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The Ratepayer’s Prayer (Brother Clarkson, petitioner and parishioner)

The familiar complaint of market failure by critics of decentralized (nongovernmental) decision-making must be coupled with realistic discussion about any government “solution.” This is why market failure must be considered alongside two other failures:

    • Analytic failure, which can range  anywhere from intellectual error to the fatal conceit to emotional bias, and
    • Government failure, the gap between theory and practice, wishes and result.

Intellectuals, practitioners, regulators, and the public far too often resort to see-a-problem, pass-a-law rather than:

  1. Making sure what is seen as a problem is really negative;
  2. Making sure that the undesired situation did not result form prior government involvement in whole or part; and
  3. Assessing whether the (coercive) solution is greater than the problem, which would leave civil society (media, foundations, public opinion) to right the wrongs.

A century or more ago in the electricity market, state after state set up tribunals to set rates and establish terms of service. The regulated companies accepted self-regulation–in fact they lobbied and got regulation–in exchange for exclusive franchise rights.

The peculiarity and problems of addressing monopoly power with monopoly status is not the subject of this post. Rather, it is to let Jim Clarkson, libertarian voice of the beleaguered ratepayer in the Southeast, have his moment of calling and concern.

Free marketeers can either lobby or pray against the powers of government gone wrong. Less a lobbyist, Jim Clarkson is given the floor.

O Lord,

We have placed our trust in regulators instead of markets to protect us from utility abuse. Alas, these mere mortals succumbed to temptation and have betrayed us. Now we are left with no choice but to beseech thee for the courage to make the needed reforms.

When they sought office, we heard their promises of relief. We were assured the money changers would be driven from the temple. Instead we have seen plans and conspiracies against the people and their fruits. Overtly and covertly the utilities have diverted our incomes for their own wasteful practices and high profits, with the very approval and eager participation of the regulators. We have contained our wrath, but we need thy divine intervention to calm our hearts.

We have heard the regulators and utilities say they have our interests at heart, but they meet secretly and plan ways to oppress and exploit us. These usurpations have multiplied over the length and breadth of the land. They have become a plague. Deliver us O Lord from the clutches of the monopoly regulatory system which systematically steals our daily bread, earned by the sweat of our brows. Recognizing that the lust for power and unearned riches is a powerful drive and encouraged by their past success, we see them pressing on with all the double talk and trickery necessary to attain new heights.

The time has come. We need change. Stay the wicked exploiters! Exorcise their greed and restore them to rational behavior! The abuse increases as the monopoly privilege grows. We have seethed in justified anger at the blatant domination, wanton spending and unrestrained pillaging. Knowing the utilities will never willingly leave the banquet of monopoly for the competitive picnic of austerity on their own accord, we implore thy intercession on behalf of your humble servants.

AMEN

Brother Clarkson, petitioner

4 comments

1 Kenneth Haapala { 08.23.13 at 6:36 pm }

An amusing take on the alliance between regulators and utilities that lost the goal of protecting the public and delivering reliable electricity at the lowest possible cost. Robert Bradley Jr’s book, from Edison to Enron, explains how this “sinful” alliance occurred.

2 Kermit { 08.24.13 at 10:30 am }

How true, and vice versa when companies are bankrupted by making such arrangements then not allowed to cover cost of service by regulators. A free market keeps all parties honest.

3 David Norman { 08.24.13 at 4:48 pm }

! Hallelujah !

4 JohnInMA { 08.27.13 at 9:08 am }

Whenever I read arguments for and against centralized control of any part of the economy, I’m reminded of my first experience post-college in working to solve problems within a manufacturing facility. The parallels to how we are “governed” and how laws are written and enacted are stunning.

Essentially, there was a large and long manufacturing line – almost 50 yards in length – producing a very specialized roll of plastic. The line would occasionally drift into near chaos from a product quality standpoint. And the company steadily increased its engineering team devoted to improving…well, at times just maintaining the output. The problem was eventually discovered, and it boiled down to the fact that control systems were added and further tweaked without much effort to look at the system as a whole. So, at times, control interactions caused unpredictable harmonics and drift. Localized control corrections sometimes fixed the problem, and at other times they simply made it worse.

So goes the lawmaking effort in this country. It is almost purely additive as mentioned in the article, and rarely tries to correct historical or systemic errors. Whenever unintended consequences appear – and they do routinely – adjustments are made almost always by writing NEW laws. And in a similar way our ‘energy policy’ leads us to ultimate dysfunction where the only goals that are met are the control of utility profits through regulation. The remaining goals, power quality and reliability included, randomly drift because the ‘system tuning’, as it were, isn’t properly optimized for that. And the solution is always more regulation.

As we used to joke about the large manufacturing line – just add more knobs and turn them. Eventually you will fix the current problem. Then go on to the next one (perhaps that you just created)…..

It is futile to talk about market forces in the current ‘energy policy’ environment. There are no paths for markets to fully run a natural course. Just as the manufacturing line was instrumented and controlled to the hilt with tens of independent systems, so is our electricity network constrained and bound. I’ve changed service suppliers when dissatisfied in a number of example, such as my cell phone. What are my options for power? How can I even EXERT market pressure? I cannot.

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