# Gas and Electric Prices, What the dealio? **URL:** \ **Category:** Great Debates\ **Created:** [May 6, 2001, 5:57pm UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551 "2001-05-06T17:57:56Z")\ **Posts on this page:** 8\ **Page:** 5
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [May 12, 2001, 1:37am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/81 "2001-05-12T01:37:03Z")
> [@](#): > > \*Originally posted by flowbark \* > I think you’re exagerating the role environmentalists play, but the issue would probably require further study. Anyway, here’s [Exhibit A](http://www.santateresacitizen.org/cisco.html). It’s a letter from Cisco Systems, dated February 2000 (before the crisis materialized) opposing a power plant siting in San Jose. (If I have the correct plant in mind, it was actually pretty green: it was a natural gas-fired cogeneration plant. I may be wrong though.) Anyway, I couldn’t see _any_ environmental concerns listed in the letter. FWIW. And the reason you can’t find any is that Cisco ain’t on the environmental side of this issue. Environmentalists, or at least the Sierra Club, are supporting that plant [Sierra Magazine, May/June 2001, p. 59]. Also relevant is this quote: “For its own power needs, Cisco is relying on diesel generators that produce, watt for watt, 50 times as much pollution as the new gas-fired plant would.” By the way, blaming environmentalists for creating a NIMBY mentality regarding these new power plants seems about as logical as blaming the capitalist system / property rights advocates for creating it. Maybe even less so. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [May 12, 2001, 1:54am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/82 "2001-05-12T01:54:21Z")
I understand Mexico is building some power plants just across the border as they do not have to worry about all the environmental laws. They will be happy to take your dollahs in exchange for their Kwh. And if the wind blows the pollution north, now that is not their fault is it señor? It would be ironic if going overboard with tight environmental standards actually Increased pollution by encouraging building plants south of the border, down Mexico way… Sometimes the best is the enemy of the good. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 12, 2001, 4:55am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/83 "2001-05-12T04:55:55Z")
1. I heard on the radio this year (2001) that Cisco came out in favor of some power plant. It might have been the Metcalf one, I’m not sure. Anyway, like I said earlier, increased power plant construction is a done deal. Appropos nothing: California and Kentucky will be on the same grid? COOL:cool: ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 15, 2001, 3:37am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/84 "2001-05-15T03:37:43Z")
Page 4 of the Sunday NYT’s business section discussed the current electricity crisis in… Montana. Apparently the utility pushed a deregulation plan through a confused legislature, sold off a good share of its electrical capacity, and is now facing prices that are 12-15 times higher than they were earlier. Does this sound familiar? Of course, it probably wasn’t “true deregulation”. We know that because it didn’t work. If it worked, I’m sure it would get the market fundamentalists’ blessings. Oh, but there’s one difference. The legislature didn’t approve guarenteed savings to the consumer, so instead of the power company taking it in the chin, individuals and business users end up with the entire bill. Now, this shouldn’t surprise us. People take a while to respond to price changes that are not immediately visible to them. And it takes years for new power companies to enter the market. In the meantime, power suppliers can pass maintenance duties on to their crack team of experts (Moe, Larry and Curly) and strategically close a certain share of the power plants for oh-so-convenient repairs. Now, I’m not saying that deregulation is necessarily a bad thing. But electricity was regulated for a reason (it was an intrinsically monopolistic enterprise) and IMHO some care should be taken to avoid perverse incentives. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [May 15, 2001, 4:06am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/85 "2001-05-15T04:06:07Z")
If the CEOs of the electric power companies are the ones pushing the “deregulation” plans that are driving them into bankruptcy… what kind of stuff have they been smoking? ---
**Author:** ![tracer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tracer/32/20578_2.png) [@tracer](https://boards.straightdope.com/u/tracer)\ **Post date:** [May 15, 2001, 4:28am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/86 "2001-05-15T04:28:17Z")
I thought it was the CEOs of the electric power **generating** companies that were pushing for deregulation, not the CEOs of the electric **utility** companies. (It’s the utilities that are being driven to bankruptcy, not the generating companies.) ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 15, 2001, 5:05am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/87 "2001-05-15T05:05:40Z")
> [@](#): > > \*Originally posted by sailor \* > \*\*If the CEOs of the electric power companies are the ones pushing the “deregulation” plans that are driving them into bankruptcy… what kind of stuff have they been smoking? \*\* The Montana electric power utility has not been pushed to bankruptcy, since it was able to pass its costs on. As for PG&E and S. Cal Edison, they did approve of CA’s deregulation plan. They also did well under it for a while. My understanding is that they were smoking the same weed that the public utility commission (PUC), the legislature, Pete Wilson’s office and the press was. That is, the plan wasn’t entirely thought through. There were opponents to the plan, but I don’t know of anyone who anticipated the crisis. When the PUC pressured PG&E to divest itself of its electricity generating capacity, they were worried about PG&E using its ownership of the transmission lines to discriminate against small electricity providers. The PUC also figured that an 8% market share wasn’t enough to exercise monopoly power. And in most markets, they would be correct. But demand for electricity on an hourly basis is extremely insensitive to price, even if final users are charged the full cost. When they are not, (as in N. CA, but not San Diego), the situation is even worse. In econ 101 language, firms have more monopoly power when they face an inelastic demand curve. ---
**Author:** ![oliversarmy](https://avatars.discourse-cdn.com/v4/letter/o/eb8c5e/32.png) [@oliversarmy](https://boards.straightdope.com/u/oliversarmy)\ **Post date:** [May 16, 2001, 3:41am UTC](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551/88 "2001-05-16T03:41:51Z")
Damn, Anthracite, I wish I knew who you worked for. My best friend and I were both voluntarily displaced during a utility merger a year ago. He just got back into the game. I hope to follow. I really miss this stuff. [Previous page](https://boards.straightdope.com/t/gas-and-electric-prices-what-the-dealio/64551.md?page=4)