🚀 go-pugleaf

In article <1993Jan25.174753@aifh.ed.ac.uk> jamesh@aifh.ed.ac.uk (James Hammerton) writes:
>
>Hmmm, I think I agree with these points, and would add that in the USA
>where they have allowed market forces to govern things to a large
>extent(though it's not perfect), it has allowed utilities who have
>spotted new ways to make money to go ahead with their ideas. For example
>there have been several cases of utilities realising that instead of
>producing new electricity, it was cheaper to subsidise energy efficient
>technology to their users, and use the energy saved for other purposes.
>Also there are many utilities now operating on least cost planning, 
>which encourages energy efficiency over new supply, and those that are
>sensitive to their environmental image can rightly point out that doing
>these things leads to less pollution overall. In Britain it would be 
>interesting to see the result of a publicly owned grid whose mandate
>was to supply electricity from the cheapest sources, according to
>least cost guidelines, whilst allowing any company to produce
>plans for supplying the demand for electrical services and make bids
>for contracts based on those plans. Such planning has had interesting 
>results in the US, see particularly the example of the Southern
>California Edison company which gave free quadruple efficiency bulbs to
>it's low income customers and their neighbourhood shops, because it was
>cheaper than generating the required extra electricity.

Now wait a minute James. Residential electricity is priced at the
highest rate, it should offer the highest profit per unit of production
since it's retail sales rather than wholesale. Utilities are regulated 
monopolies, however, not free market entities. If they were free market 
entities, it would make no business sense whatsoever to *pay* your 
highest profit customers to use less of your product. Instead what 
has happened is that government regulators have *decreed* that 
residential electricity use be subsidized. Thus utilities are starting
to *lose money* on residential customers because of distribution costs
and *restrictions* on pricing. Therefore, selling *at a loss* is minimized 
by paying customers not to buy. This is completely alien to the free market
and most emphatically does *not* show that paying customers not to buy
is cheaper than selling them the product at a profit.

Gary
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