“Come up one megawatt hour short at a data or medical center on a hot summer day and prices will skyrocket.” – Hirs
By Ed Hirs, University of Houston
What happens when governmental regulation dictates that producers charge less for something than the cost of creating it? Shortages, of course: no sane producer is going to make something just to lose money in the process.
That is the road we appear to be headed down with electricity in the United States. Costs are increasing partly because of increased environmental regulation, but the principal factor is that the cost of building new generating plants has in many cases outstripped the price at which generators can sell their product.
The industry is in a transitional phase. Gas-fired plants can operate cheaply, but there aren’t enough of them to go around. Renewable sources, such as wind and wa