NCPA - National Center for Policy Analysis

Electrical Power Re-Regulation is Shocking

July 16, 2003

When Washington truly and honestly deregulates -- as it did with airline fares in the late 1970s and petroleum industry pricing in the early 1980s -- consumers enjoy a bonanza of lower airfares and fuel supplies come into equilibrium with demand. But when Washington reverses course and substitutes regulation for the workings of the market, the result can and will be horrid. This is what is about to happen to electricity markets, says Stephen Moore (Club for Growth).

Congress is on the verge of re-regulating electricity, much in the pattern which created shortages and sky-high prices in California -- and stuck taxpayers there with a multibillion dollar bailout, further adding insult to injury. According to Moore:

  • Bureaucrats at the Federal Energy Regulatory Commission plan to impose vast new controls over local and state electric utilities.
  • It would place power-generating companies under authority of newly-created Regional Transmission Organizations.
  • Bureaucrats are trying to sell it as "deregulation" -- but it requires 603 pages of new rules and an initial budget of $750 million to implement!

In truth, it is politically inspired, Moore explains, penalizing New Mexico, Colorado, Idaho, Arizona and many Southern states in order to benefit states with political clout such as California and New York -- by rewarding them with lower prices.

Analysts ask: What is the issue here that Congress is trying to solve? After all, U.S. electricity prices have been falling for years. The Cato Institute has determined that the average household pays less than one-third in wage-adjusted prices for electricity today as did the equivalent household in 1950.

Experts warn that repeating the California mistake will extend the next energy crisis throughout the entire country.

Source: Stephen Moore (Club for Growth), "Pull the Re-Regulation Plug," Washington Times, July 16, 2003.


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