California: Free market for power cuts cost, professors say -

3-university manifesto urges California to stick with deregulation, including letting customers choose providers.

State regulators and lawmakers scaled back parts of the state's 1996 deregulation plan, including consumer choice of power retailers, after wholesale prices soared in 2000 and 2001

And what's significant about that time period?...

A) It happened during California's deregulation.

Jan. 4, 2003, 1:00AM

Long-distance rates do turnaround

Call prices up despite competition
By BRIAN BERGSTEIN
Associated Press
NEW YORK -- It seems to defy a basic law of business: Competition is increasing in the long-distance phone market, but prices are going up anyway.
How can this be? Companies and analysts say it's partly because prices for long-distance calls -- and many other telecommunications services -- simply got unsustainably low in recent years.
But it's also because of the nature of the competition itself.
Increasingly, long-distance calling is available as part of "bundled" packages that also include local phone service and high-speed Internet access. Customers who don't sign up for such packages, and instead take basic services a la carte, are less profitable for the leading long-distance players, AT&T, Sprint and WorldCom.
Those basic calling plans are the ones that have seen increases in recent weeks. AT&T and WorldCom's MCI division -- Nos. 1 and 2 in long distance, respectively -- have raised several monthly fees and per-minute rates, and indicated more increases are on the way. Sprint, the third largest long-distance player, is widely expected to follow suit.
With land line revenue plunging at AT&T and Sprint, and WorldCom in bankruptcy, it makes sense that the companies would try to extract more money from customers who make relatively few calls, or steer them into bundled services, which are likely to maintain more attractive prices, analysts said.
"To a certain extent, they realize they're going to lose many of their low-end customers, but they don't really mind because they're making most of their money from higher-paying customers," said F. Drake Johnstone, a telecom analyst for Davenport & Co.
Any increases in long-distance rates by AT&T, MCI and Sprint might seem to play right into the hands of their newest competitors: the nation's four huge regional phone companies, Qwest Communications International, SBC Communications, Verizon Communications and BellSouth. Those four have won regulatory approval to offer local and long-distance calling in 36 states, with more likely in 2003.
But those companies don't offer big discounts either, especially because they badly need long-distance revenue to counteract weakness in the local phone business.
The local market also has been invaded by none other than the big long-distance companies, although the regional phone giants hope federal regulators soon make that process more difficult.
"In the short term, the Bells could put some pressure on the big three to delay rate hikes, but they cannot afford to lower rates," said Rich Sayers, who runs consumer Web sites such as 10-10PhoneRates.com and Phone-Bill-Alert.com. "AT&T, MCI and Sprint have overhead that is far too high to compete on price."
AT&T spokesman Gary Morgenstern said long-distance prices fell to "irrational" levels in recent years partly because WorldCom used financial shenanigans to mask the impact its bargains had on its bottom line.
MCI spokeswoman Claire Hassett denied that WorldCom used its $9 billion accounting fraud to push long-distance prices to artificially low levels. She said competition kept prices down, but rising overhead has made that unsustainable.
There still are options for inexpensive long-distance calls, especially wireless phone plans that offer free nights and weekends.
And for people willing to take extra steps, some "dial-around" services and prepaid calling cards charge less than 5 cents a minute or have shorter billing increments. In comparison, MCI recently raised calls on some plans to 9 cents a minute.

Price competition works in both directions...Otherwise prices would never rise.

idiot eggheads......

if you deregulate something that there is a shortage of... the price will go up.

Which is the only way to attract investment in new capacity. Then the price comes down, just the way it did when Reagan decontrolled oil. That capacity was being built until Davis stuck his fingers into this mess.

The real problem was the way the shortage was contrived over the preceding 25 years. Here's a clue as to how it happened and who the players are: What's an environmental activist lawyer, classmate of Gray Davis at Stanford, and one of Davis' biggest camapign contributors doing running a power company?

One of the key players in the California Power Crisis was John Bryson. He was a founder of the NRDC (Natural Resources Defense Council) one of the principal plaintiffs in the legal actions that led to closing SMUD's Rancho Seco reactor (980 MW right there). Bryson is Chairman and CEO of Southern California Edison International, the holding company for SCE the utility. Bryson was planning to play the bogus carbon credit market through the Whirled Bank, but then Bush was elected and spoiled their plans.

Who are the beneficiaries of this game? The stockholders of those companies who own the gas wells, bankers and bond brokers who loaned money to the state, pipeline companies...

Now you know why so many "charitable" foundations (see stockholders) give so much money to environmental groups.

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