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Utility deregulation raises some important issues. Electricity has tradionally been regarded as a public service, but deregulation leads to a very different scenario. The large corporations taking over small utility companies will not have the same responsibility to keep the lights on. Local accountability is lost. They are less likely to invest in new capacity in my opinion, or to maintain the existing excess capacity which provides system stability under variable conditions.
I imagine they plan to engage in energy arbitrage, which could be bad news for the populations they serve. They may have interruptible fuel contracts in order to access fuel more cheaply, and so may not run at all if there are fuel shortages. They may also not run if fuel is simply expensive as they may be able to make more money selling the fuel on to others directly than by using it to generate electricity, and they will be under no obligation to generate. This would be a particular problem in New England where home heating and electricity are both heavily dependent on natural gas.
I expect deregulation and consolidation of utility companies to be very destabilizing influences on power systems, even in the relatively near future. Fuel shortages and price volatility are likely to cause people to shift to greater dependence on electricity, just as the system is being hollowed out and becoming more brittle. Blackouts are inevitable. It seems like a recipe for a few people to make a great deal of money while many others could freeze in the dark.
Now it would appear we're taking our usual next step, which is to remove the pesky problem of competition by allowing all the utilities to be owned by a very few. Customers, of course, will have very few choices.
So the question is, what will the picture look like in a couple of years - your scenario is certainly one strong possibility.
The risk the companies are not taking into account is civil unrest, which I think is as inevitable as are huge profits and blackouts. Being seen to make enormous profits while the expectations of the erstwhile middle class are dashed is ultimately a recipe for being pulled from one's pedestal. If memory serves, La Belle Epoque (the laissez-faire era of the late nineteenth century) ended with anti-trust legislation against the Robber Barons, and the same can eventually be expected this time. Bear markets can be thought of as nature's redistribution system when the concentration of capital has become extreme - entropy reasserting itself as the disparity becomes too difficult to defend.
The whole process is likely to be uncomfortable, to say the least, for all concerned. Personally, I think the tradition model for grid electricity as a public service will be consigned to history as an unsustainable aspect of technological complexity (in accordance with Tainter), although the dynamics could take a long time to play out. Local distribution should survive, but access and price are likely to be very variable and the poor are almost certain to suffer greatly. Rural people and small communities are likely to have to look after themselves (and each other), which could engender a very useful degree of cooperation.
A breakdown of the grid over here in Sweden would strand a large ammount of hydro power and nuclear power. The hydro power cost next to nothing to run when the powerplants are built. There would have to be a breakdown the size of a civil war to stop this power from being distributed to paying customers. It is not even that expensive to run the current backbone grid and strenghten it.
The grid will become even more valuble if people start to build small powerplants that need accumulators or exchange with the grid to get 24/7 power. Money and resources that people can use for accumulators is good market for grid operator services.
If there is a crisis resources will be used to guard and then strenghten the grid and load will be shed untill it is in ballance. Either with higher prices or defaulting on contracts and rotating or permanent cutoffs. It will indeed be uncomfortable.
I expect the scale of electricity generation, distribution and consumption to diminish over time (involuntarily), with new smaller-scale or modular generation built nearer to centres of demand. (The NIMBY syndrome is less of a factor when the alternative is to do without.) I also expect a lot of new small-scale generation to be private - built by those who can afford it for their own benefit and therefore adjacent to demand by definition. Rural communities may do this communally, which would be useful.
The winter temperature here is often comparable to Sweden, and the geographic scale is much larger, so the problems are likely to be significant. There may be population shifts towards the cities if remote rural areas unable to install their own generation (or district heating) are no longer serviced by the grid. I hope we don't see shanty-towns, but they have been so common in other parts of the world that it would be hard to dismiss them as a possibility.
The break thru time for rural electrification in Sweden were during the first world war when our neighbours were busy killing each other and we had smaller food riots. The immediate need was mostly to replace the kerosene for lamps that no longer could be imported from USA. But most of it was anyway done with three phase power with thin gauges to provide for motor power on farms to replace steam-locomotors.
This was 90 years ago when we had an economy weaker then Mexicos today but with nearly no corruption.
The electrification of the rail system were likewise rushed during the second world war to save coal.
If a grid could be built from close to zero during wartime nearly a hundred years ago it can be maintained or built from zero today with resources a small fraction of for instance the current US economy.
The grid and any non fossil power powerplants will be the crown jewels of any post peak oil country or power company. I find it more likely that there will be a small poor cottage for every 100 high tension poles with someone getting a free 16A and minumum wage as pay for daily power pole inspections, pole painting and manually moving the lawn around the switchyard rather then the grid deteriorating.
Some day I will learn how to use this language in a proper way and to preview more.
Instead of a rerun of the 1930s, I'm afraid it might look more like a rerun of the eighteenth century, which began with the South Sea Bubble and ended several decades later with a series of revolutions. I'm sure you would consider this to be a very extreme position to take, and I certainly hope it doesn't work out this way. However, unwinding the huge (unprecedented) imbalances that have been allowed to build up in the global financial system is very unlikely to be painless, especially in combination with the effects of peak oil and its attendant resource wars.
For anyone who might be interested, a book I found particularly interesting some years ago set inflation (and deflation) in historical context. It was called The Great Wave: Price Revolutions and the Rhythm of History by David Fischer (and was much more readable than the title suggests).
I am an optimist who is quite sure that idle production capacity will find people to trade with as long as they have something tangible to pay with. Complex assurances that someone somday will pay a dept for tangible goods will be worth less then a song. Its an end for a lot of overhead services, not the end of the industrialized civilization.
I think we will get your scenario if the authorities hinders new uses of old assets.
Presently my house has oil fired heat and hot water. I've put in a good wood stove (theoretically I have enough wooded land to make that sustainable), so the furnace is now a back up system. I will be switching to an electric hot water heater and heat pump system, and I'm looking at alternate hot water heat sources (so I will have at least two). I'm going electric in spite of my reservations about the grid because I cannot afford to keep changing my infrastructure. This is the value of a common energy interface, even if it has flaws.
So it pisses me off to see them going after what remains of the electric utilities - I know we're going to need them, and we should be pouring money into enhancing the capabilities of the grid, not turning it into someone's cash cow. I guess I must now figure out how to generate my own electricity - this is a big investment I had hoped to avoid.
If I may paraphrase: the grid will be dead, long live the subgrid.
Last week there was one radio (not repeated, and I haven't yet trawled online) mention that the UK grid got to its first (trivial) alert on supply. I'm not concerned, distances are small in UK, the grid is under govt control, they will do optimal things to make it function while that can be done, I can survive days or weeks without electricity.
In UK we seem to have few options, self generation or grid. The US situation, as befitting a larger country, is more variable, complex, flexible. But there are still regulations in both that are against distributed power generation. You have maybe more scope in US to implement local, sustainable, generation, grids.... for f*ck's sake DO IT.
One intresting piece of information is that modern technology both can make grids more fragile and robust. You can simulate and optimise so that you can run the current equipent closer to its margins. And you can build in smarter automatic systems for shedding load or decoupling parts of an overloaded grid to minimise the size of a power outtage. A large problem with such smarts is that they are hard to test and you might end up creating new kinds of faults.
I have not heard abot micro grids, subgrids etc in Sweden. But there is intrest in iceland running of random parts of the grid after a major fault. And house turbine running of condensing powerplants, mostly the nuclear ones, to faster get them back on the grid after a major fault. I do not think that anyone exept odd individuals plan on running a local grid as a normal situation.
The rules for adding small generators to the grid are reasonable. This might have to do with the wind power installations. I have heard but not read that we now also have code for allowing emergency generators in teleco stations, hospitals etc to bid on selling peak power to the grid.
The deregulation left the almost rediculously large cold snap spare powerplant capacity withouth any economy. We mostly hade about 35+ year old oil fired condensing powerplants built before the nuclear plants that were run for a few days or a week every other year or less. Some of them are now scrapped others are bidding on providing spare capacity that is paid for by the transmission fees on the high tension grid. But we now have too little spare capacity since absolutely everything has too work to handle a statistically 10% risk winter cold snap.
Most of the local Swedish investments are in upgrading the nuclear powerplants, more electricity production in the pulp industry, more combined heat and power plants for district heating using natural gas, garbage or biomass as fuel, wind power and uprating of the grid. The grid uprating is mostly adding 400 kV and HDVC links to get rid of bottlenecks and massive cablification of the rural distribution to make it weather proof and to compensate for the lack of locally living and workig maintainance staff. The most uncertain plans seems to be massive wind power investments and new natural gas pipelines.
I suspect you're right, based on what we've already experienced with deregulation. (One word: Enron.)
What I don't understand is why Democrats and Republicans both are still so enthusiastic about deregulation even after the Enron disaster.
Politicians won't work for the average folk unless they start donating, voting or unionizing in droves. As long as most of us obey tv and radio blabbermouths, we will be pandered to, but otherwise ignored.
that's pipe dream isn't it?