Electrical Engineering
or Choosing Your own Electrons
The Next Step in Deregulation by J.A. Savage
When you opened your energy bills hthis summer, you may have
noticed you're paying more for natural gas. What you probably won't know
is that when big businesses open their bills, they'll be paying less. This
shift is part of the process of deregulation-removing government control
of monopolies, originally established for the public good, and allowing
energy prices and sources to be determined by a free market. Now, the electric
industry is the next target of deregulation. Throughout this spring, the
California Public Utilities Commission (CPUC) held several forums to collect
experts' advice on the issue. This powerful, wholly Republican, pro-business
commission holds sway not only over energy bills, but telephone bills, water
bills and even trucking services. And if the commission's attempt at deregulating
natural gas service is any indication, most ratepayers are in danger of
suffering the same expensive fate from the powers that be.
A few likely scenarios: *Rates will increase, at least in the short term
because regulators will protect utilities and their shareholders from eating
the costs of transition to the new competitive industry-even for their past
bad investments. In the deregulation scheme currently under consideration,
utilities may no longer be in the business of generating power from centralized
plants, like those fired by nuclear or fossil fuel. The only monopoly left
for utilities will be in distribution, and all the "transition"
costs, for instance the costs of retiring or decommissioning plants, will
show up in monthly bills. *Nukes will remain a nagging problem. If no longer
under the wing of a monopoly, only crazed investors would sink money into
a nuke. Sure, they could buy a San Onofre or a Palo Verde unit for a few
cents on the dollar, but the risk of caring for and decommissioning plants
would be overwhelming. Whether investors actually buy nukes or the state
gets stuck with them, ratepayers or taxpayers will end up bearing the financial
burden of nuclear facilities.
*Consumers will be presented with burdensome and confusing electric options,
much like telephone deregulation. Michael Shames, director of Utility Consumers
Action Network (UCAN) in San Diego, hates the idea of deregulation because
instead of protecting consumers, it would expose them to the risk of higher
priced energy-like choosing a MCI or Sprint, when actually Working Assets
would be the optimum choice. Deregulation advocates predict that our grandchildren
might actually end up with a cheaper system. Some speculate that utility
dinosaurs, like inefficient oil-fired plants or dangerous nukes, will become
extinct.
Renewable energy sources like wind power would have a better chance at flourishing.
Efficiency, in theory, should win out in a competitive market. If consumers
are willing to work at it, under deregulation their leisure time could be
used to form electric cooperatives-either acting like a small municipal
utility and buying electricity at a discount, or perhaps, installing their
own small generation facilities in a neighborhood. Individuals could opt
for installation of photo voltaic cells on their roofs and disconnect from
the utility grid altogether. But if recent history is any indication, efficiency
does not mean consumer protection. Not only are gas rates going up for residential
ratepayers while declining for big business, but the "baseline"
rates (the threshold under which a thrifty consumer pays less per kWh) on
other gas and electricity have been getting higher. Energy hogs benefit,
because non-baseline rates have been decreasing simultaneously. The free
market just may be the wrong place to entrust something as fundamental to
civilization as light and refrigeration. But regulators seem bent on deregulation,
in spite of the risks to the masses of ratepayers and the immediate benefits
for large consumers. They see it as the wave of the future, and they want
California to lead.