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Article #98

Re: Outsider viewpoint of CA power crisis

#98
From: John Higdon
Date: Thu, 24 May 2001 07:25
26 lines
2292 bytes
in article 3B0C3D46.25DB4187@ebay.sun.com, David Robinson  wrote:

> That is not how the power market is structured.  Assume the state
> needs 100 units of power, three companies bid:
> 
> A: 50 units @ $0.10
> B: 45 units @ $0.12
> C:  5 units @ $0.20
> 
> As currently structured all 100 units are purchased at $0.20
> giving A an unexpected profit of $5.00 and B $3.60.
> 
> It is one thing for seller A to look at the market and see that
> C was able to sell at a higher price and raise his to $0.19
> in hopes of getting more profit, it is another for the government
> to mandate the extra profit regardless of the offered price!

What should possibly happen is to take A and B at $0.12 and tell C to take a
hike. That is a perfectly legitimate action. C can take the $0.12 or just go
fish. Yes, we are short five units and we might have to shed some load for a
short period, but we have greatly influenced the market price.

-- 
John Higdon     | Email Address Valid | http://www.anntec.com/
+1 408 264 4115 |  Silicon Valley, CA | FAX: +1 408 264 4407
  Cheap, provincial San Franciscans can call: 415 428-COWS
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Date: Thu, 24 May 2001 00:25:30 -0700
Subject: Re: Outsider viewpoint of CA power crisis
From: John Higdon <no-spam@RadioMonopoly.com>
Newsgroups: sdnet.general,ba.general,la.general
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