Old Wires, Old Motives


The profits of privatization

Just finished listening to The Sunday Edition on CBC's Radio One. Lots of negative feedback from listeners about last Sunday's interview with Lawrence Solomon, who promotes the combination of regulation and privatization pioneered in Great Britain. Some with personal knowledge of the situation there spoke of rising costs of electricity and denial of service to those who can't afford it. Others simply won't buy the notion that adding a profit incentive will lead to lower prices, citing American trends.

The New York Times had another article yesterday about the 'tragedy of the commons' effect that deregulation has created in the US. That's my metaphor, not theirs, for neglect and abuse of the transmission grid.

New Kind of Electricity Market Strains Old Wires Beyond Limits

This was followed today with Forget Deregulation. It's the Wires, Stupid.

I sent out some emails this week letting more friends know about this web log. Got back several replies offering encouragement and some helpful criticism. Patti wrote about her own deregulation experience and has kindly allowed me to repeat it here:


Hi Jim, I read the article on Deregulation and found it very interesting. I've bookmarked your site and will go back and read more articles later. Does your friend Max work in the industry? [No, he is a member of Energy Probe, and one of the smartest people I know. - Jim]

Here are my comments......this topic really gets me worked up. I worry that the government is making such a huge mistake.

I started working at Union Gas when deregulation was in it's first years. At the time gas prices went from 7 cents per cubic metre to 9 cents per cubic metre. Everyone said deregulation would help reduce rates by increased competition and consumer choice but they've never gone down- only up- and right now I think I'm paying around 25-30 cents per cubic metre.

Why? 1 ...Union Gas no longer bought gas in large enough quantities (because so many of our customers signed up with other companies) so they didn't qualify for the lower rates. 1a) ...Union having to buy on the spot market because of inaccurate estimate of gas required (more volatility in customer base as customers signed up with other companies...as the other companies went bust Union Gas had to take on their customers).

2 ...Union Gas/Westcoast began selling gas to customers in Western U.S. for Hydro Generation.

3 ...Less money was being spent on creating new supply of natural gas so the law of supply and demand was at work to increase rates.

I know many people believe large bureaucracies owning utilities is a bad idea but I really truly believe it's the lesser of two evils. I'd be interested to know how much money the lobbyists made off of deregulation.

Patti


Posted: Sun - August 24, 2003 at 01:52 AM          

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