“In a 2014 ‘EV Everywhere Grand Challenge’ study, the US Department of Energy finds that the current battery cost is $325 per kWh. At a battery cost of $325 per kWh, the price of oil would need to exceed $350 per barrel before the electric vehicle was cheaper to operate.”
– Covert, Greenstone, and Knittel. “Will We Ever Stop Using Fossil Fuels?” Journal of Economic Perspectives (30(1), 2016): p. 132.
In the marketplace for ideas, economists are always selling. We see a situation that everyone knows is imperfect, point out the exorbitant costs and likely mistakes on the road to Nirvana, assure our audience that in any case the market can likely manage things better than government. And we hope someone accepts our research and clients retain our consulting services.…
“The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”
– Milton Friedman, “Which Way for Capitalism?” Reason, May 1977, p. 21.
Power markets are badly distorted by government intervention. Ratepayer welfare and economic efficiency are routinely sacrificed. Protected companies under public-utility regulation have a me-first ratebase mentality. The worst often get on top, with the real entrepreneurs elsewhere.
In place of more competition, innovation, and growing volumes, political incentives are deciding the what-when-where-how much questions of electricity generation, transmission, and sales. Political pressures in the name of the environment (“saving the planet,” etc.) are now guiding state-regulated utilities to meet state and federal regulation.
The coming of efficiency and climate policies have given the monopolists new territory, particularly as the commodity side of their business has been taken away (such as in Texas).…
“Regulation did not originate as a goodwill gesture from enlightened attorneys who wanted to spread their notions of the public interest…. It emerged in its current shape largely as a way to enforce Samuel Insull’s efforts to protect his empire from competition for the long term….”
Attorney and author Scott Hempling makes his living testifying before regulatory commissions, often on behalf of public interest and consumer groups. He is the author of “Certifying Regulatory Professionals: Why Not?” recently posted on ElectricityPolicy.com, (Part I here; Part II here), from which I quote below.
Hempling’s argument is straightforward. Today, policy and technology are always in flux, which changes the boundary between efficient and inefficient practices. People should know more. Things would surely be better if only regulation were driven by both facts and expertise, an “independent force that aligns interests of the regulated with the public interest.”…