tag:blogger.com,1999:blog-5524682876220396502.post8233280899066952701..comments2024-03-27T06:56:10.255+00:00Comments on Broad Oak Magazine: Small Electricity Suppliers Have No Right To An Easy Life Unknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5524682876220396502.post-33824769451587771692013-06-13T19:55:38.019+01:002013-06-13T19:55:38.019+01:00This piece ia a gnarly one for me, Nick, because I...This piece ia a gnarly one for me, Nick, because I don't begin to have your technical expertise.<br><br>You refer to "dumb vertical integration, yet without it an organisation can be caught out by dislocation or adverse moves in the open market, as Northern Rock was with its borrowing-to-lend. <br><br>Or one player can spoil things for others by having a selfish strategy - as I recall, one of your energy security pieces speaks of the French buying up energy on the open market to maintain their generous reserves, so depriving others of needed supplies and raising the market price.<br><br>I understand e.g. McDonald's is vertically integrated to prevent dislocation and being held over a barrel by external suppliers. http://www.industryweek.com/planning-amp-forecasting/value-creation-vertical-integration<br><br>I think I grasp the point about economies of scale, and the relative cost-effectiveness of different kinds of energy generation (wind farms are a target for many commentators for many reasons). <br><br>And in principle I see how subsidies, quotas, partisan regulation etc distort the market so that economically incorrect decisions are made. Though there is the knotty question of how we perhaps should intervene in order to head off tomorrow's problems as well as satisfy today's needs. <br><br>I need help with the comments about liquidity, trading and hedging as I don't understand the processes, but perhaps this is for you to explain to me (if you will) when we meet again.Sackersonhttp://www.blogger.com/profile/17284329249862764601noreply@blogger.com