CURRENT MOON

Tuesday, April 25, 2006

So What's Happening Is Exactly the Opposite of What the Free-Market Advocates Promised Would Happen


From the EEI newsletter:

"Dereg States See Rates Rising Faster Than in Regulated States
Electric power rates in states that have moved to deregulation are "rising faster than those in regulated states," the Christian Science Monitor reported today. "That trend could expand as caps on retail electric rates, which have held prices down, are lifted in at least six deregulated states this year."

The Monitor pointed out that there have not been too many examples to point to how significantly prices are likely to rise "because rate caps are only just being removed. But in New England, where many caps came off last year, retail electric rates surged about 15 percent - except for Vermont, where regulated rates are roughly flat. In the Mid-Atlantic region, rates in deregulated New York have risen 16 percent since 2002, while rates in still-regulated West Virginia were about flat."

John Shelk, president of the Electric Power Supply Association, was quoted as saying: "Competition has been incredibly robust. People believe if prices rise something is wrong ... But the reason is the cost of [fuel] increased." The Electricity Consumers Resource Council, in a FERC filing, said: "There has been and is today no true competition in wholesale and retail electricity markets."

Christie Rewey, an energy specialist at the National Conference of State Legislatures in Denver, said some states are considering re-regulation but getting the "genie back in a regulated bottle" may be difficult or impossible. Wrote the Monitor: "Many states sold their generating stations for a song in the 1990s, she says. Now these same states find that those old plants are a gold mine for their owners and would be very costly to buy back. Today, 16 of 23 states that initially passed electricity deregulation offer a fully deregulated power system, studies show."
Christian Science Monitor , April 25."

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