Econ 101 Shows the Way
Charles Bayless recently retired as President and Provost of the West Virginia University Institute of Technology. Previously he was Chairman, President, and Chief Executive Officer of Illinova Corporation and its wholly owned subsidiary, Illinois Power Company. Prior to joining Illinova Corporation, he was Chairman, President, and Chief Executive Officer of Tucson Electric Power Company.
"The ships hung in the sky in much the way that bricks don't."
-Douglas Adams, "A Hitchhikers Guide to the Galaxy"
Since deregulation began, electric and gas "markets" have on many occasions exhibited unusual price and allocation results in much the way that free markets don't for a simple reason. They are not free markets and have serious structural defects invariably leading to these anomalous results.
In Economics 101 textbooks everyone quickly learns the power and beauty of the free market mechanism. The individual preferences of millions of consumers and producers aggregate into supply and demand curves, such as those shown in Figure One, which then determine price and quantity. Adam Smith's invisible hand then signals to producers and consumers to produce or consume more or less than they did.
See Figure One.