An article in the June Public Utilities Fortnightly (subscription required) spews a river of invective against any and all critics of electricity deregulation. They are denounced as “a motley assortment of anti-market naysayers,” driven by “the preservation of entrenched privilege,” often found “protesting the latest meeting of the World Trade Organization,” “recalcitrants,” “afraid they are on the wrong side of this evolutionary bell curve,” “socialist ‘true believers’ and corporate monopolists,” “anti-marketeers” who use the “frequent red-herring” of “guilt by association through some form of ad hominem reference to Enron,” and so on, but I won’t go on. The authors are Todd Bessemer of Market Reform and Francis Shields of Accenture.
Holding up two Shields as I picked my way through this screed, I pondered a couple of sentences:
Centralized command economics is a discredited concept that deserves to be consigned to the dustbin of history, along with the other vestiges of socialism.
The authors mean to indict regulated utilities in favor of regional markets, but what is an RTO if not “centralized command economics”? These organizations are highly centralized, employing complex designs comprising rules (computer programs, really) that are meant to comport with prescriptions written by five people in Washington and that often have disregarded the (even unanimous) advice of state officials.
If these highly centralized structures can deliver real net value that demonstrably flows through to end users, perhaps their structure should be overlooked. That case has not been made, however, and there are reasons to think that the lack of accountability that attends them may be part of the reason.
The second sentence is a quote from Pat Wood, former FERC and Texas PUC chair, who said in March 2002:
I’d give the regulated market about a ‘C’ or a ‘C+’ on its best day.
Using the state Pat Wood regulated, if the best that the regulated market of pre-1999 produced was a C+, what’s the grade of restructured Texas today?