CasazzaPUF - ERRANT ECONOMICS LOUSY LAW MARKET MANIPULATION...

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ERRANT ECONOMICS? LOUSY LAW? MARKET MANIPULATION? ALL THREE !! By J.A. Casazza President, American Education Institute IEEE Life Fellow Public Knowledge : Transparency. Economists stress the need for it so those who vote with their dollars can make intelligent decisions. Why has data been concealed on the cost increases needed to achieve electric power restructuring (erroneously called deregulation) that has taken place and is continuing to take place? Has the withholding of such information been an instrument for manipulation of public opinion? Clearly, yes. The purpose of this article is to assist the process of providing national transparency. Information must be collected to enable an overall evaluation of the costs and benefits of present policies, and, hopefully, development of improved future policies out of the disasters of the past ten years. Booming prices, more power interruptions. It is a national problem. What has caused it? FERC blames higher costs because of generation shortages and rising fuel prices. The California PUC blames market abuses from the lack of true competition. The economists complain a true competitive market has not been established. These related views do not address the core of the problem. The entire restructuring process failed to investigate the costs and benefits resulting from the policies being adopted. Unlike our environmental procedures, an impact statement was not required from those proposing major changes in how electricity was to be produced, distributed, bought, sold, 1
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and priced. The huge number of those that would benefit from the restructuring were not interested in any analysis of the costs and benefits. Those in government saw political capital in claiming electricity price reductions; those in the electric power industry saw a potential for large profits; those in the professions saw a chance for increased business and to earn large consulting fees. They sold restructuring to an unwary public on the mantra that competition is good -- it will reduce prices. Only a few in the engineering profession stood their ground and argued that the effects of what was being done had not been analyzed. 1 They were accused of "creating a smoke screen to prevent progress." What have the results shown? Errant Economics Time. What is its role in economics? Do the economics of a business change when the time between production and use of a product is months, or weeks, or days, or with the speed of light? The electric power business is unique. It has the shortest time constant between production and use, i.e., zero, and the longest time constants for increasing production and delivery capacity, i.e., years. Most businesses provide a product such as gas, water, steel, ice cream, and shoes. The characteristics and quality of the products they provide can be different. Products can be made or obtained in advance of need and stored by the producer or users for future needs if price change are anticipated. Many other businesses provide services such as the telephone, express mail, and
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This note was uploaded on 11/02/2011 for the course ECON 301 taught by Professor Gandhi during the Spring '01 term at Andhra University.

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CasazzaPUF - ERRANT ECONOMICS LOUSY LAW MARKET MANIPULATION...

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