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Re: California electric power on the ragged edge

  • From: William Allen Simpson
  • Date: Fri Aug 04 06:42:21 2000

I sent a half hour at IETF or so learning some of this from Phil Karn,
an old friend who lives in San Diego.

The capacity of the transmission lines into southern Cal is the 
limiting factor.  There's power out there (in various places), but 
no incentive for PG&E to carry it.  It's virtually impossible for 
a "competitor" to add capacity, as right of way for power lines is 
even worse than for fiber.

The cost of power is passed right to the customer.  There's no 
incentive for PG&E to find lower cost power; thus, the bid price 
is either very low (at night, maybe not even covering the cost of 
production), or at the peak allowed (50 cents per kilowatt hour), 
in an obvious step function.  (Such a high price would cause riots 
in the heartland states.)

In short, the microeconomist's wetdream (demand bidding) simply 
doesn't work without hundreds of competitors, cost containment on 
the distributor and a low barrier to entry, none of which apply.

Meanwhile, Phil has added another 16 solar panels and more batteries, 
and is selling power back to the grid.  Buy low, sell high!  PG&E is 
not happy, and wants to change the rules for microgenerators -- the 
very thing that could add competition!

(Phil already had solar panels and batteries for his EV1.  See his web 
pages at  Barriers to 
entry without such a motivation might be higher.)

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