Deregulation at work

[Tenten]

Here some extracts from an article from European tribune. http://www.eurotrib.com

Interesting pieces.

Tenten


Source: http://tinyurl.com/fhycy
http://www.eurotrib.com/story/2006/5/31/53939/6469

Deregulation at work

by Jerome a Paris
Wed May 31st, 2006 at 05:39:39 AM EDT
A recent study on electricity prices in Europe, which can be downloaded from here (in French) (http://www.lesechos.fr/info/rew_energie/200076862.htm), has been widely publicised in France because it shows that France has seen electricity prices in the deregulated market (i.e. price for industrial users) increase fastest over the past year, by a whopping 48%, to become some of the most expensive in Europe (not as expensive as in fully deregulated UK, though).

above: industrial prices, as of 1 April 2006
below: evolution of these prices over the preceding 5 years.

It is being used by industrial and commercial users to complain about EDF's unfair practises and about the silliness of France having cheap nuclear power and its industry mot benefitting.

What it hilarious, and sad, is that you did not hear these customers complain about market prices a few years ago, when these prices were lower than the regulated EDF prices, and they moved away from EDF's guaranteed prices to the more efficient (and thus supposedly always lower) market prices. EDF's regulated prices, as the second graph above shows, have barely increased, and are the lowest in Europe. The thing is, once you've switched to market prices, you cannot go back to regulated prices (Duh! would seem appropriate here).

Newsflash 1: market prices can go up too!
Newsflash 2: electricity prices on the market are determined not by the cheapest producer, but the the most expensive needed at any given time to fulfill all demand. And in most places, that would be gas-fired electricity.
Newsflash 3: EDF has been privatised and sells its electricity at market prices, except if you chose to stay under the umbrella of the State-regulated prices.

What? Reality is not complying with ideology?

...

A few days ago (4.00 / 3)
I got to talk with a pretty senior analyst on energy in Europe (someone regularly published in big papers and the like). He said that the situation in the energy markets is really worrisome; the markets are tight, they don't function properly, and Europe is in dire need of some good regulation and a new model.

So I told him: what's wrong with the EDF model? Every singlt attempt at deregulation/market based regulation has failed over the past 20 years. There are lessons from a number of countries, and each regulatory framework has had its problems. Isn't it time to say the the problem is actually the markets, and the electricity should follow the EDF model - fully integrated, State-owned and run - and State funded.

To which he said that this had led us to having an overcapacity - too many nuclear plants - for our needs.

The very overcapacity which is the only thing preventing several of the other European markets from collapsing from insufficient supply - and which is creating a tidy profit for EDF and its shareholders...

EDF = State-owned (and French) thus BAD, BAD, EVIL. They cannot get this out of their heads.

In the long run, we're all dead. John Maynard Keynes

 

[Johnno]

This is also happening in Australia. The government is getting out of its Hydro Electric power suppliers and putting it on the market.

Strange thing is they are looking at getting into nuclear energy at the same time.

Most electric companies downunder were in State (not Federal) governemnet hands, there was a sell off by most of them during the mid 90's to early 00's. Big buyers from USA, Europe and Australia stepped in to make some handsome profits.