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Fortnightly Magazine - June 1 1995

profit for the market maker. The United Kingdom's spot market has something like this, with extensive "contracts for differences." But their academics added the weird LOLP formula and botched things up. I still believe that competitively bid long-term contracts offer the best way to guarantee long-term generation resources.

I was also wrong on retail wheeling. I thought then (and still do now) that competitive long-term contracts and regional dispatch based on marginal cost would yield the lowest cost to distribution companies and all their customers. But I overlooked the burning desire for choice on the part of some retail customers. Retail wheeling (em after disintegration (em will certainly work. But for residential, commercial, and low-load-factor industrial customers to benefit from retail wheeling, we will need aggregators (in the United Kingdom, they call it "power supply") that group retail customers and then match them with generators, to take advantage of diversity. These aggregators will have to be paid, and they will have to advertise. Can you imagine the telephone call? Just as you sit down for dinner: "This is Entergy `Friends and Family' urging you to switch from Enron's `Save America' Plan."

I still prefer my vision. t


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