viernes, diciembre 30, 2005

Jack Casazza Recommendation: Cooperate and Coordinate Parte 3

The following comment has been posted on EnergyPulse, under Professor Ferdinand E. Banks article A Few More Unfriendly Comments on Electric Deregulation.

This is my second response. Now I will offer two humble comments about Mr. Jack Casazza's suggestions and the world context.

1) In general terms, Jack Casazza suggests repairing Space B (faulty deregulation) with coordination agreements to assure that coordination of the system to produce long and short run minimum costs. To do that I have found that the best signal to private agents is that customer's interruptions should be compensated under any circumstance. Behind that, by Coase's Theorem, the electricity market is borne, since customers supply security needs now vary widely under each customer class. If that means bridging the gap between the insurance industry and the power industry, then it should be done.

2) If I understand correctly, Jack is concentrating on either/or thinking (concentrate on the system, that the results will follow). As comment 1 introduces important changes to the market, repairs to the market are needed as well. As Toyota showed in the automobile industry, in the power industry we should go for increase quality (and reliability) and reduced costs. To do that we need both efficient markets (no regulator can represent the customer better than himself – shout for no price control) and outstanding systems planning and operation. I suggest we go for both. I believe that calls for the development of true deregulation, as outlined in Space D above, without going into Space C. If a coordination agreement is to be done, do it on both counts, to reduce as much as possible the value destruction to the economy and society.