It looks like the promise that electricity deregulation would lead us all to smaller bills and better service is finally being shown as the false promise it always had been.
The New York Times, in the first of a multi-part series on electricity deregulation, is pretty blunt in its assessment:
A decade after competition was introduced in their industries, long-distance phone rates had fallen by half, air fares by more than a fourth and trucking rates by a fourth. But a decade after the federal government opened the business of generating electricity to competition, the market has produced no such decline.
Instead, more rate increase requests are pending now than ever before, said Jim Owen, a spokesman for the Edison Electric Institute, the association for the investor-owned utilities that provide about 60 percent of the nation’s power. The investor-owned electric utility industry published a June report entitled “Why Are Electricity Prices Increasing?”
This is no surprise to those of us who saw the deregulation of electricity as a dangerous gamble in the first place. When Congress began working on ways to open the industry up to competition, critics pointed out how easy it would be to game the system (enter Enron) and how low-income consumers were likely to be left behind. New Jersey made efforts to protect low-income consumers and allowed aggregation, but not on the scale that would have been necessary to make it worthwhile and with enough restrictions that it was destined to fail.
So only a couple of companies have entered the market and prices have inched up, with most consumers staying with their longterm providers.
And this is in the Northeast in a state that has a stable power grid and is unlikely to face the kind of problems that the Southwest has dealt with (again, see Enron).
There is no good answer to all of this, unfortunately, though it is important that we stop looking at the provision of electricity the way we look at the sales of sports coats. Electricity — like healthcare — is a necessity in the modern world (don’t believe me, talk to the people from Queens who were without power ealier this year). Leaving it to an unfettered market invites instability and leaves consumers at the mercy of investors.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
Hank Kalet 