Utility bills could soar due to deregulation

[Azure]

Originally Posted by VladtheImpaler

And for good reason , but that's a topic for a different thread...

Even if said driver has 'zero' demerits?

[yads]

I can't see it happening, unless like someone said the companies decide to form a cartel, which is unlikely given that Epcor/Enmax are city owned corps. The main problem with this theory is that in order for costs to spike like this guy predicts we would need to see some major power outages not just across the province, but across western Canada and the US NW.

[VladtheImpaler]

Originally Posted by Azure

Even if said driver has 'zero' demerits?

Yep. All insurance rates (absent other factors, such as political interference), whether life, car, whatever, are governed by actuarial projections, based on decades of statistics and the likelihood that a given individual will have a claim (be that a car accident, death, illness - whatever the policy happens to be for). And the fact is, statistical anylysis suggests that a "young" person is several times more likely to cause an accident than, say, a 40 year-old. Obviously, there are a ton of other factors, such as what the vehicles is being used for, etc, etc, but basically it is based on statistical analysis of historical data. An actual actuary or someone with insurance industry experience could explain this better and in more detail I am sure.
From the anecdotal standpoint, I've looked at a few thousand accidents myself over the years, and a very substantial proportion are caused by a "20 year-old in a Sunfire" , with senior citizens being another well represented group.
So, yes, in my mind, it's perfectly reasonable that a given 20 year-old pay 3-5X more for insurance than I do, since he is 3-5x more statistically likely to cause an accident than I am.

[Crazy Flamer]

Originally Posted by CaramonLS

Anytime you have an essential service with very limited competition (ex. due to extremely high infrastructure costs), the government needs to keep a watchful eye on the service to make sure people aren't being taken advantage of.

We've seen it with Car insurance (in Alberta) and telecommunications (across Canada).

This is one of the reasons that Slappy's anarcho-capitalism theory couldn't function in a practical setting.

Actually, a large portion of the industry is still regulated. Transmission and distribution of both electricity and natural gas is regulated. That's where the majority of infrastructure is. And it will stay this way.

The problem California had was that they deregulated their whole industry. So there were power companies that started to build their own power lines and it completely messed with the grid, causing brownouts and blackouts. We won't see that here.

[yads]

The California problem was due more to the fact that retail prices were fixed, while wholesale prices were allowed to float. This forced the retailers to buy at floating rates and sell at essentially fixed prices. There was also plenty of market gaming, where energy traders from Enron communicated with the production side of things, which is illegal. That could happen here as well I suppose.

[Flame Of Liberty]

Originally Posted by Crazy Flamer

Actually, a large portion of the industry is still regulated. Transmission and distribution of both electricity and natural gas is regulated. That's where the majority of infrastructure is. And it will stay this way.

The problem California had was that they deregulated their whole industry. So there were power companies that started to build their own power lines and it completely messed with the grid, causing brownouts and blackouts. We won't see that here.

Come on, that's simply not true. The whole "deregulation" in California was that the companies could sell electricity to neigbouring states at higher prices. And as yads said, retail prices are still regulated.

Another thing to consider that eventhought the population of California grew (as did the economy), "green laws" prohibited building coal and nuclear powerplants. So the state government not only fixed prices but it artifically lowered the supply. And the blackouts were a result of that.

So the state government caps retail prices, thus removes incentives to build powerplants, and not only that it forbids companies to build coal/nuclear powerplants too. Shortages come next and yeah, that's a total failure of "deregulation."

[Tron_fdc]

Originally Posted by Crazy Flamer

The problem California had was that they deregulated their whole industry. So there were power companies that started to build their own power lines and it completely messed with the grid, causing brownouts and blackouts. We won't see that here.

California's problems had nothing to do with companies building their own lines causing brownouts. It was entirely Enron's traders manipulating the marketplace causing false shortages. This was proven in court.....Enron traders would shut off generation for ridiculous reasons, causing the price to spike due to power shortages. They owned the generation, so suddenly they were selling into the spot market for MASSIVE profits.

Theoretically this could happen here, seeing as Enmax/Enron own the lions share of generation, but I think they have to submit maintenance schedules to the Power Pool. They can't shut down unexpectedly unless it is a major issue.

[Flame Of Liberty]

Originally Posted by Tron_fdc

Well, electricity is a little different. In this case a lot of the generation is owned by the retailers (in Calgary's case, Enmax) so in order for a new retailer to come on line they would have to own their own power generation facilities, buy spot market from the power pool, or enter into a long term contract from Enmax.

There are small retailers that own generation, but they don't have enough to supply large municipalities like Calgary. They focus on large industries. Add to the fact that banks won't lend money for a new power plant unless you have long term contracts with an end user in place, and you can see how hard it is to become a generator or a retailer in Alberta.

Electricity has been a gong show since day one when we spent countless hours on radio and TV fighting it, but finally gave up when every fact and fallacy that we came up with was largely ignored by the Klein government. It was quite the introduction to politics for us, and ultimately changed the way we did business.

I'm actually surprised it took this long for it to go completely sideways.

I am not saying that building a power plant/power grid is easy. However what I am saying is that deregulation (real, not what they did in California) increases competition because more companies are likely to enter the market (when they see that profits can be made).

Does deregulation guarantee new competitors? No it doesn't. However, regulation pretty much guarantees that no new competitors will enter the market.

[Tron_fdc]

Oh, I definitely see where you're coming from FOL. True deregulation of marketplaces theoretically ensures competition and lower prices. You see this with commodities. However, the problem with electricity is that it isn't a commodity that can be openly traded like gold or coal.....which is why the government should have never tried it in the first place. At least in my opinion.

[yads]

Originally Posted by Tron_fdc

Theoretically this could happen here, seeing as Enmax/Epcor own the lions share of generation, but I think they have to submit maintenance schedules to the Power Pool. They can't shut down unexpectedly unless it is a major issue.

More importantly like I said earlier, traders of a company like Enmax or Epcor are not allowed to have advance knowledge of outages. It's a serious infraction. So in a perfect world, if Enmax decided to just take a power plant off line for the hell of it. They would be screwing themselves, since their traders likely committed to delivering energy at a certain price and now they would have to import energy or buy it at the spot rate which would be higher due to the outage.

[Bobblehead]

Originally Posted by fotze

If gas service skyrockets with these low gas prices, then somthing is very wrong with the system. Gas is pretty close to free right now. The economics to build some nat gas power plants has to be pretty good nowadays.

Except that utilities are generally considered to be natural monopolies. The initial infrastructure costs are huge and with the economies of scale involved it is far easier for existing companies to add one customer - the additional cost (up to a point) is almost nil - than it is for a new firm to build and then capture customers.
Economically speaking, the current firms should always be aware of the risk of new generation and be keeping their price high enough to generate maximum profits, but low enough that it is not economical for a competitor to enter the industry.
As the costs of generation drop - alternatives generation becomes cheaper/more efficient (and even if nat gas is cheap, generation plants aren't) - then theoretically speaking the pricing should fall as existing firms attempt to remove any incentives new firms may have.

[Crazy Flamer]

Originally Posted by Flame Of Liberty

Come on, that's simply not true. The whole "deregulation" in California was that the companies could sell electricity to neigbouring states at higher prices. And as yads said, retail prices are still regulated.

Another thing to consider that eventhought the population of California grew (as did the economy), "green laws" prohibited building coal and nuclear powerplants. So the state government not only fixed prices but it artifically lowered the supply. And the blackouts were a result of that.

So the state government caps retail prices, thus removes incentives to build powerplants, and not only that it forbids companies to build coal/nuclear powerplants too. Shortages come next and yeah, that's a total failure of "deregulation."

Actually, it is true.

http://ca.lwv.org/lwvc/edfund/citize...gulation-3.pdf

But you're right, it didn't have much to do with California's blackouts, I was mistaking that for the Northeast grid.

[monkeyman]

Originally Posted by Tron_fdc

California's problems had nothing to do with companies building their own lines causing brownouts. It was entirely Enron's traders manipulating the marketplace causing false shortages. This was proven in court.....Enron traders would shut off generation for ridiculous reasons, causing the price to spike due to power shortages. They owned the generation, so suddenly they were selling into the spot market for MASSIVE profits.
.

"Enron: The Smartest Guys in the Room", is an excellent documentary which talks about this. I'd recommend it to anyone who enjoys these kinds of movies.

[Devils'Advocate]

I like Somalia where there are no regulations and plenty of electrical companies. They each have their own grid, they all service the same area and there is plenty of competition.

Check out the power lines at their money exchange here.

Looks incredibly efficient!!!

[Hemi-Cuda]

Originally Posted by FlamesKickAss

but prior to oct 1 2004 some would drop you for that

i think it was 2002 or 2003, we graduated from SAIT in '04