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PG&E: the Sky's the Limit
The utility companies asked for increases of 75%, but as the wholesale prices are as much as 30 times higher, rates could soar. A bailout would only prolong things.
The sky's the limit for deregulated utility rates
PG&E and SoCal Edison claim that electricity deregulation is driving them to bankruptcy, and ratepayers must bail them out. They asked for increases of up to 75%, but rates could go even higher than that -- wholesale prices are as much as 30 times higher. San Diego Gas and Electric more than tripled rates last summer, until the State capped them at twice last year's level. The bailout would provide no lasting benefits for ratepayers; it would only prolong a bad situation.
We're already paying to bail out these utilities. When will this end?
The deregulation law required Californians to pay up to $28 billion to retire the mortgages on uneconomic power plants--almost all of it for nuclear reactors. This was supposed tomake PG&E and Edison "competitive" in the deregulated market.
The utilities also just got a huge rate increase -- hundreds of millions of dollars -- to replace electricity and gas distribution systems which had been allowed to deteriorate.
Long before deregulation began, California utilities were charging 50% more than the national average. They claim it was because they were required to build more environmentally friendly power plants, but the real reason was mismanagement, bad planning, and greed.
The public should not pay for market failure
The big utilities were closely involved in designing the deregulated system. They were enthusiastic about the market deciding who shall thrive and who shall fail. Well, the market has decided. These corporations have failed. And the market itself has failed to deliver what California truly needs from its electricity and natural gas providers: reliable power, that is easy on the environment, at a reasonable and stable price.
PG&E and SoCal Edison claim that electricity deregulation is driving them to bankruptcy, and ratepayers must bail them out. They asked for increases of up to 75%, but rates could go even higher than that -- wholesale prices are as much as 30 times higher. San Diego Gas and Electric more than tripled rates last summer, until the State capped them at twice last year's level. The bailout would provide no lasting benefits for ratepayers; it would only prolong a bad situation.
We're already paying to bail out these utilities. When will this end?
The deregulation law required Californians to pay up to $28 billion to retire the mortgages on uneconomic power plants--almost all of it for nuclear reactors. This was supposed tomake PG&E and Edison "competitive" in the deregulated market.
The utilities also just got a huge rate increase -- hundreds of millions of dollars -- to replace electricity and gas distribution systems which had been allowed to deteriorate.
Long before deregulation began, California utilities were charging 50% more than the national average. They claim it was because they were required to build more environmentally friendly power plants, but the real reason was mismanagement, bad planning, and greed.
The public should not pay for market failure
The big utilities were closely involved in designing the deregulated system. They were enthusiastic about the market deciding who shall thrive and who shall fail. Well, the market has decided. These corporations have failed. And the market itself has failed to deliver what California truly needs from its electricity and natural gas providers: reliable power, that is easy on the environment, at a reasonable and stable price.
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§When Will It Happen?
I keep hearing about the utilies being deregulated. When is this going to happen? I hope soon because it will drive down prices and stop the stupid laws in place now.
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§Greed to blame for crisis
After deregulation, energy providers in California began using natural gas reserves bought at cheap rates to generate electricity. Because of price increases after deregulation they posted huge profits, but after the reserves ran out supply and demand took over causing the current crisis. El paso energy owns almost all of the natural gas pipelines running into California. Their lines have been operating at around 95% since before the reserves (which shouldn't have been used anyway) ran out, according to a commodities trader I know. To blame Enron, El paso, or Duke is to ignore the fact that Edison and PG&E used there resources for quick profit after deregulation. To argue that Enron, Duke, or El Paso Energy is price gouging you must argue against the simple rules of supply and demand.
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