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LTE on liberalised energy markets

by DoDo Mon Jul 9th, 2007 at 11:27:57 AM EST

EurActiv posted an article titled Energy liberalisation: A communication gaffe?, where the 'communication gaffe' is how Antoine Pellion of the Schuman Foundation characterised the claim that liberalisation brings lower prices.

The article brings a good overview of some criticisms of the dogma, but not enough -- so after the alert, I wrote an LTE, finished with the help of others in our 'think-tank'. (Or are we an NGO? We were classified as such for the EC Biofuels Consultation [pdf!].)

EurActiv now posted the LTE, albeit with mangled credits.

Liberalised energy markets 'do not work in practice'

Concerning Energy liberalisation: A communication gaffe?, how lenient to describe the claim that liberalised markets reduce prices as a "communications gaffe"! Rather, it is a deliberately misleading sales pitch, also known as "spin".

More below the fold.


Liberalised energy markets 'do not work in practice' Published: Monday 9 July 2007

Sir,

Concerning Energy liberalisation: A communication gaffe?, how lenient to describe the claim that liberalised markets reduce prices as a "communications gaffe"! Rather, it is a deliberately misleading sales pitch, also known as "spin".

Contrary to Commissioner Andris Piebalgs almost religious belief in liberalised energy markets bringing "the best prices and the best service", the idea is not even workable in practice.

One could point to the California energy crisis, or to how the German liberalisation panned out. But the faithful will always blame insufficient dosage of their remedy, so let's focus on three systemic problems.

First, it is not just protectionism that shields existing majors against newcomers. Their own pre-existing power counts, too. With pre- or post-liberalisation price-hikes and investment throttling, they can create a 'war chest' for an eventual price war. They can use dozens of anti-competitive tricks over a sustained period of time, which together can be effective even if each one is successively struck down by regulators.

The other two problems lie beneath the policy contradictions that Bruegel pointed out.

Security of supply is not merely a function of the suppliers' size and degree of integration. Open price competition also cuts into investment chests. Furthermore, investors prefer generation modes with quick return on investment, crippling long-term security policy.

Pricing environmental externalities into fossil-fuel use doesn't eliminate all obstacles to regenerative energies on free markets: regeneratives typically have higher up-front investment costs and long amortization times, thus causing higher financing costs and slower returns on investment, both structural handicaps for private-sector investors.

P. Manet

Vác, Hungary

No, I am not a French Painter, they apparently lost the email reply in which I gave my real name. They also left off European Tribune as Organisation.

Display:
I wrote an email for correction.

Do you spot edits in the text? At a quick first glance, I didn't find any. I note that in that email they lost, which I just repeated, I also requested a regeneratives->renewables edit.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Jul 9th, 2007 at 10:18:57 AM EST
Looks good.

I sent a LTE to the Swedish paper Svenska Dagbladet, blasting some idiots hailing emission trading. They will probably not accept it, but we'll see.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Jul 9th, 2007 at 10:35:46 AM EST
[ Parent ]
Forgot: they definitely edited the subject line.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jul 9th, 2007 at 10:41:20 AM EST
[ Parent ]
I can't see any edits beyond the header and the first line.

I imagine there's a real P Manet who is possibly emailing them to say he didn't write that bunch of Commy crap.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Jul 9th, 2007 at 10:53:13 AM EST
Maybe it will be read...

I saw in this week's economist that Euractiv is recruiting several senior people, including their main editor (it used to be Willy de Backer, who just resigned)r and more. So they must have a few readers...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Jul 9th, 2007 at 11:35:56 AM EST
just great!

Concise and to the point..sit seems the correct approach for euractiv..

By the way brilliant pdf on biofuels...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Jul 9th, 2007 at 01:05:04 PM EST
"communication gaffe" -- sheesh

is that like "wardrobe malfunction"?

to be really energy efficient we could save typesetter energy and space in the newspaper by substituting the simple three letter word "lie"...

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Mon Jul 9th, 2007 at 02:27:00 PM EST
it's just a straussian teensy weensy fib, nothing to write home about...

just a little butterfly's wing....turning into a hurricane of death and destruction.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Jul 9th, 2007 at 07:59:30 PM EST
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