Electricity deregulation falls short on benefits

The Toledo Blade ^ | Sunday, January 16, 2005 | JON CHAVEZ

[Willie Green]

One analyst says he thinks electricity is among the few things not open to free-market competition.

With just 11 months left before a five-year move to electric deregulation in Ohio is complete, competition hasn't materialized and it seems unlikely that state regulators can ever make it happen.

Deregulation was instituted in 2000 under a mandate by the Legislature. The initial promise was to lure outside suppliers to Ohio that would offer competing rates on electricity - and savings to northwest Ohio consumers who historically have paid some of the highest rates in the state.

But so far, the only benefits most customers have realized are a rate freeze since 2000 and a state-mandated 5 percent reduction of their bills.

About 50,000 customers got in on limited deals in the first few months of 2000, and large groups of customers have achieved some savings - up to $70 a year this year - by forming large buying coalitions known as aggregations.

Unless competition suddenly materializes, there isn't likely to be much more than that in the future, experts said.

Jim Halloran, an electric power analyst for NatCity Investments in Cleveland, said, "I've come to the conclusion that there are few things that are not open to free-market competition. One is electricity."

[snopercod]

Since when are price controls "deregulation". Obviously, Ohio is following the California script.

[Texas Eagle]

One analyst says he thinks electricity is among the few things not open to free-market competition.

Isn't that what anal-ists said when President Reagan deregulated the airline and telephone industries?

[Dog Gone]

They ought to try deregulation before deciding it doesn't work.

It's working just fine here in Texas, incidentally.

[LPM1888]

Electric deregulation had the potential for significant gains for some users, primarily large users such as industrial clients who have the ability who control their usage patterns.

But unfortunately their is no free lunch, when some users gain others lose. In this case primarily residential users because they don't have the capability to make large bulk purchases and control their demand patterns.

Even then deregulation might have worked out if Kenneth Lay, Enron, and the other members of the utility cartel hadn't gotten greedy and used their ability to manipulate the market to run a huge scam on Californians.

During November of 1998 I was asked by the cartel members including Kenneth Lay and the heads of several other energy corporations to make a presentation on the application of large scale Information Technology and Energy Automation systems to electrical deregulation. During the meeting it became obvious that they had absolutely no interest in how to use the technology to reduce overall energy consumption or costs. Their only interest was in how they could acquire system wide data and how that data could be manipulated.

When I walked out of that meeting I knew that the end users were going to get screwed. California took the hit for the rest of us, otherwise all of our residential bills would have doubled or more.

[LPM1888]

Electric deregulation had the potential for significant gains for some users, primarily large users such as industrial clients who have the ability who control their usage patterns.

But unfortunately their is no free lunch, when some users gain others lose. In this case primarily residential users because they don't have the capability to make large bulk purchases and control their demand patterns.

Even then deregulation might have worked out if Kenneth Lay, Enron, and the other members of the utility cartel hadn't gotten greedy and used their ability to manipulate the market to run a huge scam on Californians.

During November of 1998 I was asked by the cartel members including Kenneth Lay and the heads of several other energy corporations to make a presentation on the application of large scale Information Technology and Energy Automation systems to electrical deregulation. During the meeting it became obvious that they had absolutely no interest in how to use the technology to reduce overall energy consumption or costs. Their only interest was in how they could acquire system wide data and how that data could be manipulated.

When I walked out of that meeting I knew that the end users were going to get screwed. California took the hit for the rest of us, otherwise all of our residential bills would have doubled or more.

[Young Werther]

Our chruch just completed a year of deregulated electrical consumption. While KWHs were 96% year over year our expense were 86% so the $2200 in savings were mostly cheaper KWHs.

[WOSG]

You read "state-mandated 5 percent reduction of their bills"

and then you read ... "Unless competition suddenly materializes" ... with a straight face, as if the pseudo-deregulation actually did anything.

It's like a cafe with horrible food wondering why they dont get customers. You just gotta shake your head.

[WOSG]

"They ought to try deregulation before deciding it doesn't work. It's working just fine here in Texas, incidentally."

Dittos on that comment.

[LPM1888]

Deregulation was established in Texas as a "Loss Leader" to bait the hook for the rest of the nation.

[Dog Gone]

That's absurd. If that were the case, we wouldn't be attracting new power providers within the state. Nobody put a gun to their head.

[brooklin]

It doesn't seem to work in sparsly populated regions. Not enough customers and high transmission costs.

[LPM1888]

See post #5

[Dog Gone]

I'd already read it. It doesn't change the fact that real deregulation seems to work, while phony deregulation causes manipulation.

[Larry Lucido]

It doesn't seem to work in sparsly populated regions. Not enough customers and high transmission costs.

Implicit in that statement is that regulation will resolve the problem (by making transmission costs less somehow?).

Without regulation, sparse population folks won't be able to transfer their costs onto others - they will have to decide to bear the increased costs of transmission/generation, or move to a more populated area. Life is a series of trade-offs.

The first Martian colony can't expect their electricity at $0.05 per kwh either.

[LPM1888]

You live in Texas.

[Dog Gone]

I think I knew that.

That's what gives me the personal experience to tell you that deregulation has worked here.

[snopercod]

Well, the thing about Texas is that they don't do "interstate commerce" when it comes to electricity. They produce what they consume.

California and Ohio should learn from the Texans.

[enviros_kill]

The electric rate in Fort Worth has gone from $.07/kwhr in 1997 to $0.10/kwhr in 2004 since deregulation in Texas. Deregulation was an end run by the eco-nazis to cut off the large capital funding needed to build nukes. Now we are saddled with natural gas and the supply cost increases as well as the explosion danger. Meanwhile Communist China is building nukes like crazy.

[texas booster]

I don't think that the cause-and-effect of deregulation is solely related to the eco-nazis and the death of nukes. The eco-nazis are a real problem and gov regiulation makes it much worse to expand capacity.

The market bought into natural gas in the late 90's because the forecasts for NG prices was so low. With a one to two year timeframe to build out a new power plant, NG plants became a no-brainer compared to nukes or coal.

Yes it was strongly related to government imposed regulations, but the market (the builders and suppliers of power) chose the path of least resistance and best ROI.

No one has a crystal ball on forecasts three years out, but someone should have noticed that the changeover to gas became a stampede almost overnight.

I sell dereulated power, and my company recently signed a 25,000 member church in Houston to a firm fixed contract with a lower price than the price from two years ago, when the cost of NG was under $5 per MCf. Over two dozen churches participated in the buying pool.

Deregulation works in Texas for businesses and residences. It may even end up saving TXU and Reliant by forcing them to improve their customer (non)service and shed deadweight at the top.

The beauty of nukes is that they produce very low cost power. The bane of nukes is the capital cost and end of life decommissioning. To a quality operator government regulation is just so much noise that increases the complexity and cost of operations.