We`re asking for trouble
My comments to your editorial of the August 1996 issue of Power Engineering: “It`s time the utilities started planning for the future, meaning planning new generation and power delivery capacity. If they do not start soon, it`s going to be too late.” It is time the customer started planning for the future, if they don`t then they will be served by the “I do not care electric service company.” I am not an industry expert. In my opinion the industry has a lot to learn about a competitive market, but the most critical market learning curve is on the customer`s side.
“The prolonged paralysis in capital spending by U.S. electric utilities and independent power producers threatens the reliability of electric supply.” The current market price is not sufficient to drive an expansion in electric supply nor is it sufficient to sustain the reliability of electric supply. If the customer wants more reliability, then the market price must change to cover the cost of the expansion in supply.
“Electricity demand … has been steadily growing.” The market price of electricity has been steadily dropping. Why would the supply increase?
“We are already in trouble.” Did the market price change when the blackout occurred?
When the customer says, “I want to buy more reliability” then we are in trouble if someone else can provide it at a lower cost than we can. If the customer says, “I want to buy more reliability” and no supplier responds, then the market price is not sufficient.
“U.S. electric utility generating capacity margins are dropping perilously low.” What is the market for capacity margin, and what does a profitable capacity margin business look like?
“We are clearly asking for trouble.” Who is we? The company I volunteer my time to is clearly competing for customers. It`s a constant struggle to profitably anticipate and deliver customer satisfaction. If it is not profitable then they do not do it!
I have been in this industry 16 years now, a youngster by standard measures. Maybe it is time to stop mourning the passing of the regulated electric industry and to get on with business.