The Ameren Monopoly
Jim Syler (aka Calion), Chair of the fringe Southern Illinois Libertarians recently wrote in Carbondale Bytelife about ‘Electricity, markets and monopolies”
In classic Libertarian-speak Syler asserts, “The only way out of our electricity problem is to cut Ameren loose from its state-privileged status, to fly or fall on its own.” He says this will benefit consumers because Ameren”will be afraid that if their price is too high or their service too poor, other companies will come in and try to undercut their business.”
I’m convinced that Libertarians want utilities to rain havoc on consumers. From the flames of the resulting chaos, they have an expectation that some Phoenix-like, benevolent, natural order (and Wal-Mart style ‘Falling Prices’) will spontaneously sprout from the ashes.
The Illinois Libertarian Party takes the position that:
Most of the disastrous utility laws now on the books began with deregulation brought about by the Energy Policy Act of 1992. That’s the same complex act (393-pages) that, in its infinite wisdom, designated Yucca Mountain as the ‘permanent disposal site’ for used nuclear fuel and other radioactive materials from commercial nuclear power plants and U.S. Department of Defense activities. The act distorted alternative transportation fuel development leading to uneconomic subsidization of ethanol from corn. It’s the same act that also failed to significantly raise automobile fuel economy (CAFE) standards.
The latest incarnation of AmerenCIPS is one of nine public utilities in Illinois that are retailing monopolies regulated by the Illinois Commerce Commission (ICC), a state agency established to “to pursue an appropriate balance between the interest of consumers and both emerging and existing service providers in accordance with applicable statute and rules.”
Essentially, when it comes to electric utilities the ICC has repeatedly blown numerous opportunities since the 1980’s when I helped argue before the ICC that Ameren needed to invest far more in sustainable energy solutions such as conservation and renewables. First, the ICC failing to foster significant demand reduction and demand management solutions that would reduce the need to build more polluting coal and nuclear power plants. Then it failed to guide acquisition of renewable energy supply sources, and most recently, it miserably failed to protect the electorate from an artificial purchasing process where the new “retailing Ameren” gets to buy power from the old “power generation Ameren” company at unnatural prices.
No, sorry, I cannot see cutting “Ameren loose from its state-privileged status, to fly or fall on its own.” Not when there are so many opportunities for the company to leverage its unregulated monopoly status to pillage its customers’ bank accounts. There is no quick easy solution. The solutions I see working best in the long run are those that turn every home and business into both an energy demand reduction engine and a distributed energy producer using renewable sources such as wind, solar, geothermal and other clean fuel technologies.
In classic Libertarian-speak Syler asserts, “The only way out of our electricity problem is to cut Ameren loose from its state-privileged status, to fly or fall on its own.” He says this will benefit consumers because Ameren”will be afraid that if their price is too high or their service too poor, other companies will come in and try to undercut their business.”
I’m convinced that Libertarians want utilities to rain havoc on consumers. From the flames of the resulting chaos, they have an expectation that some Phoenix-like, benevolent, natural order (and Wal-Mart style ‘Falling Prices’) will spontaneously sprout from the ashes.
The Illinois Libertarian Party takes the position that:
“Allowing the free market to set electricity rates is the best way to get reliable service at competitive rates. The Libertarian Party of Illinois opposes legislation that controls prices for any market service, including electricity.”Libertarians simply choose to ignore both distant and recent history of scandalous abuses by utilities that were unregulated monopolies. I’ll be the first to admit that understanding utility regulation is not an easy task. There are so many federal and state laws that have distorted the market. Many of the laws were actually written by the utilities, handed to legislators, and hastily passed without decent analysis. It should come as no surprise that the electric industry sought to improve the profitability of its monopoly standing by giving “more than $40 million to Congress since 1999 (more than two-thirds to the Republican Party) and spent an additional $260 million lobbying the federal government over that same time period. The crisis we are in now in Illinois over deregulation and high prices was nurtured in the utilities and sold to the ICC as a universal panacea for Illinois energy problems. Everybody was tricked into or bought-out by the plan. Just follow the money!
Most of the disastrous utility laws now on the books began with deregulation brought about by the Energy Policy Act of 1992. That’s the same complex act (393-pages) that, in its infinite wisdom, designated Yucca Mountain as the ‘permanent disposal site’ for used nuclear fuel and other radioactive materials from commercial nuclear power plants and U.S. Department of Defense activities. The act distorted alternative transportation fuel development leading to uneconomic subsidization of ethanol from corn. It’s the same act that also failed to significantly raise automobile fuel economy (CAFE) standards.
The latest incarnation of AmerenCIPS is one of nine public utilities in Illinois that are retailing monopolies regulated by the Illinois Commerce Commission (ICC), a state agency established to “to pursue an appropriate balance between the interest of consumers and both emerging and existing service providers in accordance with applicable statute and rules.”
Essentially, when it comes to electric utilities the ICC has repeatedly blown numerous opportunities since the 1980’s when I helped argue before the ICC that Ameren needed to invest far more in sustainable energy solutions such as conservation and renewables. First, the ICC failing to foster significant demand reduction and demand management solutions that would reduce the need to build more polluting coal and nuclear power plants. Then it failed to guide acquisition of renewable energy supply sources, and most recently, it miserably failed to protect the electorate from an artificial purchasing process where the new “retailing Ameren” gets to buy power from the old “power generation Ameren” company at unnatural prices.
No, sorry, I cannot see cutting “Ameren loose from its state-privileged status, to fly or fall on its own.” Not when there are so many opportunities for the company to leverage its unregulated monopoly status to pillage its customers’ bank accounts. There is no quick easy solution. The solutions I see working best in the long run are those that turn every home and business into both an energy demand reduction engine and a distributed energy producer using renewable sources such as wind, solar, geothermal and other clean fuel technologies.
1 comment:
Webmaster, yes, although that page was last updated in 2004, which shows what a conscientious webmaster I've been. But I don't see why that makes me either the Chair or the "public face" of SIL.
As for the main issue...we seem to be talking past each other, so let's go over your post point by point:
"There are so many federal and state laws that have distorted the market."
My point exactly.
"Many of the laws were actually written by the utilities, handed to legislators, and hastily passed without decent analysis."
Again, this supports my argument. Why do these laws exist at all? "Deregulation" is supposed to mean not having any regulations. If you give power to government, expect big business and special interests to take advantage of that power and use it to their own ends.
"It should come as no surprise that the electric industry sought to improve the profitability of its monopoly standing by giving “more than $40 million to Congress since 1999 (more than two-thirds to the Republican Party) and spent an additional $260 million lobbying the federal government over that same time period."
No, no surprise whatsoever. When government has the power to grant highly profitable monopolies, businesses are going to spend tons of money to ensure that they are the ones who benefit. Again, this fully supports my argument.
The article you link refers to partial deregulation, which may indeed be disastrous. It's like what is happening in Russia: Sell off the giant state companies, but then subsidize and support them to ensure that they don't fail or break up, thus ensuring that the tremendous inefficiency inherent in such large firms continues to stifle the economy. Contrary to the article's insinuations, if the grid was fully deregulated and privatized, power companies would have every incentive to invest in transmission, to ensure that the power doesn't go out, causing consumers to turn to their competitors instead. But because power companies are fascist monopolies, there are no competitors to choose from, giving power companies license to fleece consumers in just the way the article shows. Partial deregulation does not work.
"The crisis we are in now in Illinois over deregulation and high prices was nurtured in the utilities and sold to the ICC as a universal panacea for Illinois energy problems. Everybody was tricked into or bought-out by the plan. Just follow the money!"
Did that panacea include complete deregulation and removal of the state-granted power generation and transmission monopolies? I didn't think so. Power companies are making a bundle off of their state-enforced monopoly power; they wouldn't have any wish to change it. Let me re-emphasize: Power companies would hate my plan, because it would drastically cut into their profits!
I'm still waiting for examples of "scandalous abuses by utilities that were unregulated monopolies." Emphasis on unregulated. The examples you give are all ones of regulation gone wrong, which fully support my point. My contention is that if the market was truly unregulated (laissez-faire), many of these companies would not remain monopolies for long.
Look, I could keep talking, or you could just read Thomas DiLorenzo's excellent article on the subject, which pretty much proves my point: Things were tremendously better during the unregulated "robber baron" days.
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