Please Blame the Deregulation and Regulation Fiascos Parte 10

Gentlemen,

I forgot to acknowledge that my previous message was also intended to Mr. Casten, Mr. Swinand, Mr. Malinowski, Mr. Pflaum, and Mr. Tanton.

Today I am very busy, but to keep the ball roling I will answer Steve, and partially answer Ferdinand.

Steve,

Thanks for your comment. I have some answers, but not all the answers. However, as you acknowledge, I try very hard to be consistent.

"Spot Pricing of Electricity" is a seminal book about how electricity prices vary in time and space, with transactions where customers buy from and/or sell to the utility. In some days, wholesale prices vary widely when system is close to capacity unless customers respond. Those events occur randomly, when reserves become insufficient to assure an acceptable expected risk of system failures. That leads me to the next comment regarding complexity.

Ferdinand,

Thanks for your comment. I accept the remark you make to your finance students. Marketers do it even simpler. Renowned marketer guru, Jack Trout, the author of “The Power Simplicity,” entitled the first chapter of that book "Simplicity: Why people fear it so much." He concludes the chapter with the message: "Complexity is not to be admired. It is to be avoided."

However, before ending chapter 1, when developing an outstanding simple solution, Jack says: "This solution to the problem was simple, though implementing it was a complex process." Let engineers make it easy for the customers by developing the require software based on solid theory and practice, just as nukes are designed and operated. The main problem of deregulation was that economists implemented a simplistic solution - not a simple solution - to electricity deregulation.

Regards,

José Antonio