PUC and deregulation


It is rare for a Government entity to admit they made a mistake

I was amazed to see in a recent addition of the Harrisburg Patriot News and article about the upcoming winter heating season and the Philadelphia Gas Works asking for a rate increase. That in itself was not so amazing but the article next to it talked about how the Pennsylvania Public Utility Commission (PUC) had just released a report about the failure of Gas deregulation. In the report they decried the lack of competition that had forced the increase costs in natural gas prices. BUt the bottom line was that deregulation had failed and their solution was to repeal the law and return to the regulated system as it was.

Now if you have read anything in this blog you know how I feel about deregulation. There are certain industries that for the public good should be regulated. That way companies and consumers know their costs. As we've seen with other deregulated industries, the shift from public good to the shareholders and the bottom line is almost immediate. But historically the old regulated utilities did good for their broader range of shareholders, not the speculators and greed driven CEO's but those who wanted a safe reliable investment and a company that cared about its community. In the late 90's and early part of this century it seemed everyone got bitten by the high flying star CEO bug. Even our legislature got suckered and deregulated natural gas and electricity. Good solid companies merged and bought other companies and accumulated debt far beyond their capacity. Of course it all came crashing down as we found that those high flyers at Enron were all charlatans and con men who fooled everyone. Now these formerly good companies are struggling and their only answer seems to be raise prices and cut the very workers who make their companies strong. But the free market folks will say the market decides these things. But my answer is that the free market is made up of people and unchecked many people will go for greed over good.

So whenever someone mentions deregulation there are questions we need to ask.
1. Who benefits, is it a short term money grab by a new CEO trying to ingratiate himself with shareholders.
2. Will the assets be held or sold off for short term gain?
3. Will the company continue in its core business or is the deregulation an excuse to get rich quick?

So far in this country we have deregulated utilities, trucking, airlines and communications. So far I have yet to see the benefit of any of them. It was good to see the PUC admit its mistake about natural gas, let's hope they wise up about electricity and communications as well.

Posted: Tue - October 11, 2005 at 01:32 AM          

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