Heat wave

Just about every summer that I can remember you see something like this in the local media:

The Northern Virginia Electric Cooperative asked its 144,000 customers to reduce power consumption at work and home between 2 and 8 p.m., and Pepco asked customers to keep home thermostats at 78 to help reduce demand.

Beyond the weirdness of a business asking customers to use less of its product, it's a great illustration of the role played by the pricing mechanism. Water and electricity utilities are heavily regulated, and do not have a free hand to charge what they like. Consequently, demand and price are only marginally related to one another, and we face absurd situations where the companies are forced to plead with their customers to reduce usage.

Then again, if they could raise prices we would surely be subjected to endless accusations of corporate greed.