Unpublished letter to the Economist
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Your lament for Europe’s money-losing electric utilities, pickled in their own brine, begs the question whether old, long-and often still-subsidized oligopolies should be bailed out or shielded from competition when they bet against innovation and lose. They were supposed, but failed, to prepare for renewables by reinvesting their hundreds of billions of Euros’ windfall from billing customers for the first decade’s tradeable carbon emission credits they’d been given for free. Now they’re whining that disruptive technologies are upending their old models. Of course: should we reject mobile phones because they disrupt wire line telcos? A well-designed, technology-neutral electric capacity market is worthwhile, but botched investment strategy should not be rewarded, nor should shareholders be surprised that utility shares no longer perform like bonds when 21st-century technology and speed collide with 20th- and 19th-century institutions, rules, and cultures.