(For educational purposes only)

By Betsy Stark N E W Y O R K, July 17

 Wisconsin Electric Power never figured on a heat wave in early May when it took some power generators down for maintenance.

So when the temperature unexpectedly hit the 90s, the only way to keep its customers supplied was to buy electricity on the open market at more than 25 times the usual rate.

It would have really hurt, says Richard Abdoo, the CEO of Wisconsin Electric Power Corporation. You dont know how many hours youre gonna have to do that for, but even for an hour or two, it would have hurt.

Abdoo made his largest customer, the Cleveland Cliffs iron ore mine, an unusual proposition: He offered to pay them $82,000 to shut down for the afternoon.

Deregulation is not supposed to be this way, but it turns out the road to selling electricity in the free market is paved with potholes.

You change from a completely regulated industry to a completely deregulated [industry], says economic adviser John Dyson. It throws all the cards up in the air and exactly what hand well all end up holding when its finished is still to be decided.

Frequent power shortages are one of the biggest problems. New power plants are needed, but for now, power companies are unwilling to build them.

Some utilities are trying to manage too much demand and too little supply by paying their residential customers to shut off air conditioners or increase temperature setting on especially hot days. Some big business, including software giant Oracle, avoid getting caught short by building their own power generators.

Brownouts, black outs and price spikes may become fixtures of summer for the next few years, as the electric industry works through the awkward transition from government monopoly to free market.

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Another good example of so called "experts" telling us that we will be better off taking the control of the industry out of the hands of "de bad-ol gubment" and that deregulation would bring down what we pay for power. Now with increasing demand for electricity, no one in the free marketplace is willing to invest in building new power plants to supply the raising needs because they do not bekieve they will be able to recoup the cost of the investment.

-- Cherri (sams@brigadoon.com), July 17, 2000

Answers

Cherri, there's truth in what you say, but I don't think the problem is just deregulation; it's a whole combination of factors.

Look at the airlines, which were deregulated some years ago. When that first happened, you had trouble finding flights to smaller cities, because the major airlines wanted to go for the lucrative NY-Dallas-LA-Chicago-DC-etc. runs. That soon settled out, though, and dozens of smaller airlines started taking up the slack. Air travel is now cheaper than ever.

Same with long distance service. Deregulation has resulted in more choices and MUCH lower prices for consumers. After an initial shakeout, the US Postal Service now does a better job since being semi-privatized.

BUT ... I do have this concern: the difference with power companies is that they're essentially monopolies; no one is going to run a duplicate set of lines to my house so that I can choose a second power company. So, in this case, I agree with you: I'm not sure that deregulation is the bed of roses that my fellow conservatives assume it to be across-the-board; we'll have to see.

The point I'd make, though, is that these power companies would build new plants in a heartbeat if all they had to do was build a building, buy some generating equipment and install it, and then put it on line. The problem is, it's not that simple anymore.

Want to build a hydroelectric system? You may NEVER get that on line, not if the anti-nukes have anything to do with it. Even if you do, it will take years, because the company will have to go through endless hearings, court challenges and protests just to build the darned thing.

If you want to build a nuke, it's even worse, because you have people who are opposed to them on principle -- in addition to the usual environmentalists, Not In My Back Yard-ers, etc.

So, you're left with oil or coal-fired. Now: isn't THIS ironic? You are far more likely to get approval for THIS type of plant, because it's not an Evil Nuke and doesn't require a large lake that might kill some Horned Weeble-faced Twarblebirds. But it costs out the wazoo; you'll have to install scrubbers and all sorts of things to keep the exhaust clean. Plus, these plants cost a lot more to run.

Not that I want power companies to have carte blanche to destroy the planet, but this is just the price we pay. There are no good answers. But personally, I don't think deregulation is the real problem. It's present economic/environmental realities.

That's just me. :)

-- Stephen (smpoole7@bellsouth.net), July 19, 2000.

Pardon the poor editing on my part; instead of "anti-nukes" in the paragraph about hydroelectric, I meant to say "environmentalists." That's what I get for typing before my morning coffee has kicked in.

But surely you see my point.

-- Stephen (smpoole7@bellsouth.net), July 19, 2000.