Thursday, June 12, 2008

Problems in the US electric grid

Given the ongoing problems with NZ's electricity generation and supply, The Objective Standard hosts a timely and fascinating discursion on the history and development of the American electric grid written by analyst Raymond Niles, taking us from its earlier genesis under the likes of entrepreneurs Thomas Edison and George Westinghouse, to its gradual strangulation by regulation, price control and property rights violations, and the resulting "crises, blackouts and huge price disparities" of today, which, notes Niles,

have led to a vigorous debate about the root cause of the industry’s problems and how to solve them. On one side are the advocates of regulation who blame the problems of the industry on the “deregulation” of the past few decades, and who long for a return to the “good old days” of 100 percent ratebase regulation. On the other side are the advocates of the kind of “deregulation” that involves the forced opening of the grid, who now argue that the grid must be “freed up” even more than it was before.

"Both sides,"  says Niles, "are wrong."  Read on here for his solution to the seemingly "intractable dilemma," which is also the solution to demonstrates the illusion of Telecom's supposed monopoly of supply was a monopoly maintained only by the lack of Niles' important insight.

UPDATE: At a time when NZ's electricity generators are running at capacity -- which is still  less than enough for some businesses who are already working short shifts -- at a time such as this, what is National's Nick Smith worried about?  What is it that has got the red-faced weasel worried? Answer: "the massive current increase in emissions from electricity generation." And his colleague, Gerry bloody Brownlee, here's what he had to add: "Brownlee said if the recent thermal emissions were added to the deforestation figures "it's just a disaster" and says the increase continues the pattern set during Labour's term in office."

A "disaster." In Smith and Brownlee's wet world, generating the power to keep the wheels of industry running is "a disaster."  In the upside-down world of National, if Labour's finger-wagging waffle about climate change isn't matched by equally vigorous finger wagging stopping producers producing, this is considered to be a bad thing.

Sheesh.

No surprise then that National has now said "me too" to its own Emissions Trading Scheme a sort of Emissions-Trading Lite -- which I was assured yesterday by Phil Heatley would be sufficiently onerous to hold NZ industry down to 1990 levels of emissions.  Asked if this meant that the scheme would be sufficiently onerous to hold NZ industry down to 1990 levels of productivity, Heatley assured me that we'd all be alright, that producers would go right on producing. 

How?  Somehow.

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