Paying through the nose for power

The NYT's David Cay Johnson likes to delve into some very complicated economic and financial stories. His latest effort concerns the network of lines that transmits electricity all over the country. Turns out there aren't nearly enough of them, which means that utilities must find other ways of getting at the juice. That often involves buying costlier power from nearby plants - something called congestion charges. This is a particular problem in several localities, including Socal (the summer blackouts are a reminder). From the NYT:

The congested transmission network has frustrated the many who supported the opening of the electricity industry to competition a decade ago, hoping that prices would fall. Under the old system, regulated monopolies made and delivered power in their own area, with only small sales outside. The new system is intended to encourage a competitive business in which power is distributed over vast regional networks. But for electric prices to fall, the network must be able to move power from the lowest-cost plants to where it is needed, utility industry experts said.

[CUT]

Investment in the network has been falling for three decades. For each dollar spent on the network in the 1970s, spending, adjusted for inflation, is only 75 cents today. Independent power producers say transmission would attract more investment if profits were not regulated, while municipal power agencies and other critics of making electricity a competitive business assert that inadequate investment in new lines is inevitable because it increases profits for power plant owners.

More by Mark Lacter:
American-US Air settlement with DOJ includes small tweak at LAX
Socal housing market going nowhere fast
Amazon keeps pushing for faster L.A. delivery
Another rugged quarter for Tribune Co. papers
How does Stanford compete with the big boys?
Those awful infographics that promise to explain and only distort
Best to low-ball today's employment report
Further fallout from airport shootings
Crazy opening for Twitter*
Should Twitter be valued at $18 billion?
Recent stories:
Siri versus Hawaiian pidgin (video)
Letter from Down Under: Welcome to the Homogenocene
One last Florida photo
Signs of Saturday: No refund
'I Am Woman,' hear them roar

New at LA Observed
On the Media Page
Go to Media

On the Politics Page
Go to Politics
Arts and culture

Sign up for daily email from LA Observed

Enter your email address:

Delivered by FeedBurner


Advertisement
Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
LA Observed on Twitter and Facebook