Long Bet: The Cost of Energy

Posted on Friday, September 14th, 02007 by Alexander Rose - Twitter: @zander
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We have recently resolved Bet 117 on Long Bets about the adjusted cost of energy. It was an interesting case where we had very specific criteria for who would win the bet, yet we could not adjudicate it when the time came. The bettors cited the Department of Energy published numbers to resolve their bet. However in the first quarter of 02006 when the DOE posted their numbers, they then quickly retracted them. It turns out they had several years worth of data incorrect due to the deceptive data from the Enron energy kerfuffle. It took the DOE over a year to straighten it all out. In any case we have yet another resolved bet. Congratulations to Steve Kurtz on winning the bet, and to both bettors who patiently awaited the results, and agreeing quite gentlemanly in the end.

  • Jim Harding

    Interesting discussion. I’ll offer a few observations.

    Regulation and deregulation make this analysis difficult. When many states “deregulated,” they also imposed temporary caps on the retail price of electricity. In most cases, utility were allowed to accumulate (but not immediately recover) balances for costs exceeding that price. You have a number of states (Illinois, Maryland, Pennsylvania, etc) facing very large rate increases from costs incurred during 2003-2005 but not recoverable during that time. EIA has measured price, but not cost, so I’m afraid the jury is still out.

    JH


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