Electric dereg. cost TX consumers $11 billion

[LiberalEsto]

Boy, wasn't utility deregulation a smashing success -- for utilities' corporate profits. Another one of those "brilliant" GOP ideas is debunked as consumers discover that they have been royally screwed.


"Texas' electric deregulation cost is tallied in study

By Jack Z. Smith | The Fort Worth Star-Telegram

A report released Monday concludes that electric deregulation has cost Texas residential consumers more than $11 billion in higher rates and that the operator of the state's major power grid, the Electric Reliability Council of Texas, has been poorly managed and industry-dominated.

The 101-page report, "The Story of ERCOT," is the result of a research project of the Steering Committee of Cities Served by Oncor and the Texas Coalition for Affordable Power, which works with 158 cities and other governmental entities to buy electricity in bulk.

Deregulation, it said, has resulted in higher rates for Texas power consumers rather than the lower rates forecast by lawmakers who passed the state law in 1999.

Before deregulation, Texas had cheaper rates than most states. Between 1999 and the first six months of 2010, however, Texas residential consumers "suffered greater increases than residents in all but six other states," the report said.

"Had electric prices remained at the national average -- not below it, just at it -- Texas residential consumers would have saved more than $11 billion since the implementation of deregulation," the report said, citing data compiled by the U.S. Energy Information Administration."

Link: http://www.mcclatchydc.com/2011/02/15/108745/texas-electric-deregulation-cost.html#storylink=omni_popular#ixzz1E8EgFOLb


Our electric utility PEPCO, which "serves" parts of Maryland and DC, is under fire from the public and elected officials for excessive and lengthy power outages while paying out record dividends to its stockholders.

I worked indirectly for natural gas utilities for several years, and what I learned is that deregulation enabled utilities to drastically reduce their payrolls, cut down on maintenance, and basically focus only on profits, profits, profits.

For example, instead of maintaining adequate numbers of repair crews, they laid most of them off and created "reciprocal agreements" with other states' utilities so that in an emergency, they could call for help and get crews from those states. That's why in recent major outages it's taken so long for repair work to get started here in Maryland. They're waiting for extra crews to drive 10-12 hours from places like Ohio and North Carolina, while we sit in the dark without heat after a snowstorm. They also don't employ an adequate number of people to field calls and answer questions about when power might be restored.

The Maryland Public Service Commission, which is supposed to regulate our utilities to the small extent that's allowed, is a misnomer. It should be renamed the Corporate Profit Protection Commission. Any use of the words "public service" is a lie.

Deregulation is an absolute fraud.

[Horse with no Name]

1. I've been shouting this for years

Excellent piece.
My electric bill is more than my house payment and car payment combined.

[badtoworse]

2. How would you structure the market to keep prices lower?

[Badfish]

3. regulations.

[rucky]

5. public utilities

co-ops
regulations

[LiberalEsto]

6. I'd go back to the old regulatory system

on the premise that these are services that the public depends on and can't do without.

Ideally, I would nationalize power production and distribution, and subsidize it to keep it affordable for average people. Pay for it, and for single-payer national health care, by raising taxes on corporations and the wealthy to realistic levels. I would heavily subsidize R & D into alternative energy sources.

[badtoworse]

9. Forget subsidies; they won't make electricity any cheaper...

A subsidy just means that someone else would be paying for the cost difference. Under the old system, regulated utilities were vertically integrated and owned everything from the generating plants to the transmission system to the distribution system that brought the power to your house. They were guaranteed a regulated rate (historically in the 10% - 12% range) on the book value of their assets. The cost of fuel and other variable operating costs were passed through to the ratepayers.

How would this market structure reduce electricity prices? Where would the savings come from?

[LiberalEsto]

13. I'm afraid I'm not an economist

or an expert in utility regulation. I was a journalist, and then a marketing writer for various natural gas technologies such as fuel cells, cogeneration, microturbines and gas-powered air conditioning systems until a couple of years ago.

However another option would be extensive use of distributed generation -- creating or harnessing power at or close to home. But the government would need to pump serious money into subsidizing it, far more than the token amounts spent today.

If people could afford to retrofit their homes to use solar power, wind power, wave power and/or geothermal power, having large power distribution networks might become unnecessary. By geothermal energy, I mean tapping into the steady underground temperature of the earth in a way similar to the way heat exchangers operate, to provide both heating and cooling as needed. The same with public buildings and business structures.

In Toronto, for example, many large downtown buildings use a system that taps the cold water temperatures deep in Lake Ontario to provide air conditioning during the summer months.

Because of the hideous effects of hydraulic fracturing - fracking - for natural gas, I can't support the use of natural gas for distributed generation any more. But here FYI is a case study on gas-powered distributed generation that I wrote several years ago, if you'll forgive the subject matter.

http://www.energysolutionscenter.org/docs/uploads/Case_Studies/ReaganLib_Cogen_H_rev.pdf

[rucky]

4. Now Texans are free from those nasty government regulations.

Will the Tea people chalk this one up as a victory?

[phantom power]

7. The basic conservative meme here is always "it would be even worse with regs"

or, more generally: no matter how bad things become under conservative policies, they just claim that it would be so much worse if the liberals were in charge.

there is really no way to argue these things in good faith.

:shrug:

[rucky]

11. private, for-profit corporations are more interested in saving you money

than maximizing their profits.

Liberal hatred is all they have, because their arguments supporting privitization hold no water.

[n2doc]

12. Exactly. Here's a toon to sum this up

[n2doc]

8. But but but W said it would save us money!

And he would never lie to us, would he?

You are more likely to die by the "invisible hand of the free market" than to live by it.

[LiberalEsto]

10. But W had his head up his butt

and said whatever his Corporate masters told him to say :)