Remember, since the theoretical monopolies they teach you about in Econ 101 don't actually exist in the real world (and let's not debate this now), regulated so-called "monopolies" are really just licenses to fleece, withheld and doled out by politicians to businessmen. (Remember, they figured this out in the airline industry when they noticed that unregulated intrastate tickets between San Francisco and LA were significantly cheaper than "regulated" interstate tickets between Boston and New York.)


So, in California, the original assumption was that whatever price they bought the right to charge from the government was going to be a fleecing, only instead of doling out the rights to fleece in the Capitol building - or by the uncomfortably rigid existing structure - somehow they were going to compete for the rights to fleece. Somehow, the utilities must have thought that they would be able to get one over on one another like this, or that fleecing would somehow become better allocated and more optimized and efficient. And somehow, the government must have thought that, with everyone fighting over the fleecing they had handed out, they would end up with more money.


I think the presumption was that, if you picture the utilities as sort of middlemen between the consumers and the government - rather than as the generators being at the other side - that there was a guaranteed fleecing margin locked up there. And so the rules of the game were set that everybody had to buy at the same price - the spot - and nobody could generate his own electricity. This was not going to be a game of producing, or speculating - or competing - it was simply going to be a playground match over the fleecing itself.


It should have been so simple.


But then I guess when the people who won the "fleecing" rights started feeling the pain, the government just turned its back on them.


So, the so-called "competition" they set up for electricity in CA is illuminated when you understand that they were not viewing themselves as normal economic partcipants, competing to produce or acquire a product and sell it at a profit. They were simply to fight over a profit. Meaning, the source of the electricity, and whether it was at a lower price than the retail price, was never meant to be part of the game, somehow. And it was actually foreseen that it if ever became part of the game, that would ruin everything.


leroy