“… the knowledge problem and governance problems are intertwined.” (Kiesling, October 20. 2023)

Those eight words from an electricity technocrat dressed in classical liberal garb represent a major concession regarding the (governmental) centrally planned wholesale electricity markets, known as ISOs (Independent System Operators) and RTOs (Regional Transmission Organizations).

Before, Keisling only acknowledged governance. “Where the RTOs should have done better IMO is in governance, which is quite flawed but flawed differently in each RTO…”, to which I responded:

One question you have refused to answer: apply the knowledge problem to ISOs/RTOs. Can you do that for us all at substack? And not only Hayek–bring in Don Lavoie’s analysis on noncomprehensive planning, and the Austrian view of competition.

And now she has answered in part. It is not easy dealing with an assumption-making academic who seems to be hiding something from her classical liberal friends and sponsors.…

“What we now have instead are vast centralised wind and solar power stations distributed outside of population centres, and quite distant to the eventual market for the third-rate power that is being produced. This is the exact opposite of the original proposals for distributed power located within population centres.

The public is up in arms against the great ruse “energy transformation,” predicted on climate alarmism and at odds with energy density (pushing dilute, intermittent inferiors). Here in the U.S., Robert Bryce’s databank of delayed/cancelled wind or solar projects is above 580 projects. I have personally argued that even if such a project is on private land, the taxpayer enablement gives standing to the locals who decry the project for other reasons (noise, lower property values, drainage, etc.). The fact that land and neighbors were there first means no homestead right to the rent-seeker.…

“It is time to do now what was not done in 1999 in Texas. First, deregulate the electricity market, do not re-regulate it under a new regime. That means removing public utility regulation of rates and other terms of service, as well as end the franchise protection over geographical territory.”

The Texas Electric Utility Restructuring Act of 1999 is approaching a quarter-century. And what a mess has resulted from the misnomer “electricity deregulation.” A monopoly wholesale market under mandatory open-access rules is central planning pure and simple. The idea that a ‘competitive’ retail market rescues a governmental wholesale market from the knowledge problem and politicization (per Lynne Kiesling, Michael Giberson, etc.) has been turned upside down in Texas and elsewhere.

I was reminded of this upon reading a 500-word commentary from Doug Sheridan on LinkedIn.…

“The separation of government and electricity (six words) or, more precisely, the separation of government and the generation, transmission, and distribution of electricity (twelve words) is simple enough…. Why deny this Political Economy 101 definition between free-market reliance and government intervention?”

The separation of government and electricity is a straightforward, time-honored application of classical liberalism (or the free market). It has existed as long as I have been in the debate (the 1990s) and probably since the beginning of the industry. In contrast, restructuring, partial deregulation, or reregulation connotes the mixed-economy alternatives of market here-government there in this sector.

Deregulation as an escape from public utility regulation harks back to the Reason Foundation and Robert Poole Jr. in the early 1980s. In 1985, Poole’s Unnatural Monopolies: The Case for Deregulating Public Utilities (Lexington Books) challenged the “natural monopoly” case for franchise protection and rate-and-service government regulation in the different industries.…