Deregulation A Campaign Issue In 2008?

by Steve

I’m sure that no one is surprised to learn that contrary to claims by industry advocates about the benefits of energy deregulation, electricity prices have risen faster in unregulated states than those which remained regulated. As a result, many states are moving to re-regulate their energy industries. An independent study by an expert in this area using government data has concluded that the cost to consumers for electricity in deregulated states is now significantly higher since 2000 than the cost in states that remained regulated.

The main reason behind the effort to return to a more regulated market is price. Recent Energy Department data shows that the cost of power in states that embraced competition has risen faster than in states that had retained traditional rate regulation.

One prominent critic of competitive pricing — Marilyn Showalter, a former Washington state utility regulator who has become an advocate of publicly owned power systems — has calculated that, in the year ending May 31, customers in competitive states paid an extra $48 billion for their power, compared with what they would have paid under rates in regulated states.

Of course, some states are moving against the grain. In Texas, Governor Rick Perry is fast-tracking efforts by his buddies in the energy industry to build nearly two dozen dirty coal plants, while allowing those companies to operate in a unregulated market that is by the government’s own data an oligopoly.

Official reports on pricing data from Texas and other states have declared some prices were artificially high at times, a characteristic of an oligopoly. This occurs when a small number of suppliers legally coordinate their actions, achieving prices close to those a monopoly could charge.

There will be a receptive audience in 2008 to challenge the deregulation push that began and took firm root during the Clinton Administration in the 1990’s. Whether it is the disastrous telecommunications deregulation of 1996 that has led to higher cable and local telephone prices, energy deregulation which gave us Enron and the theft of billions from California all under the watchful eye of the Federal government, or the imminent flooding of our highways by unsafe Mexican trucks and truckers at the expense of Teamster jobs and American trucking companies because of NAFTA and other right wing efforts to achieve profits against the public interest, Democrats will be able to force the GOP to defend their dogma next year in front of a skeptical voting public.

And while Hillary adopts a more populist tone in her speeches in Iowa of late, she will have the opportunity to convince us that she would be serious about undoing the worst of deregulation. We already know the Teamsters’ endorsement is there for the taking.