Magazine article Common Cause Magazine

Electric Shock

Magazine article Common Cause Magazine

Electric Shock

Article excerpt

The utilities industry wants to pull the plug on regulation and leave consumers with the bill.

The pitch begins as you pick up the phone. A generic voice offers a 28 percent discount for long-distance calls to your 10 closest friends and everyone in your extended family provided they're made before six o'clock on a Sunday or between 9 p.m. and 4 a.m. during the week. And while you're trying to figure out what that means, the voice promises a free half-minute for every 18 minutes of calls you make as long as your monthly total exceeds 60 minutes. You could save hundreds of dollars.

So you sign up. And while daydreaming about cashmere scarves and model train sets, you open your mail. There's a check, money you can spend tomorrow. If you deposit it, another phone company promises an additional 20 percent off calls made during the middle of the night, and a 30 percent savings when you use a phone card in a foreign country.

You start wishing for a set of Ginsu knives.

When your bill comes it's as fat as the phone book itself and as incomprehensible as the tax code. Is it worth it?

Well, get used to it. In 10 years it won't just be the phone company. The electric company will come calling. Some utility in Oregon will offer someone in Kentucky a discount on peak-hour wattage units or some other hitherto unknown product.

This is the future promised by electric utilities deregulation. If we're lucky.

Years after federal deregulation splintered the airline industry and long-distance telephone service, folks still debate the wisdom of it all. Several major air carriers went bankrupt, and the survivors often operate in the red. But airline ticket prices have come down - especially for the leisure traveler. Similarly, the telephone breakup may have produced annoying solicitations and unreadable bills, but rates are lower. And callers have the power to choose; if they don't like what they're getting they can switch.

But electric utilities deregulation is different; it makes customers pawns, not kings. While Eastern Airlines shareholders paid the price of airline competition, consumers have been handed the bill for utilities deregulation. You may not know it, but every time you pay your electric bill you're helping to bail out the industry.

The public may have disliked the government's multibillion-dollar bailout of the S&L industry, but at least people knew about it. In contrast, the rescue of utilities, made possible by government regulations, is reaching deep into people's pocketbooks while barely causing a public stir. And once again political campaign contributions are playing a role.

Everything Old is New Again

While electric company executives can be thankful they haven't been cast in the role of this decade's S&L operators, there are some similarities in the way they do business - at least as far as campaign contributions are concerned. Since Jan. 1, 1988, electric companies have contributed more than $1.5 million in unregulated "soft" money to the political parties, and since Jan. 1, 1993, they've given more than $1.4 million in campaign contributions to candidates for Congress.

Just what are they after? Like the S&L executives, utilities and independent power producers have a stake in government regulations. They want Congress to change laws enacted as recently as 1992 and as long ago as the Depression, and they know that federal and state regulators will determine how deregulation will play out. Only the ratepayers are absent from the talks, which makes some consumer advocates wonder if consumers will be left holding the bag.

Thrift deregulation was pushed by more than $11 million in congressional campaign contributions from the S&L industry. Lawmakers gave the industry what it wanted: changes in accounting rules, higher interest rates, increased deposit insurance and the chance to diversify into junk bonds and real estate trusts. …

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