Utility Deregulation's Many Pitfalls

The ugly face of deregulation is rearing up once again and we, as consumers, can only open our wallets and pay the higher rates that this ideological nightmare will soon demand. The impecunious industry currently laboring to cut the constricting chains of regulation is the electric utility industry.

These poor souls have been forced for decades to live with guaranteed profit margins and consumers who are forced to pay for the fiascoes the industry built and lost fortunes on, such as nuclear power plants.

They even invented their own language to cover the problems that they created. My favorite is "Stranded Investment". Nope, it isn't a power plant that was accidentally built on an island that the utilities can't get to anymore. Rather it means either something that was built in the wrong place at the wrong time for the wrong reason, such as the aforementioned nuclear power plants, or it means that the utility was able to invent an accounting method to show that a power plant that is 50 or 60 years old still hasn't paid for itself. Both of these answers are accepted practices based on the current regulatory framework. In the new framework, it would be a somewhat puerile joke save for the fact that you, the consumer, are going to have the privilege of paying for the costs of these plants through your higher electric bills.

Let's begin by trying to see why this newest "deregulation" nonsense is even considered necessary. Did you guess that Corporate America and Wall Street will benefit greatly? You win! The mergers that have already occurred are just the beginning. The largest utilities, such as SCE or PG&E or SDG&E, are busy merging with or outright buying as many of the smaller electric producers as they can afford in order to minimize what little competition currently exists. Meanwhile, these behemoths are selling off portions of their companies, the energy producing parts especially, to THEMSELVES! Why? Because then they can sell the same energy back to themselves for resale at a higher price or "wheel" it over their power lines and thus profit twice from each little electron.

Now, business won't just profit once. Once deregulation takes effect, in 1998, the first beneficiary will be those large energy users who can begin negotiating with any utility they choose and buy power at the lowest cost. The estimated decrease in cost to these large energy users is between 10% to 30% or more. These users make up between 40% to 65% of the total energy sold in most markets. Do you believe for a minute that prices will fall once business is given this gift?

It surely doesn't take the proverbial rocket scientist to figure that these decreases in revenue from such a huge part of the market will have to be balanced. Look in the mirror to see who will be given the privilege of paying the difference, gentle readers. And, while the promise is to allow the consumer to also negotiate their best deals, it won't take effect for us until somewhere between the years 2000 to 2003 and even that early date is in doubt.

So far we've only discussed the scenario for California. Each of our 50 states, though, will be making up their own rules and rate structures. In June of last year, for instance, thousands of doctors and other consumers in Connecticut were notified that electric power might not be guaranteed 24 hours a day.

Can't the federal government step in with uniform guidelines? Nope! Those who hate "Big Government" are fighting tooth and nail to keep the federal government out of the picture (the repeal of PUHCA of 1935 and the enactment of EPAct of 1992). This movement is less to downsize the federal government than it is to keep the investigatory powers of the U.S. from being used to find the myriad instances of blatant rip offs and inept management that naturally occurs in every deregulated environment. Remember S&Ls?

Speaking of the S&L disaster, who believes that the airline industry is safer or more customer oriented since deregulation? When was the last time you ate a meal in a comfortable seat on an airline that actually left on time with a reasonable fare? Who honestly believes that their phone service has magically improved since deregulation? GTE merges with Contel and immediately demands a huge rate increase while drastically reducing the number of customer related positions. The trucking industry has shown a enormous increase in accidents since its deregulation.

I've only touched on the issues you will be soon be facing once this newest facet of the war on the consumer begins. Longer outages, less service in rural areas, higher costs to small business and individual consumers, ad infinitum.

Ladies and gentlemen, you will soon be led once again to the slaughter by the Corporations who run America. They have devised another method of making you pay much more for far less. The Democrats tax and spend while the Republicans sell us out to the highest corporate contributor. Either way, we not only lose but have no say in the process. Pretty sad commentary on a once great nation.

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