🚀 go-pugleaf

On 22 Mar 2001 19:16:19 GMT, Jim Blair <jeblair@facstaff.wisc.edu> wrote:

> In a
>free (unregulated) market "California" would not set the price, the
>utilities would.  And would set it high enough to cover the cost of 
>production.

  Another addition to my collection of quotations.  Sorry Jim, but you
  typed it.

  "The sole and only purpose of a corporation is to make the most
  possible money for its stockholders".....or words to that effect.
  Pricing "to cover the cost of production" doesn't happen.
  In particular, the electric generators did what OPEC tries to do:
  hold down the production so as to get the highest profit by setting
  the price as high as possible.

  For an essential product in a oligopolistic industry, the price has
  no upper limit -- until it bankrupts the consumer.  In the case of
  California electricity, the generators' consumers were the local
  power companies, such as PG&E.  PG&E, by its own choice--
  enforced by bribing the legislators--became "de-regulated" so
  as to use its assets, via a holding company, for other purposes.
  As part of the deal they set up, they promised that it would not
  cost the public more for power, and agreed on fixed prices.

  PG&E and Southern Edison et al management did not understand
  the first principle that would govern the generators they had sold
  off:   "The sole and only purpose of a corporation is to make the most
  possible money for its stockholders". 

  However, don't worry, the "power shortage" will be solved by the
  state supplying money, for example by purchasing the transmission
  system from PG&E.  (no generators, no transmission, power company?)
  
  Perhaps some electrical engineer here can tell us how juggling the
  money will create more power -- which it certainly will.

  "Power shortage"?    "Money shortage"?    Pick one.

         Mason

   P.S.  The present demand, inducing blackouts, is much less
   than it was last summer when there was no shortage.