{"id":381398,"date":"2025-06-04T15:29:00","date_gmt":"2025-06-04T13:29:00","guid":{"rendered":"https:\/\/climatescience.press\/?p=381398"},"modified":"2025-06-04T15:29:01","modified_gmt":"2025-06-04T13:29:01","slug":"why-regulate-electricity-two-exchanges-giberson-borlick","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=381398","title":{"rendered":"Why Regulate Electricity? Two Exchanges (Giberson, Borlick)"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From Master Resource<\/a><\/p>\n\n\n\n

By Robert Bradley Jr.<\/em><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The intellectual and practical case for separating government and electricity is strong. The historical record offers little support for \u201cmarket failure\u201d\u2013quite the opposite. The laws of physics do not preclude private ownership and control of assets in this area unless you assume<\/em> mandatory open access\u2013Lynne Kiesling\u2019s Ostrom trick\u2013to make private operation of control areas problematic. [1]<\/strong><\/p>\n\n\n\n

So, I labor against faux classical liberals\/think tanks that offer suggestion after suggestion to try to make government planned ISO\/RTO\u2019s work. But the fix is in with the guilty who refuse to seriously consider a free market in electricity<\/a>.<\/p>\n\n\n\n

Two exchanges with my critics follow. One is with Michael Giberson<\/a>, a \u201cRight\u201d central planner; the other with Robert Borlick<\/a>, a Progressive Left central planner.<\/p>\n\n\n\n

Michael Giberson Exchange<\/strong><\/h3>\n\n\n\n

Giberson posted<\/a> on his regulatory filing:<\/p>\n\n\n\n

\n

The DOJ Anticompetitive Regulations Task Force requested comments on how state and federal regulations act to impair competition. In R Street\u2019s comments<\/a> we describe how regulations granting monopoly rights to electric utilities can be abused to raise rates and slow innovation. We advocate deep reconsideration of the grounds for state-protection of monopoly in the electric power industry, and using that reconsideration to restrict monopoly grants to the degree supportable by evidence and then quarantining the monopoly to allow competition to flourish in other industry sectors.<\/p>\n<\/blockquote>\n\n\n\n

He continues:<\/p>\n\n\n\n

\n

Much of the regulatory framework governing the electric power industry in the United States remains founded on thinking that is now over a century old. It might [not?] be the case that the old ways still work best for consumers. Plenty of evidence\u2013ranging from peer-reviewed economic analysis to legal decisions to news reports\u2013suggest that monopoly electric utilities use their protections in ways harmful to the public interest. We discuss this evidence and offer recommendations for reform.<\/p>\n<\/blockquote>\n\n\n\n

I asked<\/a>: \u201cAny discussion in the paper on eliminating both public utility regulation and mandatory open access to introduce a real free market in electricity? Repealing the Federal Power Act of 1935, as well as the Green New Deal subsidies to wind, solar, batteries, etc.?\u201d<\/p>\n\n\n\n

Giberson<\/strong><\/a>: \u201cWe recommend the DOJ\u2019s task force take a fresh look at justifications for granting state-protected monopoly and work to eliminate any state grants of monopoly power found lacking in justification. Not quite \u201cburn it all down,\u201d but offering them reason to do some serious \u201ccontrolled burns.\u201d<\/p>\n\n\n\n

Bradley<\/a><\/strong>: \u201cHow far away are we from teeing up a real free market in electricity in addition to the \u2018controlled burns\u2019? Just as an alternative. Is there a reason why without public utility regulation (franchise protection), integrated electricity firms cannot manage control areas and guarantee reliability for blocks of consumers? And consumer blocks be organized by representatives to negotiate rates and other terms of service?\u201d<\/p>\n\n\n\n

Giberson<\/strong><\/a>: \u201cYour suggestion seems like one possible arrangement in the absence of a monopoly franchise.\u201d<\/p>\n\n\n\n

Bradley<\/strong><\/a>: \u201cThe free-market alternative should not be anathema to \u2018a think tank whose work is grounded in liberty and freedom.\u2019 How long at R Street can the dance with central planning and renewables last?\u201d<\/p>\n\n\n\n

Final Comment<\/strong><\/p>\n\n\n\n

And he disappeared, as usual\u2026.<\/p>\n\n\n\n

There can be no straight answer. R Street and Michael Giberson are wed to electricity statism in the centrally planned ISO\/RTO market. They do not offer a North Start of a real free market in electricity in the face of withering criticism that free markets never failed in this huge sector. Note that Giberson\u2019s extensive footnotes do not mention my electricity piece, which he refuses to try to refute, much less acknowledge. Oh well, the future will be kinder to me than to him, as is the case for many areas of statism versus free markets.<\/p>\n\n\n\n

Robert Borlick Exchange<\/strong><\/h3>\n\n\n\n

The exchange began with Borlick\u2019s social media post<\/a>:<\/p>\n\n\n\n

\n

Why should the general public subsidize Big Tech\u2019s need for electric power? These companies are largely owned by billionaire oligarchs. We don\u2019t need more welfare for corporations. Big Tech should provide for their own power needs.<\/p>\n<\/blockquote>\n\n\n\n

He referred to an article \u201cBig tech must stop passing the cost of its spiking energy needs onto the public<\/a>.\u201d<\/p>\n\n\n\n

I commented<\/a>: \u201cAn end to public utility regulation could address this.\u201d<\/p>\n\n\n\n

Borlick<\/a>: \u201cRob, you keep saying this without addressing how to control the market power of natural monopoly. If utilities faced competition there would be little need for price regulation. When small scale generation gets cheap enough to make self generation economically feasible, utility regulation will no longer be needed, nor will it be capable of even ensuring cost recovery for the utilities. I submit that day is not far off.\u201d<\/p>\n\n\n\n

Bradley<\/a>: \u201cMy argument has long been (and it is in the paper I have shared with you) that 1) the natural monopoly theory is missing in action, as in the pre-PUR of the industry and 2) a \u2018monopolist\u2019 utility rate can be countered by monopsony, organized consumers via lawyers\/experts. Low transaction costs make the latter possible, and civil society (public opinion, media, etc.) will no doubt be part of the process, if it were to get to that.

But can you or anyone else provide a clear example of a natural monopoly doing bad things in a free market setting (w\/o franchise protection)?<\/p>\n\n\n\n

Third, as Pigou stated in 1920, \u2018It is not sufficient to contrast the imperfect adjustments of unfettered private enterprise with the best adjustment that economists in their studies can imagine. For we cannot expect that any State authority will attain, or will even whole-heartedly seek, that ideal\u2019 (1920, 296).\u201d<\/p>\n\n\n\n

Bradley<\/a>: \u201cRegarding off-grid distributed generation, central station thermal with transmission and end users exhibits scale economies\u2013and in all three areas. Insull first discovered this, and it has not changed despite all the government intervention to penalize vertical\/horizontal integration and to subsidize dilute, intermittent inferiors\u2026.\u201d<\/p>\n\n\n\n

Final Comment<\/strong><\/p>\n\n\n\n

And Borlick disappeared\u2026.<\/p>\n\n\n\n

[1] <\/strong>Kiesling uses the mandatory open access trick to argue<\/a>:<\/p>\n\n\n\n

\n

I don\u2019t know that we need to reopen the utility regulation debate. I strongly think we need to reframe it in Ostromian terms. Yes, electric networks require central physical control, but 1. there are different institutional ways of implementing that and 2. the more we think of grid management and physical control as Ostrom-eqsue institutions for defining and enforcing use rights in a common-pool resource, the better a job we\u2019ll do of allowing a resilient, decentralized, heterogenous network of resources to emerge through innovation.<\/p>\n<\/blockquote>\n\n\n\n

Wrong! The regulatory approach has been, is, and will be a case study of technocratic second-best, at best.<\/p>\n\n\n\n

\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014<\/p>\n\n\n

\n
\"\"<\/figure>\n<\/div>\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The intellectual and practical case for separating government and electricity is strong. The historical record offers little support for \u201cmarket failure\u201d\u2013quite the opposite. The laws of physics do not preclude private ownership and control of assets in this area unless you\u00a0assume\u00a0mandatory open access\u2013Lynne Kiesling\u2019s Ostrom trick\u2013to make private operation of control areas problematic.<\/p>\n","protected":false},"author":121246920,"featured_media":381404,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691835580,691818656,691828255,691818849,691835582,691835581,691818299],"class_list":{"0":"post-381398","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-control-areas","9":"tag-electricity","10":"tag-free-market-2","11":"tag-green-new-deal","12":"tag-iso-rto-market","13":"tag-regulation-and-mandatory","14":"tag-subsidies","16":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/06\/f626b73d9f138dac7aee6300df15d2e1.jpeg?fit=1456%2C816&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-1BdA","jetpack-related-posts":[{"id":266695,"url":"https:\/\/climatescience.press\/?p=266695","url_meta":{"origin":381398,"position":0},"title":"Free Market Electricity: End the Blackout (Kiesling bobs and weaves)","author":"uwe.roland.gross","date":"11\/07\/2023","format":false,"excerpt":"Imagine a self-described classical liberal that cannot define classical liberalism (a\u00a0real\u00a0free market) in their area of specialty. 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