Energy Deregulation: What's Really Going On? Part 1

We've all looked past the $27 screwdriver. A little corruption is manageable. But when it comes and knocks on everyone's door and there's no longer a choice as to whether or not you can be manipulated and taken advantage of, it's time to step up and take action.

This is the second article in a series on the current energy situation and the energy deregulation in the Western region of the United States. We asked several questions last time and now we're going to try to uncover some of the facts behind them.

Basically, this is the energy problem as it stands today: The Western Grid, as it's known, is a network of high power lines that is hooked up to generating power throughout the United States. It is simple to move energy great distances, like from Canada to San Diego. It's applied into the system at one end as a bank of consumption for the other end. When energy deregulation took place, Southern California Edison and many of the cur rent electrical companies were generating, producing and creating a profit on about $4 per kilowatt (I,000 watts of electricity). Then they were forced to sell their generating capabilities.

Now there are approximately 27 companies supplying energy to California and charging approximately $40 a kilowatt. What is the advantage in letting these companies decide the entire economic health of the Western Region? We too find it difficult to understand. Could this be the equivalent of industrial terrorism?

In any other industry, there are checks and balances in place to prevent businesses from unfairly taking advantage of consumers. So why did these energy companies consistently, in-step, raise their prices at the same time? Under any other terms, this is known as price fixing.

We would also like to bring your attention to the fact that there was a test market for these price increases in San Diego. There were no outcries, no picketing in the streets. Nobody decided to unplug their electricity from the electrical company, so generating companies at the time got a green light.

There's several ways you might want to take a look at the situation: Who benefitted most from deregulation? Why was it put into place? Why would a governing body take something as crucial as our life supplying energy sources and put them in private hands unless someone was going to greatly benefit from it? Obviously it has not been the consumer.
In a democratic society, why are certain municipal cities not being controlled by this apparent energy coalition? Why are they allowed to enjoy moderate price increases while another part of the population has been left at the mercy of these coalitions?

We called the Public Utilities Commission. We talked to the Federal Energy Regulation Commission (FERC). We talked to Southern California Edison. We talked to several of the municiples to make sure that the information we're providing you with is accurate.
The interesting part, other than the lack of straight answers, is that half the people we spoke with didn't understand what was going on themselves. Could this crisis just be a misunderstanding? Perhaps the technical complexity of the situation makes it easy to fool the governing bodies into believing these prices are justified.

What we did discover is that all decisions made by the Federal Energy Regulation Commission are made by five individuals. Two of them were put into place by President George W Bush's first appointment after taking office. Perhaps this is not an accident. Perhaps the commission is controlled and the policy has been arranged. Is government well aware that the table has been set and that a plan is being followed?

In calling the Federal Energy Regulation Commission, we got double talk: They're looking into it... they're evaluating it... they don't really believe it's their place to set price.
But the fact is we had to go through five different divisions of FERC trying to get straight answers and all we heard was, "It's not our policy at this time." So what does policy mean? Could policy be the decisions of five individuals?

How electricity rates are set, where and when power plants get built, and whose electricity gets cut off when supplies are tight are extremely volatile political issues. Which is why we believe this is a problem that has to be corrected on a federal level. As it stands, all the generation capabilities are regulated by the Public Utility Commissions. But they don't have the authorization out side of the state and much of our electricity is generated out-of state from foreign producers and imported. The Federal Electrical Regulation Commission would be the only governing body to put it back on track.

Even if power plants were forced to close down because of emission requirements and we understood bad decisions were made, let's take this initiative to reverse it. Why don't we roll back and eliminate deregulation? If it's not working, there's no sense in following on a disastrous path.

Because another concern is the fact that California has always been a leader for the United States. Could this be just another expansion of their test marketing program? We predict it will move up to Oregon next, then Washington, and finally eastward. Electrical companies can act like any other cartel that gains power: The more revenue they get, the more political clout they get, the more politicians they put in their pocket, the more lobbyists they can control, the worse the problem becomes. We feel now is the time to stop this problem.

Again, we implore you to educate yourself about this system, become politically active and call the necessary forces. Ask your political representatives: What is the justification for increasing the kilowatt price from $4 to $40? We'd like to find out, too. Let's keep an eye on www.consumerwatchdog.org/utilities and in contact with our elected officials. Depending on the facts you obtain, you may want to give strong consideration to who best represents you in Congress and the Senate for the next election.

If you would like to read part two of this article, click here