Wednesday, November 07, 2007

Can’t you just feel that invisible hand?

From the November 6, 2007, New York Times.
Competitively priced electricity costs more, studies show

Retail electricity prices have risen much more in states that adopted competitive pricing than in those that have retained traditional rates set by the government, new studies based on years of price reports show.

The findings, by advocates for both sides in the market-versus-regulation debate, raise questions about the reasons market competition produced higher retail prices than government regulation.[emph added]
Questions, questions, questions. How could market competition ever produce higher retail prices than government regulation? Well, 12 paragraphs and one chart later comes a rather inadvertent answer.
The data are the latest to show that competition, which was promoted by big industrial companies and Enron as the best way to create competitive incentives to reduce prices, has instead resulted in higher and faster rising prices. Some big industrial customers have turned against the changes they once championed, saying that if markets produced lower prices they would favor them but that electricity auctions have not worked. [emph added]
I’m no expert in economics and/or utilities deregulation, but does anybody think it’s just possible that people like the fine folks at Enron and similar companies were gaming the system?

It’s not unheard of, you know.

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