Alright, continuing our discussion of this strange and confusing industry. Electricity is in some ways the more transparent part of it, you make it here, you move it here, you move it here and you move it there. That makes sense. Then we talked about the money. The money tends to flow in some ways backwards, because the consumer pays the bill and it flows to cover the costs of doing those three principal services, generation, transmission and distribution. In many cases, there's a regulator in many cases, again, there's exceptions to everything. But in most cases, there is a some kind of private company, perhaps competitive, perhaps not, that does these things and a regulator keeps an eye on them. And in most cases, the transmission and distribution system is not competitive. These are considered as we talked about natural monopolies. So in many countries, though it vary significantly, we're talking about a few examples. There is some kind of organization that runs or manages the transmission system, and some kind of organization that runs or manages, operates the distribution system. And there is a government that oversees that. In some cases, the government doesn't. In some cases, the government just keeps an eye on it to avoid any kind of inappropriate pricing. And again, it's the natural monopoly concept. It just makes sense that only have one distribution system and who runs that, and whether, how they can make profit or whether it's a government function, that's where you have a lot of discussion. So let me talk about some more concepts and the language, and there's a lot going on here. We'll circle back to these firms, but let me just go through it first. The regulator, that is a government function. So, in all countries, I could think of, there is a regulatory agency or group or organization that's the government that keeps an eye and regulates or controls or manages the regulated monopoly. And regulated monopoly is a, in some, most cases, a private company, private meaning that it is not directly owned or controlled by the government, and that's a monopoly part. And regulated means the regulatory regulators have some control over it. The common term is deregulation or restructuring, and this gets at the, what has happened over the last 40 years in this industry, where again, for most, much of the 20th century, this was the electricity industry was actually pretty simple to understand. And that most electricity in most countries was provided by the government, or by regulated monopolies, private or semi kind of quasi public private organizations that were regular, regulated by the government. But beginning again, starting about the 1980s, and accelerating through the 1990s And 2000s, there was a move to introduce more competition in the electricity industry. And that's sometimes called the deregulation, meaning less regulation or restructuring, which just means changing things. But what these terms refer to, is introducing competition into electricity. And in almost all cases, that was entirely on the generation side, not the transmission and distribution side. So among the other terms you'll hear is a transco, which is short for transmission company, which is an organization that operates, manages the transmission system. Another concept you'll hear about and the terminology vary significantly by country, is a distribution utility. What is that? That's a company, an organization, an entity of some sort that runs the distribution system, and they're the ones that get the notification. If let's say a power line gets knocked down in a windstorm, they run that system, that's a distribution system. Similar concepts though, not quite identical or something called the load serving entity, sometimes called an LLC, a retail provider, a disCo, a distribution company. And again, the terminology is kind of. In some cases, there's a company that you buy electricity from, but they don't actually do the distribution, they paid another company do that. So there's lots of variations here. One we'll talk in greater detail about, is a competitive wholesale market. Many countries are going this direction, where the transmission and distribution system are regulated. Either government agencies do it, or more typically a private or quasi private, private mix company doesn't, that's regulated. But that generation is competitive. Different companies can build power plants and bid in somehow, or try to sell their electricity into the system and this is a bit of a trend. Many industrialized countries do have competitive wholesale markets, though not all and very significantly is changing over time. Another option or concept is competitive retail market, where you can imagine as a consumer, you may have the option to buy electricity from different organizations. This is perhaps less common than a competitive wholesale market, but this can be found in some countries as well. And then as I've talked about in the past, there's a new organization that in some cases runs all of this. It's a nonprofit kind of quasi public private thing called an ISO, or RTO, or TSO. So, in many countries are going that direction using these kind of organizations. So we'll talk about them as well. So, let me talk about a first example country, because this is a lot of this is conceptual and easier to understand if you think, well, how does it really work? We'll start with a pretty straightforward example, the West African country of Ghana. And this is, Ghana's electricity structure, I'd say is representative of how many countries used to be, and many countries still are. So it's a somewhat simpler and more transparent structure. So let me explain how it works in Ghana. At the top, you have the government, there are government agencies that control, or limit, or make decisions about electricity in Ghana. And there are three in Ghana, the Power Ministry and Energy Commission, and a Public Utility Regulatory commission. These government agencies, these are government agencies, things the government actually does internally, in turn keeps an eye on the limits, regulates the rest of the industry. Then you have the generator, a main generator in Ghana is the Volta River Authority, which is, I'll call a quasi public private organization doesn't fall clearly into one box. Is it purely private competitive? No, is it a government ministry? No, it's somewhere in between, and that's common in the electricity industry. You also have the grid company, that's essentially the transmission system operator. And then you have the distribution companies. There's two in Ghana, electricity company of Ghana and northern electricity distribution company. So generation, transmission, distribution and in Ghana, all these all three of those functions are provided by alcohol, quasi public private organizations that aren't competitive. There's only one company that does those things. But that company, that organization is, I'd say controlled or regulated and strongly influenced by the government. It's not a purely private company, not a purely profit seeking company. And down at the end you have of course the customers. And if you are in Ghana, for example in most cases, you'll buy the company that actually provides electricity to you is one of these two distribution companies. But they in turn getting electricity through the grid, through the transmission system owned by the Ghana grid company. Which in turn gets the electricity itself from several sources, largely from the Volta River Authority. For example, the river authority controls Ghana's very large hydro resources. But notice there's some other bits and pieces here that are interesting. First of all imports and should be labeled exports actually. Different countries connect to Ghana in some cases Ghana cells to them. In some cases they sell to Ghana. Ghana is largely electricity exporting country, partly because of its very strong hyper resources. And one interesting piece of here, that's a good introduction of what's going on elsewhere is the Independent Power Producer, also called an IPP. As we've talked about this, industry loves three letter acronyms as my colleague likes to call them TLS. So, Independent Power Producers are called IPPs. This is competition. In some cases, Ghana does allow and even encourage private companies to invest in the electricity system in Ghana. And this is a complex and controversial topic at times. But many countries have looked at electricity, and for various reasons have allowed private companies to come in and build power plants and sell their power into the system, at some negotiated rate. So, this is again a good example of a country that has what I call a system that similar to what we've seen throughout much of the world in the 20th century, many countries still run systems this way. And Ghana, like many other countries, has introduce competition in a small measured way by allowing independent power producers to participate in the electricity system. We'll take a small break there. It's one more point is, there's a lot of these issues are very controversial. What should the role of the competition be electricity industry? Should Independent Power Producers, IPPs be allowed? Is that a good or bad thing? Those are interesting debates. I'm not going to take a position on that. That's up to you. I'm gonnna describe how it works. Let's take a break there and we'll come back. Talk about more detailed and complex examples.
