Re: California Electricity Pricing

[larson@xxxxxx]

Hi,

Your topic sounds very interesting. You might want to start with reading an
absolutely excellent book on Post Keynesian Price Theory (that's actually the
title) by Frederic S Lee. He's at Univ of Missouri, Kansas City and his book
will take you deep into the territory of price theory from a heterodox
perspective. You might also want to read my dissertation where PK price theory
is taken one step further; it's being revised for publication at the moment.
I'll keep you informed.

A core purpose behind deregulating utilities is to create a more efficient
market - meaning more efficient pricing. Since deregulation opens for very
frequent price changes (abolition of price control) the message from
deregulation advocates is that flexible prices are better than sticky prices.
In the framework of Post Keynesian theory flexible prices convey uncertainty as
to tomorrow's cash flow management - exactly the opposite of what mainstream
theory and deregulation advocates propose.

You see, when you ask consumers which pricing regime they prefer, flexible or
sticky, the absolutely dominating majority say they prefer sticky prices
because they feel more confident they can cover their expenses tomorrow. To the
best of my knowledge no deregulation of utilities or public sector service
production has ever led to more stability in consumer costs. Quite the contrary.

What this basically breaks down to is the concept of efficiency. That might be
a theoretical hub in a study of utility prices under deregulation.

You can contact me at larson@xxxxxx if you want to discuss this further.

Best Keynesian,

/srl

Quoting Okenfuss@xxxxxxx:

> ...long-time listener, first-time caller...
>
> I've just finished a paper looking into the pricing of wholesale power
> in
> California.  I'd like to expand the research I've done and (possibly)
> include
> it as a chapter in my dissertation.  I was wondering if you fine list
> members
> could offer a few good sources for heterodox utility pricing theory,
> heterodox commodity pricing theory, or regulatory theory.  Thanks.
>
> James W. Okenfuss, P.E.
>

--
Sven R Larson
PhD; Assistant professor of economics
Department of Social Sciences, Bldg. 22.2
Roskilde University
Pb 260
DK-4000 Roskilde
Telephone: (+45) 4674 2910