Thursday, July 14, 2011

California energy crisis and channel theory

The effect of government price controls is to reduce the rank of the channel for the controlled flow. California's efforts to control electricity prices are a case in point.

The legislature set up a two stage delivery system, stage one from old plants, stage two at newer plants. Ignores price, motive, and morality; and ask, what is the minimum number of steps required to complete energy flow under the two step delivery?

Step one is eah of the old plants deliver their quota at a flow that synchronizes their arrival. Step two is to have one huge replacement order at the ready. The analysis uses the set of steps to delivery, the i in -iLog(i), to match the uncontrolled flow to the controlled flow by reducing the rank, the maximum i.

Run the Huffman at precision K, then at K-1. The encoder will look like a very big monopoly aggregator at the long end, all the variation in orders now crowded into a small short space. The Huffman tree will be stilted.

Applying the constraint (all -iLog(i) within an integer), then the short end are the old producers under price control. They end deliveries each day at a defines, controlled rate. With all these plants terminating at some rate, to meet -(i-1)Log(i-1), the delivery size is huge, it will carry cargo for the whole bunch.

Another California example when they mandated electrics by percentage.

The result was odd. From the view point of minimizing inventory steps and maximizing flow the result was, a few retro golf carts kept at the back of the lot. The electrics sold occasionally, they worked and their is always an environment where the thing works. Flow was maximized, steps minimized.

You know what elses operates under flow control? The central banker.

No comments: