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Getting access to the White House apparently costs about $100,000, although, for that sum, they serve the coffee. You can get my attention for a lot less -- just take the trouble to drive to Salida and buy me some coffee, and I'm all ears.
That happened last week when several rural-electric co-op officials came to town to ply me with caffeine and explain why Colorado shouldn't be in any hurry to deregulate electricity.
I was on already on their side -- given our state government and its bipartisan eagerness to bend over for corporate interests, any change that comes from Denver is likely to be for the worse, unless you've got a Standard & Poors portfolio.
One REA argument is that Colorado electric rates are already 14 percent below the national average, which indicates that we're not being gouged now. Being suspicious, I looked in the 1996 Statistical Abstract, and could not find a state-by-state rate breakdown.
But I did see that in 1994, the national average residential rate was 8.4 cents per kilowatt-hour. In 1994, we paid 6.9 cents to PSCo here -- about 18 percent less than the national average.
That chart also showed that on a national-average basis, and measured in constant 1987 dollars, residential electric rates actually declined from 1970 to 1994 (the most recent year listed in the Abstract). In 1970, the average was 6.3 cents per kwh. It peaked at 8.3 cents in 1983, and has dropped steadily since then, to 6.1 cents in 1994.
Industrial rates rose, though. In 1987 dollars, they went from 2.8 in 1970 to 3.8 in 1994 -- an increase of 36 percent.
That might explain why there is considerable support, from some influential sectors, for electric deregulation. We peons seem to be doing okay under the current system, but our blue-chip superiors are dismayed and thus eager to purchase corrective legislation.
In theory, deregulation would enable a customer to pick an electric supplier and cut a deal -- sort of like long-distance telephone deregulation, where you can answer sales calls during your family dinner hour, shop for the best deal and pick a service provider.
But out here in the boondocks, that took a long time to arrive -- real long-distance competition didn't get here until about five years after it hit civilization.
Now there's supposed to be competition for local phone service -- and the new competitors want to serve only concentrated markets, and have apparently been reluctant to offer residential service.
That sort of cream skimming
could well happen
with electric service, too.
Another big utility worry is stranded costs.
A
utility predicts its likely future demand and invests in
generation capacity accordingly. Then deregulation appears
and some outside supplier might undercut those rates. The
utility can't sell power from its plant, so it can't to
repay the money it borrowed to build the plant, etc.
That argument doesn't get much sympathy from me. All investments carry an element of risk. We don't protect people from their folly if the pork-belly or silver markets take a downswing, and I don't know why electric plants should be any different.
One argument they didn't make is that electric deregulation could further trash the Mountain West. California's air-quality rules essentially outlaw coal-fired power plants there. Yet the Golden State is a huge consumer of electricity -- 213.7 billion kwh in 1994, of which only 60 percent was generated in-state.
The rest comes from burning coal in Wyoming, Utah, New Mexico and Arizona. The air may be cleaner in Los Angeles these days, but it comes at the price of not being able to see across the Grand Canyon.
It's Not in my Back Yard
on a continental scale.
Californians want the benefits of electricity, but they're
too wholesome to tolerate smoke-belching power plants in
their hallowed air. So these NIMBYs put the power plants,
and associated pollution, in our back yard.
Electric deregulation would encourage this trend, since
California's natural-gas cogeneration systems, wind farms
and nuclear plants would have to compete with cheaper
electricity from coal plants in states with compliant
governments. And our mountain-state legislatures are always
more concerned with economic development
than with
avoiding colonial status and protecting citizens from
breathing poison.
In the long term, electric deregulation is inevitable and probably beneficial if done properly. But the REA guys were right -- there's no reason to rush into this, on either a state or federal level.
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