“What is underemphasized or missing in the working paper is consideration of real-world competition as the industry understands it. In other words, rate discounting, surplus capacity, new entry and bypass, alternative fuel competition, and other factors make markets very competitive whatever the market shares of its individual participants.”
“[FERC] never considers the imperfections of regulation itself. It is assumed that regulation is a costless alternative to correct imperfect pipeline markets.”
In a previous life, I worked for an interstate gas transmission company that was rate- and service-regulated by the Federal Energy Regulatory Commission (FERC). During this time, I tried to make a case for deregulation where both entry/exit and rates would not be regulated under cost-based public utility regulation.
Following neoclassical economics, FERC did not consider interstate pipelines “workably competitive.” Using a technical approach instead of a common-sense, real world approach, FERC could not see what those in the business saw on a day-to-day basis: that the pipeline business was very competitive, and discounts from maximum rates proved so.…
“Rather than adopt costly regulatory measures that serve to suppress energy use and economic growth, policy makers should seek to eliminate government interventions in the marketplace that obstruct emission reductions and discourage the adoption of lower emission technologies. Such an approach is a ‘no regrets’ strategy….”
“A true ‘no regrets’ approach to climate change is not greater government controls on economic activity, but fewer. Economic growth, market institutions, and technological advance are often the most effective forms of insurance that a civilization can have.”
– Jonathan Adler, “Greenhouse Policy Without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change,” Competitive Enterprise Institute, July 14, 2000.
MasterResource from time to time reprints free-market-oriented energy/climate analysis that was bold for its time and still resonates today. Unlike the neo-Malthusians, our side’s work has held up well.…
The much touted benefits of wind come with a fatal caveat: industrial wind turbines–suffering from intermittency, low average-usage factors, remote siting, relatively high (and all-up-front) costs–are uneconomic. So the fact that the Wind industry creates jobs and can piggyback on consumer-chosen, taxpayer-neutral, baseload power is no consolation.
The starting point of economics is that wants exceed resources. Market prices are therefore needed to allocate resources. Out of a wide range of technical possibilities (including wind-produced electricity), only a small subset is economic desirable as well. Think of a bullet train from Los Angeles to New York City–technically possible but uneconomic when compared to air travel. Only freely acting consumers in a government-neutral marketplace can decide the difference.
The new study cosponsored by the American Wind Energy Association, Electricity Markets, Reliability, and the Evolving U.S.…