Monday, November 21, 2016

What if We Opened our Power System to a Free Market?

   It would certainly be an interesting experiment in economics, if we did away with one-provider electricity service.
   What if we let every who wanted to sell, sell? Oh, we could hardly let them each create their own distribution lines. We have enough power lines, already.
   So, let them all use the same grid. Now, power lines can only bear so much power, so you would have to limit each company to placing on line no more power than what it sold. But, that certainly should be doable.
   So, the electricity would be the very same electricity regardless who you bought it from. Almost the only difference would be the rate. You could pay Rocky Mountain Power one rate, or Pete's Power a different rate.
   That would make for an interesting market. With people flocking to the lowest price, would the pressure to collude and price fix be at a maximum? Would something need to be done about that? I suppose, though, this is not too different than what we already face in the gasoline industry. When we buy from one gas station, the gas is little different than what we buy from the one around the corner. The big difference between the gasoline industry and this new electricity industry is that when we buy gas, the location of the service station is a factor. The electricity market would not have that.
   Oh, there would be at least one other difference between the companies. While it would be the very same electricity, regardless who you purchased from, some of the suppliers would provide wind-generated electricity, and others would be dominated by electricity produced by coal-powered plants. Some customers would be influenced by this.
   This would be an interesting experiment. As with any system, the kinks would have to be worked out. But, I'm not so sure but what a workable open-market system could not be developed.

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