Can Electricity be treated as a  Commodity ?

By Santosh Bose

COGNIZANT TECHNOLOGY SOLUTIONS

INDIA

• The character of "commodity" many confer to the electricity today as one of the arguments to justify the electricity industry Reform is questionable. Calling "commodity" to the electricity means to open the possibility of electricity being treated as tangible traded commodity, which certainly does not look alike in anything to the gas either.
  
  
• Simultaneously Electricity  is not a tangible article because it is a force of the Nature .  At the most we might consider an artificial process of energy conversion.
  
  
• Electricity as product is a finitely  engineered product. Electricity is "conducted energy" delivered to the consumer safely and reliable in pure state for its direct consumption .
  
  
• It is delivered without being precise to carry out any energy conversion process as it occurs in the case of coal, gas or other fuels.
  
  
• The process of "electricity conduction" undergoes a time scale which must be observed scrupulously for not to incur risks. Electric system works in steady state bearing much in mind that utilities cannot control completely the "homogeneity" (frequency and tension) of the electricity as product. It also depends on the instantaneous load of the consumers.
  
  
• "Non storable" nature of the electricity is direct contradiction to very nature of other storable commodity.

To avoid wrong moves and contradictions, it is very much said  that the electricity is a very peculiar "commodity" ( Copper is the commodity which supplies the electrons, while the electricity is the force which move them.)

In fact, GATT (General Agreement on Tariffs and Trade) never considered electricity as a commodity. “Electricity is only Electricity”.

 Just imagine in the in future some might start trading  " gravitational field energy" as electricity is "traded" today. Perhaps we should ponder whether electricity business reform troubles are the "financial haughty" tribute of trying to commoditising  a very  force of the Nature. Finally, an additional question to  this debate: Is Electricity a "commodity", a “service” or a “Public good”?

About Santosh Bose

Santosh Bose currently works  as Business analyst (Energy and Utility Practice) for

COGNIZANT TECHNOLOGY SOLUTIONS at Chennai,India. His current area of interest are Customer Information service and CRM for global energy sector.