Restructuring electricity supply systems
Public goods, natural monopoly and competition
April 9, 2016, 8:53 pm
Power-Exchange: One time-step shown.
Generator’s offers are stacked from cheapest to dearest,and customer’s bids from most generous to most frugal.
(Self-schedules lie outside the market and resolve technical and business concerns).
Generator’s offers are stacked from cheapest to dearest,and customer’s bids from most generous to most frugal.
(Self-schedules lie outside the market and resolve technical and business concerns).
by Kumar David
In most countries, except the biggest, the electricity supply system was, in the past, a single publicly owned monopoly. The best known and most esteemed was the Central Electricity Generating Board of England and Wales (CEGB). In the United States, because of its great size, each state or part thereof was served by a "utility" – a private monopoly that generated, transmitted and distributed power within its franchise area. In France, EdeF was and still remains a state owned monopoly as does France’s famous railway network, SNCF of TGV fame. Japan, Canada, much of Europe, India and China include several monopoly utilities that are public or privately owned. The CEGB was the benchmark for many private and public (provincial or central) utilities.
Then came that Thatcher woman! Together with Ronald Regan she embodied the nadir of neoliberalism; her philosophy: "If it moved, breathed or waddled, privatise it!" Denationalisation of British Rail is legendary – there are several books detailing this ignominious fiasco. (Corbyn has pledged to take back the railways). The counter-lesson that we need to learn from this ruinous neoliberal agenda known as the Washington Accord is that public goods and natural monopolies (defence, justice, electricity grid, spectrum and telecoms-backbone, roads, and water – domestic and schemes like Mahaweli irrigation – must remain under public control. Yes, competition indeed trims prices and improves sector efficiency, but the industry and technology must be well understood by reformers so that they can make socially responsible decisions about competition. This is no game to be entrusted to locals or foreigners with loaded ideological agendas.
The Thatcher drive to break up and privatise the CEGB derived from the "dash for gas". Huge quantities of cheap gas were discovered in the North Sea. Instead of letting the nationalised utility benefit from it, the Thatcher government privatised the power stations, encouraged private capital to build gas-fired plant, drove coal back underground (recall the miners’ strike) and forced distribution utilities to buy from private generators. The transmission system was retained as a monopoly National Grid Company (NGC). Regional distribution systems were hived off as twelve private distribution companies (Discos) who bought from private generation companies in a power-market and sold to domestic and small industrial customers. Industries were encouraged to buy directly from generators bypassing their local Disco commercially. Of course power still had to pass through the transmission and distribution networks and use-of-system charges were levied.
