eventually, remote devices for the injection of dynamic reactive power) to increase network capacity by improving flow management

And smart grid regulation, sensing, and monitoring technology does not change the fact that long-distance transmission still involves line losses that average about 7%. Renewables proponents have to make the business case that the transmission construction has net present value on its own, without inaccurately cloaking it in smart grid rhetoric.

Smart grid does not necessarily mean more grid. Smart grid means a transactive network in which all consumers can choose products and services that meet their needs and reflect their values, and all resources, renewable and otherwise, can compete for their business. It’s the vibrant retail competition among products and services, including renewable products and services, that will reveal the true economic value of new transmission construction to connect renewables in isolated areas to areas of demand.

Tomorrow: Smart grid policy implications and recommendations

Other posts in this series:

Posted in Economics, Electricity, Environmental policy, Technology | Tagged , , , , | 8 Comments »

h1

Why is Chris Masse making a big deal about a little article on prediction markets in The Economist?

March 5, 2009

At the prediction markets blog, Midas Oracle, Chris Masse has posted several times (here, here, and don’t miss the remarks in the comments) about the recent piece on prediction markets in The Economist.  Among his recent grand pronouncements:

If you are a prediction market consultant, and have nothing to say about the negative piece from The Economist, then you don’t matter anymore.

Really?

What is it that The Economist said that prediction market consultants should have something to say about?

I read article when it showed up online, and then again when the print version arrived and after Chris mentioned it at Midas Oracle, and now a third time since I wonder why he is making a big deal of it.

Fortunately, it is a light read – reading it three times has not been particularly taxing. But there is not a lot of depth there to engage: An intro paragraph, some explanation, three brief examples-two of which illustrate implementation problems, and then the article concludes with a quip that “Perhaps the best way to find out when prediction markets will finally take off is to ask your employees–using a prediction market.”

That’s it.

No searing indictment of the prediction market software vendors and consulting business, no challenge to the theoretical foundations of prediction markets, no rejection of the “wisdom of the crowds.” All the article does is observe that the tool has “yet to take off.”

So my question to Chris remains, “What is it that The Economist said that prediction market consultants should have something to say about?”

(Cross-posted at Midas Oracle.)

Posted in Economics | Tagged , | 1 Comment »

h1

The natural gas industry is adapting to changing conditions

March 5, 2009

Michael Giberson

From the Globe and Mail:

Last year, the continental U.S. saw its natural gas production grow by 10 per cent to 55 billion cubic feet a day, powered by huge production increases from shale gas plays like the Marcellus, Haynesville in Louisiana and Texas’s Barnett field. In Canada, gas production actually declined by about 4 per cent or 700 million cubic feet a day to 15.7 billion cubic feet a day.

The leading indicator for gas production is the drill rig count – how many rigs are in the field at any given moment exploring for and developing new fields. “Drilling activity on both sides of the border is collapsing faster than a bank loaded with toxic debt,” [BMO Nesbitt Burns analyst Randy] Ollenberger said.

Of course that is partly because there are fewer promises of bailouts being dangled in front of the oil and gas exploration business.

(As the article also notes, “After touching $15 for 1,000 cubic feet in the spring of 2008, gas prices have fallen to $4.20 on the New York Mercantile Exchange, and many analysts believe they have not yet bottomed out.”)

Posted in Uncategorized | 1 Comment »

h1

Intelligent end-use devices make a transactive smart grid valuable (Part 3 of 5)

March 4, 2009

Lynne Kiesling

Digital communication capabilities in the network, including in end-use devices, provides increasingly feature-rich, mobile, and customizable ways to create consumer awareness about electricity consumption, electricity expenditure, and the environmental impact of that consumption. It also provides ways to change electricity consumption, either manually or automatically, in the home or remotely. In yesterday’s post about a transactive smart grid I invoked our imaginations of a potential vibrant future electricity industry:

… imagine what that kind of transactive capability would be like with respect to your energy use. Online home energy management, remote access, the ability to automate your electricity consumption decisions, the array of new products and services that could make use of this transactive functionality.

For example, a home can have a home area network (HAN) that connects its appliances, its heating and cooling, its water heater, its laundry, its entertainment (stereo, TV, DVR, game console), and its lighting into one communication network, accessible either through a computer screen in the home or a web-based portal that can be accessed via a computer or a web-enabled mobile device. Through this communication interface, the customer’s electricity retailer can communicate real-time information about the quantity of electricity consumed, the price the consumer is paying, and even the type of generation resources being used to generate the power being consumed. The retailer can also communicate price signals to the customer, and the customer can program the different devices in the HAN to change their settings in response to price changes – if the price increases from 9 cents to 12 cents, reduce the temperature in the water heater by 5 degrees, and increase the thermostat air conditioner setting by 5 degrees. Moreover, the consumer can have remote web access to the HAN, and can change settings, monitor energy consumption, and analyze data on the home’s electricity consumption.

Say, for example, you are on the train to work, and you get a SMS notification that due to unexpected weather, there will be a higher-than-normal electricity price in the 9:00-10:00 hour. You may have already programmed your devices to respond to price signals, but what if the price is high enough that you want to change your settings? You can log in to your HAN from your mobile device, or from your computer at work, and change the device settings in the home through the web portal.

Such functionality requires intelligent end-use devices, which are increasingly feasible and cost-effective as the costs of information technology fall. Intelligent devices are things like your thermostat, water heater, television, and so on that have digital communication capability. Intelligent devices can have their settings changed remotely, and can be programmed to respond autonomously to data, including price signals.

Furthermore, if the home has distributed generation installed, such as solar photovoltaic rooftop panels, the customer can program the network to reduce electricity use once the home’s consumption reaches the generation capacity of the solar resource, thereby reducing the use of energy overall and reducing the use of fossil-fuel-generated power, if the marginal generation resource at that time is coal or natural gas (of course, with retail choice, the customer could choose a 100% renewable energy contract if s/he desires, which would alleviate the green/grey mix consideration). These digital communication technologies enable new value creation, reduction in environmental impact, and decentralized coordination in the electricity industry precisely because they make more of the network, and more of the participants in the network, transactive.

The technologies to make that vibrant future a reality already exist. The research that I’ve discussed here before in the GridWise Olympic Peninsula project used price-responsive, transactive water heaters and thermostats in conjunction with dynamic pricing and consumer choice among retail contracts. Other intelligent end-use devices and home network energy portal systems that are already in the market include (in no particular order):

  • Tendril: Tendril’s suite of in-home display options and web portal are a great example of the kinds of intelligent devices and applications that I think will transform the electric power industry. See this Greentech Media article for an overview of what Tendril is doing.
  • GridPoint: GridPoint is an industry leader and another great example of the types of products and services that can create value for consumers via the use of two-way communication capabilities.
  • Greenbox: Emphasis on transparent in-home display of energy consumption information. See this Ars Technica article for a nice discussion of Greenbox’s product.
  • Positive Energy: Uses a “combination of cutting edge technology, analytic direct marketing, behavioral science and world-class design” to inform consumers about their energy use. See also this CNet article.
  • EnergyHub: I’ve written about them before, and there’s still not a lot of information about their product and its commercialization.
  • Ecobee: A programmable thermostat geared toward transparent display of energy consumption information, focused on heating and cooling. Ecobee uses your existing home wireless network for its communication capability. See this Engadget article for more.
  • Current Cost (UK): a market leader in in-home energy information and management in the UK
  • WattzOn: An energy use tracking web site, not a device. You enter information about the various devices you have in the home, and it recommends behavioral changes. While interesting, I do not think of this as an application that takes advantage of two-way communication capabilities in the electric power network, so it falls outside my definition of smart grid, but is interesting. See this Lifehacker post for more.
  • Google Power Meter: the much-touted recent entry into the home energy management market.

These companies are already working on a range of devices and software applications to increase the information and transparency of electricity use to the home consumer. At this point, though, none of them pass my transactive test — they do not explicitly enable devices or applications in the home to be responsive to electricity price signals. But they can, and I think they will.

What’s really required to enable this vibrant transactive network of intelligent devices is regulatory reform. More on that Friday.

Tomorrow: smart grid and renewables interconnection

Other posts in this series:

Posted in Economics, Electricity, Technology | Tagged , , | 6 Comments »

h1

Retail electric power market shakeout in Texas, II

March 4, 2009

Michael Giberson

Following up on a Monday post, in the news another report of a Texas electric power retailer seeking to acquire generation as a natural hedge.  From Platts:

Direct Energy said Wednesday that it plans to acquire and/or develop new generating capacity in the US to support its electricity retailing business.

Direct, a subsidiary of UK-based energy giant Centrica, owns gas-fired plants totaling about 1,300 MW in Texas, where it serves about 800,000 retail electric customers, Phil Tonge, president of Direct’s North American mass market business, said in an interview…

“One thing we’ve found–and it’s not specific to Texas–is that there are obvious advantages to owning generation” to back up retail load that Direct serves, Tonge said, noting that access to generation “takes some of the volatility out.” …

Tonge said that it some instances it can make sense for a retailer like Direct to own generation equal to as much as 40% to 50% of its peak needs. Direct said that in Texas it can currently meet 27% of its peak demand from its three gas plants and five wind PPAs.

Cheryl Morgan summarized my post as asking “whether vertical integration might have been a better option for Texas,” but I wouldn’t say it quite that way.  “Vertical integration” in the electric power industry is typically conceived as bundling retail, local distribution, transmission, and generation.  As I recall Sally Hunt’s point (in her book, Making Competition Work in Electricity, and I too don’t have the book handy so I’m relying on memory), she argued that it make sense to unbundle the wires from the non-wires portions of the business, but it wasn’t inherently desirable from a policy standpoint to unbundle retailing from generation.

Once unbundled from the wires business, the retailers’ decision to own or contract for power supplies seems to be just another “make or buy” decision that any business must consider.  Some gasoline retailers are vertically integrated with refiners and crude oil production companies, others are content to buy on the wholesale market.

Morgan worries about the loss of transparency that comes when retailers acquire generation (rather than buying power through long-term contracts and short-term markets).  So long as consumers can switch retailers and have a reasonable choice of alternatives, we don’t need to worry about the loss of transparency.  Consumer switching can discipline inefficient power supply arrangements, whether through contract or ownership of generation.

Which brings us to Morgan’s second point, that the shakeout will eventually result in relatively few large retailers.  If you think that customer choices will dwindle to a few large companies, then transparency may become an issue.

But I’m not ready to lump the California and Texas retail experiences together.  The approach taken in the two states differed and the differences have seemed to matter.

RELATED: an exchange of views in the February 2009 issue of Energy Policy between Christophe Defeuilley and Stephen Littlechild. (Subscription may be required, check with your local library if you don’t have direct access).

  • Defeuilley says experiences with retail electric power “have proven less than stellar” and wants to blame the disappointing results on an inadequate view of competition arising from the Austrian School of economics, which Defeuilley says served as foundation for the reforms.
  • Littlechild disputes both the claim that retail power competition has been disappointing and the claim that lackluster retail competition is somehow connected to Austrian School views on competition. Littlechild adds that the behavioral economics ideas that Defeuilley cites are more consistent with Austrian ideas than with the concept of compeition offered by traditional neo-classical economics.
  • Finally, Defeuilley elaborates on why he characterizes retail competition as falling below expectations and on the limits he sees in the Austrian School conception of competition and why it matters to the case of retail electric power.

Posted in Electricity, Energy markets | Tagged , , , | 1 Comment »

« Newer Entries
Older Entries »
Follow

Get every new post delivered to your Inbox.

Join 47 other followers