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Deregulation

Aug 25th, 2006 at 8:35 am by Susie

Why, look how well it already worked for the California energy industry!

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2 Responses to “Deregulation”

on 25 Aug 2006 at 2:25 pm1Junior Tracy

Telecom regulation is what I do for a living. While I’m unconvinced that there is currently very much competition in the telecom industry - and even less convinced that there will be in two years’ time, the incumbent telcos have one pretty good point, which is that the regulated portion of their rates generally have gone down considerably over the last 15 or so years. Most of them have been subject to price cap regulation during that period. Such plans permit them to raise rates each year based on the rate of inflation minus a productivity adjustment (which reflects the fact the telecom technology has increased operating efficiency by a great deal). Unfortunately for the telcos, but fortunately for subscribers, inflation has been lower than productivity adjustments over the last decade or so. This is obviously pretty unsustainable. However, state governors and legislatures hate to be held responsible for rate increases (they appoint state public utility commissions and enact utility regulation laws) so the tendency is stack the regulatory deck in favor of deregulation and let market forces do the dirty work.

In any case, telecom dereg, while a putrid idea in many ways, will, at least, hurt us less than electric dereg. Regulated electric had incentives to make sure there was more than enough generation plant. Now, there really isn’t.
on 25 Aug 2006 at 4:09 pm2PhilW

Somehow I don’t think this is going to help Arnold’s reelection efforts this fall.

And you want to bet they won’t allow cities to start their own services.

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