Andy has been asking for "proof" of the effect of privatization (in which I include deregulation) on reliability of energy supplies. I'll provide some quotes from the article.
Another issue is electricity deregulation in Texas. The competitive marketplace produces a situation not all that different from the situation in which BP operated that led to the oil spill in the Gulf of Mexico. Under Texas' structure, there are many entities, each concerned primarily with its own bottom line. In this environment, cost cutting in the name of profitability is rewarded, but can lead to power outages.
Texas is one of the states that replaced the monopoly system of utilities with a system of competing sellers, under what is termed "restructuring". Quite a number of states tried this approach and abandoned it (shown in gold on Figure 2). Texas is one of the states (in green) that kept this approach. It is striking that Texas had problems during cold weather, and other states nearby without restructuring did not.So there is a controlled experiment of sorts going on, and last week's results don't seem to favor the deregulation model.
One of the stresses under deregulation is the fact that instead of vertically integrated utilities, we now have a much larger number of independent entities, each looking out for its own profitability, but not having a great deal of concern about making the system as a whole work together well. The economic incentive for each of these units is to cut costs as much as possible. For example, units have an economic incentive to cut corners on details like making certain that the unit can operate in any kind of weather. Units cannot be expected to have much concern about how their action contributes to the smooth operation of the whole. They certainly will not spend much time looking for feedback loops among different systems, such as the ones discussed above.The observation is made (as I implied) that gas relying on electricity relying on gas as backups may lead to unfortunate feedback loops. In summary,
We recently have experienced a period of over fifty years when the electrical grid was "up" most of the time, and almost everyone has come to take its existence for granted. I think the time has come for a much more conscious awareness of our electrical system's limits; we need to start making decisions with its integrity as a first priority. The Texas power outage fiasco has not turned into the equivalent of BP's oil spill, but if we continue down the path we are headed, we could easily find ourselves with electrical outage problems much worse than the oil spill.As they say, read the whole thing.