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View Point: Deregulation frustration

Forget Y2K. A crisis looms larger than the much ballyhooed computer shortcoming that threatened to still the modern world on Jan 1, 2000.

While the pending crisis may not reach global proportions as Y2K threatened to do, the national implications are real and scary. This potential disaster, which has already hit Southern California, will prove more costly, less easily repaired and more disheartening than any computer glitch. And it’s sure to hit the rest of the state and the country with a painful jolt.

It’s D2K – the deregulation of power suppliers.



The deregulation of utility suppliers is a nightmare that could only have been created by a science fiction writer or the blockheads in Washington, D.C. The concept sells well as far as politicians in Washington are concerned – put electricity on the open market, thus following the free market notion of reduced prices and increased service. But the reality has so far proven as idiotic and shortsighted as deregulating airlines and telephone service.

As consumers in San Diego have discovered, electric bills have almost tripled while service has disintegrated. In addition, the power grid, which supplies electricity to San Diego, is on the verge of collapse.




Why is this happening? Shouldn’t it stand to reason if widgets sell more cheaply with greater competition, so would electricity?

Unlike the case of widgets, the true cost of producing electricity is something taxpayers have already purchased. The real cost is in harnessing the power, be it hydropower, nuclear power or coal-generated power.

On the open market, electricity is a commodity that can be bartered and rationed. The real cost isn’t in delivering electricity to consumers, but in creating the electricity itself.

Since the demand for power is ever-increasing, the company that supplies the power can charge what they want, when they want and to whom they want. It’s the suppliers that now shop for the best deal, no matter what the end result to the consumer.

If a utility company doesn’t have enough power to meet demand, it must shop for more. That may mean buying from another region. In the case of Southern California, it has found buying power a greater problem than simply calling in an order. For example, the Bonneville Power Administration, which wholesales power to the West, cannot sell any more to California because its water supply is being diverted for salmon spawning. If a supplier or utility company cannot meet demand, the utility company can simply rotate the shortage with brownouts or blackouts.

What’s a consumer to do?

In San Diego, consumers bellowed loudly enough to get a $100 million rebate from the state utility regulators. But that will hardly be the norm. Things have gotten so bad in San Diego that the politicians are urging consumers to stage a ratepayers’ rebellion. Consumers are being urged to pay the same amount on their electric bill as they paid last year.

But unlike the tea-tossing in Boston Harbor that led to the American Revolution, electricity isn’t something our society can likely survive without for long. That leaves the proverbial rock and a hard place, which Washington politicos should have seen coming long ago.

Look what deregulation has done for airlines. Many airlines are posting astronomical profits, but just try to get a plane from Reno to Kansas City. Four flights and a day-long journey later, that little trip just set the customer back a couple of thousand dollars. Right now, it costs about $350 to fly from Los Angeles to Orlando, a distance of 3,000 miles or so. To fly from Orlando to Charleston, which is only hopping three states and considerably less than a thousand miles, cost three times the price.

Does it make sense? Of course not, but no more so than trying to use the telephone anymore. Try placing a collect call or a credit card call from a pay phone. If the phone actually has a dial tone, it’s chancy at best that a customer will actually get through.

Right now, three separate phone bills are the norm. There is the local carrier bill, the long distance carrier bill and the bill of the phone company successful in slamming the regular provider. There is a charge for outside service, a charge for inside service and a special charge to pay for the assurance that one has inside service.

What can be done?

Here’s one place voting records should matter to voters. Forget the dribble about tax breaks and death taxes. Where do our national and state representatives stand on utility deregulation? That certainly should spark more interest in the upcoming presidential elections than if George W. snorted cocaine or Al Gore raised money from his office phone.


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