Alberta's electricity system is Canada's example of this. "de-regulation" meant the separation of generation, distribution and retail. Decades after this was supposed to lower the price of electricity, it's done the opposite. Big corporations are now guaranteed a profit at each layer of the system. There is no competition, because why would they compete if they're guaranteed a profit?

So the result is Albertans pay more than most other Canadians for electricity. Even if the actual rate is low (which it isn't), the cost of electricity is usually only 10% of my bill. The rest is "transmission" "distribution" etc. It's insanely expensive compared to next door in British Columbia.

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Epa095 3 hours ago | parent | next [-]

Wait, they privatized transmission as well?

Electric production and transmission is interesting from an economic perspective, as the physical infrastructure is almost as perfect an example as it's possible to make for something which should be governmental (or under its direct control). You just can't get working competition there. While the power itself is the perfect example of the opposite, where the market should (according to theory at least) be perfect.

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MobiusHorizons 3 hours ago | parent | next [-]

> While the power itself is the perfect example of the opposite, where the market should (according to theory at least) be perfect.

Markets don’t seem to want to solve for outlier situations like extreme weather events or significant hardware malfunctions. Basically I’m talking about what happened in Texas. When it’s a safety issue, it can be hard to align incentives to make planning for outliers worthwhile to market actors.

	▲	roughly 3 hours ago \| parent [-]
		It’s more than that - it’s that if price is your only signal, it’s always going to be cheaper as a producer to ignore long-term sustainability, which means the companies which do so will “outcompete” the companies which plan for the future, leaving you with a market full of companies utterly incapable of handling an adverse event when it comes around. It’s not just greed, it’s a fundamental problem with how the market compresses signals about companies and products.

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stymaar 3 hours ago | parent | prev | next [-]

> While the power itself is the perfect example of the opposite, where the market should (according to theory at least) be perfect.

Nome, it only works for fossile-based power, for any other power source (be it hydro, nuclear, solar, geothermal or wind) the marginal cost of supply is zero and all the cost is upfront cost. In that situation, the (classical economics) market equilibrium simply doesn't exist mathematically.

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kyralis 36 minutes ago | parent [-]

That's not really accurate. All of those other power sources have ongoing maintenance costs as well, and "making back our investment" is also a cost.

	▲	stymaar 12 minutes ago \| parent [-]
		That's not marginal cost though, the full cost (from either maintenance or capital) is due no matter how much electricity is produced.

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cperciva 3 hours ago | parent | prev [-]

Transmission is privately owned and operated but publicly controlled. Like other natural monopolies, the regulator tells the operator what to provide and how much they get paid for it.

The main reasons for this arrangement are political -- debt stays off the government's balance sheet, and labour disputes aren't "the government's fault".

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marcosdumay 3 hours ago | parent | prev | next [-]

There's no reason for not separating generation, distribution, and retail.

Those are completely different activities, with completely different competency requirements, economical and political characteristics.

Also, bundling them is an anti-competitive measure. What is important for generation in particular, that is a competitive market where you can have private companies.

	▲	MrFantastic 3 hours ago \| parent [-]
		That works in theory. In practice each company has their own overhead which increases their service fees. They regulated nat gas in my state and the service fee is more than the gas consumed.

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canadiantim 3 hours ago | parent | prev | next [-]

Hydro One in Ontario is infinitely worse and was a government spearheaded privatization effort. "Sorry, not sorry" from kathleen wynne still echoing in the ears...

	▲	skipants 2 hours ago \| parent [-]
		Well the OLP did pay for that mistake in the next election, that's for sure.

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newsclues 3 hours ago | parent | prev [-]

Ontario privatized Hydro as well