The cost of electricity in the deregulated world

[gunderstone]

So I would like to hear everyone's comments after I set a little tone.

"Because of deregulation, Berlin-based Northeast Utili*ties — which owns CL&P — and United Illuminating have sold off their power generating businesses and focused only on distributing electricity. That means they must buy electrici*ty for their customers from power generators and middle*men, and have told regulators that they already are bound to contracts that must be met."

This is a requirement of the utility providers under laws that were set a few years ago in the hopes that deregulation would spur competition which would result in lower electricity rates (or rates that rose much more slowly under regulation of the utilities). Clearly the opposite seems to have occurred as I cannot ever remember a 50% increase in rates (for UI customers, CL&P and Wallingford Electric rate changes were lower) when the utilities were regulated.

Despite the fact that deregulation of other industries (airlines come to mind) have resulted in lower prices to a point (and you have to wonder how well that is really doing with so many airlines filing chapter 11, being bought out or shuttering their businesses altogether) I believe that the whole experiment is a failure and that the utilities need to be allowed to generate their own power again and that part of the business will need to be regulated.

These are of course my thoughts so I would like to hear yours.

Also - who do you feel is to blame?

I do not believe that the utilities wanted deregulation and be forced to divest their power plants but I am not 100% sure of those facts (that is the way I remember it however.)

Who really wanted deregulation and why? Does anyone remember? Were the people clamoring for it that much? If so, we're to blame I suppose.

If it was certain political entities does anyone remember who pushed it most?

[UNiRAC]

I barely got a clue but my rates' for power are worse than $4/gal gas. I think we need a Nuke AND a L.I. LNG platform transfer station too for the old power-plants we do still have.
But soon ,,, Atty Gen R B. will fix all this crap Yeah, Right!:mad:

[navyvet]

Congress is getting ready to take on big oil. As much as oil prices are hurting us now, wait until a gaggle of small inefficient oil companies try to feed our huge oil consumption habit.

[UNiRAC]

Congress is getting ready to take on big oil. As much as oil prices are hurting us now, wait until a gaggle of small inefficient oil companies try to feed our huge oil consumption habit.After watching C-Span tonight,,, I think We'All have got to take matters in our own hands, forget 'Don't buy GAS on Wednesday[maybe pay higher and more taken from me tomorrow], But , don't drive the kiddies to soccer practice this day or don't drive my own car to work, this one day a week! [ Idea- Steal a Soccer Mom's car for planet Earth] j/j :eek:
as alwayz, All Flamez welcome
ps: it's Wall Street -[Gas-up,Oil-up,gasup,oil-up-war-good,make-some-dough]-->and the lack of refineries/EPA boondogling that is driving up prices [and our DEMAND]

[catnap]

When they started de-regulating in the 80's under Reagan I was concerned...I didn't believe for one minute that prices would stay down due to competition, that they would probably go up...cause, simply they could. And they did steadily. Some things, the things that provide universal services to us all like power, need regulation.

As far as the airlines...has any flown lately? - Maybe for airlines the prices have been more competive but the quality of flights, and airline safety have taken back seat. Flying is a nightmare.

[skimoose]

So I would like to hear everyone's comments after I set a little tone.

"Because of deregulation, Berlin-based Northeast Utili*ties — which owns CL&P — and United Illuminating have sold off their power generating businesses and focused only on distributing electricity. That means they must buy electrici*ty for their customers from power generators and middle*men, and have told regulators that they already are bound to contracts that must be met."

The deregulation law required investor owned (CL&P, UI, etc) electric utilities to sell off one of the three facets of the electric industry; generation, transmission, or distribution. Nearly all utilities sold off their generation assets and stayed in the transmission and distribution business. The generating assets were sold to sister corporations owned by the utilities, out of state electric utilities, and many were bought up by the fuel (gas and oil) companies at several times their current value. Now these companies sell fuel (at record profits) to themselves to generate electricity (at record profits). Nice. The electric utilities sold off their generating assets for many reason, aged infrastructure (deferring maintenance), very high decommisioning costs (for the nuke plants), and pollution issues (the filthy five), etc.



This is a requirement of the utility providers under laws that were set a few years ago in the hopes that deregulation would spur competition which would result in lower electricity rates (or rates that rose much more slowly under regulation of the utilities). Clearly the opposite seems to have occurred as I cannot ever remember a 50% increase in rates (for UI customers, CL&P and Wallingford Electric rate changes were lower) when the utilities were regulated.

The increases you are seeing are changes in the Wholesale price of energy. See above. The cost to transmit and distribute the energy has changed very little, although you are also seeing the effects of deferred maintenance by the investor owned utilities to their facilities (poles, wire, substations, etc.), too.



Despite the fact that deregulation of other industries (airlines come to mind) have resulted in lower prices to a point (and you have to wonder how well that is really doing with so many airlines filing chapter 11, being bought out or shuttering their businesses altogether) I believe that the whole experiment is a failure and that the utilities need to be allowed to generate their own power again and that part of the business will need to be regulated.

These are of course my thoughts so I would like to hear yours.

Even in the airline industry, deregulation is a miserable failure. Your tickets might seem to be lower, but when's the last time you saw a meal or other ammenities on an airflight. Air travel is nothing more than a flying bus now. Cable TV and phone bills didn't go down either. Deregulation just allows companies to reap unregulated profits.



Also - who do you feel is to blame?

Greedy corporations.



I do not believe that the utilities wanted deregulation and be forced to divest their power plants but I am not 100% sure of those facts (that is the way I remember it however.)

While nearly all municipal utilities, like Wallingford Electric, were against deregulation, the investor owned utilities were fully behind the effort. Remember, this was during the 90's when false profit reporting on Wall Street was causing the stock market to soar. The CEO's of the regulated utilities wanted to jump on the stock market rocket. Regulated utilities were stable and safe investments, because their profits were regulated, but this meant their stock prices were stable, too. They wanted deregulation so they could reap huge gains off of their inflated stock prices. Unfortunately, municipal utilities put their profits back into their infrastructure and into their local communities, not into political lobbyists.



Who really wanted deregulation and why? Does anyone remember? Were the people clamoring for it that much? If so, we're to blame I suppose.


Corporate America wanted deregulation, not the average citizen. People supported deregulation only because they were told it would lower prices. Even the non utility corporations were duped into thinking they would see lower electricity prices. Don't you think Walmart was just drooling at the prospects of saving millions on electricity bills?



If it was certain political entities does anyone remember who pushed it most?


The politicians had the wool pulled over their eyes by the corporations that wanted deregulation. What's worse is that these well meaning politicians relied on these same corporate lobbyists to help write the legislation. That's how the loop holes were built into the laws that allowed the likes of ENRON to create the California electricity mess. Connecticut was spared from that mess only because our politicians were more conservative and there were still some price regulations in place to ease us in to deregulation when ENRON was manipulating the energy markets.

There are several critical problems with deregulating electricity. Under the regulated monopolies, the utilities had to deal with reliability of service. Since they generated, transmitted, and distributed the electricity, if the lights went out, they were to blame and the government regulators would take action. Now reliabilty issues become a blame game. Generators blame transmission constraints (no new transmission lines built in 30 years), transmission blames government (the NIMBYs won't let us build new T lines), and distribution blames both transmission and generation (can't get access to cheaper electricity from further away), and on and on...

Second, and by far the most serious flaw, is the notion that electricity should be treated as a commodity like oil, coal, gas, etc. The laws of supply and demand can not be used on something that is an instantaneous form of energy transmission. Can you buy electricity when the price is low, and save it for use when the price is high? Currently, No. Probably never feasible in our lifetimes at the personal level. This very instant (and every instant) there must be enough generating plants on-line generating what is being used instantaneously. Any extra electricity generated this instant, and not used, is lost. Period. Even if someone could develop a usable energy storage system, a corporation would store energy when the price was low, then they would resell that energy when the price was high... at the high price.

Also, the idea that competition will spur lower prices is insane. A corporation is going to sell the electricity they generate for as high a price as the market will bear. That's corporate and human nature, if you had something that a customer would pay $5 for, you wouldn't sell it to them for $4, and if you found another person willing to pay $6, you'd sell it for that price, not the lower prices.

Think about it.

Electricity instantaneous.
The price is... how much do you have?
Take it or you're in the dark.