A number of years ago I was invited – or to be correct, invited myself – to a long NATO ‘workshop' in Portugal that I was anxious to attend in order to draw attention to a book I had just published on natural gas. To say that I was unwelcome would be an understatement, because every time the person who had organized the meeting made any kind of eye contact with me, I would receive what is known in some cultures as ‘the evil eye'. A year or so later, when the conference volume was published, my lecture was the only one that had not been included.
But that was quite alright with me, because in order to spend almost two weeks enjoying the conference hotel, where gratis wine flowed like water, and marvelous Brazilian sambas and bossa novas poured out of every loudspeaker, I was compelled to fabricate a military background that included the commander at that time of NATO, whom I trenchantly represented as a comrade-in-arms when I was serving in the US Army in Japan – which of course he was, although we moved in very different social and professional circles, to put it mildly. The important thing however was that unlike most academic conferences I have attended, that one was constructed in the form of a series of overlapping sermons. It was more like a revival meeting than a scientific congress – a revival meeting designed to promote a mendacious vision of electric deregulation.
People like Arthur Rosenfeld – professor of physics at the University of California (Berkeley) – and a clique of Amory Lovins ‘small-is-beautiful' disciples repeatedly assured the rest of us that the time had already arrived when conservation and substitution, advances in technology, and a growing number of concerned and knowledgeable politicians and civil servants made a new energy paradigm possible. I had already heard similar hogwash when I foolishly gave a short course at the Australian School of the Environment, and so on those occasions in Portugal I took the liberty of switching off my poor brain during those meaningless harangues.
Some relief from this torture was provided by the contributions of the late Professor Fred Schweppe of MIT. Both in his paper and at various times during the conference, Schweppe gave a detailed and pedagogically clear resumé of the manner in which he thought electric markets would (or should) develop under deregulation/liberalisation, or perhaps better restructuring. He envisaged a situation in which technological change was moving in such a way as to allow computer intensive electricity consumers and producers to collaborate more closely, and as a result optimize the choices made by both. He already understood – as most of the rest of us did not – that recent and future developments in gas-based combined-cycle technology were capable of changing the power-generation picture in a significant manner, and so after examining the beginning chapters of a few elementary economics textbooks, he concluded that an industry that we had always thought of as a natural monopoly, or strong oligopoly, could be turned into a facsimile of a perfect-competition market, if various constraints could be satisfied.
