September 07, 2006
Energy Deregulation : Perry and Staples screw over Texans
Electricity deregulation was sold by Republicans as a way to making utility service more responsive and cheaper for the consumer. The benefits were going to be, we were told, plentiful. However, research and time have shown that the only entities benefitting from deregulation are the companies that no longer have to worry about the state calling them on their bad acts or excessive rates.
Take this piece from the Galveston County Daily News
We seldom receive news releases from Gov. Rick Perry’s office as interesting as the one issued Aug. 10 about a program to help poor people pay their power bills.The release was interesting for what it said and didn’t say.
What the governor said was “electric prices are higher than they were in 2002 due to the higher cost of natural gas,” and “retail competition has resulted in benefit to customers … ”
What the governor didn’t do was list or otherwise expound about what those benefits could have been. That’s a shame, because we looked for weeks and didn’t find even one.
The piece goes on to talk about the massive difference, to the detriment of consumers, between electricity pricing in Austin and San Antonio vs. the rest of the deregulated state. Perry, Staples and the utilities who are major contributors to both will say only that the pricing is due to increased natural gas expenses. The problem, as the GCDN points out astutely, is that only half the electricity in Texas is produced by burning natural gas. How the hell could that be the problem?
Well, simply put, Perry and Staples ALLOWED the utilities to price based off natural gas prices instead of actual cost. The result? The electricity you are probably paying for today is priced based on the cost of natural gas immediately following a natural disaster. Anyone remember Katrina? That's right, when natural gas soared to almost double it's current price, many of the energy companies locked in rates for delivery of natural gas. Because of their bad decision, your rates have been high and will remain high even though natural gas has dropped dramatically in price. Consumers won't benefit from the drop because when the state deregulated it lost to the ability to force utilities to stop price gouging through regulatory action.
Could the AG do something about this? Sure. There are still laws on the books regarding price gouging but considering that Attorney General Greg Abbott has also been a beneficiary of utility company largesse it seems unlikely he'll do much to arrest the problem.
The other oft-cited reason for higher prices is new generating facilities that are more efficient... however, if they are more efficient, shouldn't they be cheaper to run that those of Austin and San Antonio? If unlocking the electric market from regulation was boon to consumers, then why are the cheapest rates in the state offered by two municipal utiliies? The answer is, of course, that electricity is NOT like a car or toothpaste and price is being fixed on a scale many Texans can scarcely imagine. Changing providers won't help because they are all about the same.
Posted by mcblogger at September 7, 2006 03:00 PM
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Comments
Repugnantans hand private companies a monopoly on necessary services and think they will act responsibly. When companies such as utilities or the media are no longer be held accountable by the government of course they will screw their subscribers. YOu can't boycott the electric company in August if they choose to inflate their prices!
Posted by: Mitchell Hurricane at September 7, 2006 06:37 PM
Repugnantans hand private companies a monopoly on necessary services and think they will act responsibly. When companies such as utilities or the media are no longer be held accountable by the government of course they will screw their subscribers. YOu can't boycott the electric company in August if they choose to inflate their prices!
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