The Free Market
Apr 26th, 2006 at 6:48 am by Susie
Free for thee but not for me:
It’s the slow season for the laundromat in tiny Milford, Pa., yet owner Darryl Wood has raised the price of a wash by 50 cents this year, to $2.50. The reason? Electric rates have more than doubled since January, threatening to close the lid on a business his family has run for decades.
“I’ve already seen an electric bill higher than anything that I’ve ever gotten,” he says. “I thought deregulation would bring rates down. Now, I’m just hoping we can hang on.”
His ordeal reflects the fresh dismay many consumers are feeling about the deregulation of the electric utility industry. When deregulation was implemented in the 1990s, supporters said it would drive rates down through competition.
But data so far suggest that rates in deregulated states are rising faster than those in regulated states. That trend could expand as caps on retail electric rates, which have held prices down, are lifted in at least six deregulated states this year
One day 90% of our populace will live only slightly better than the denizens of a Calcutta slum. Energy issues aren’t going away or being addressed seriously. Workers will eventually compete for nearly EVERY job with someone overseas making less than a dollar an hour. A leveling of the playing field was inevitable as transportation, finance, communication, education and capitalistic influences around the world caught up with the U.S. However, 6 billion people are never going to achieve the lifestyle of a solidly middle class family here. That middle class family will soon have to settle for a lifestyle closer to that of many poorer souls elsewhere on the planet.
Deregulation allowed our utilities to claim falling electric rates, and send out bigger bills. Only in America, is this a great country or what? “Deregulation” took our utility, Central Maine Power, from a barely investment grade rating, to a Aa rated company by having the state put most of the CMP debt in a “stranded cost pool” assumed by the state. The result is masterful hokum. As one of the legislators who wrote this told me, “(the CMP President) was such a nice guy, he sat with us both nights we went over their draft, and he even bought us pizza.”
hahahaha deregulation lowering prices…how the hell can anyone buy that line anymore?
Electricity rates for Baltimore Gas & Electric are set to rise 72 percent (or $65 a month on average) July 1st.
Maryland state lawmakers hashed out a phase-in deal that’ll defer the full impact for 18 months, but will cost consumers an extra $15 a month (for two years) for the privilege.
This thing has been stewing for years, but only now are they making half-assed efforts to avert the crisis.
Deregulation in delaware starts in May. Our prices are expected to rise 60% wooooohooooo. the great thing about free market when it comes to utilities is there is no competition.
Ahhhhh the invisible hand just punched me in the balls again.
I’m not a fan of electric deregulation, and it has been implemented in a manner that has permitted utilities to sell off generation plants, despite the fact that they’re basically public assets. This is because when most plants were built, the financial risk associated with building them was, as a result of the regulatory structures then in place, borne by electric ratepayers, rather than utility shareholders.
That said, it’s likely that some customer classes - e.g., large business users - have or will benefit from a competitive structure, because the transaction/overhead costs associated with serving them (e.g., marketing, billing, bad debt) is far lower for business users than for residential users. In many cases, their use of the network is more consistent and stable, as well. This might result in reduced manufacturing and marketing costs for certain goods, which will in theory be passed on.
I’ll believe it when I see it, but it may not be as bad as everyone thinks.
Replace all your lightbulbs with fluorescents, turn your thermostat down to 60 degrees and wear sweaters all winter, use a clothesline instead of a dryer and don’t use air conditioning, and your utility bill will stay the same. As Steve said, that’s how people live in other countries.
At the same time, maybe we should start reviewing how power companies got to be regulated. Did this come out of Teddy Roosevelt’s trust busting? I need a history lesson.