Led down the 'primrose path' once again

by David Grand
May 10, 2006

We've been taken down it so many times, regarding the benefits consumers would supposedly realize by the increased competition that deregulating this or that industry would create, that I could find my way blindfolded.

First, it was the passage of the Airline Deregulation Act that President Carter signed into law in 1978. It's main purpose was to remove government control from commercial aviation and expose the passenger airline industry to "market forces."

Effects: Eliminated the federal Civil Aeronautics Board's authority to set fares as it had done since 1938. And between 1978 and 2001, nine major carriers and over 100 smaller airlines went bankrupt or were liquidated, with fares flying higher among the surviving "Big Six" carriers.

The next deregulation that bit us in the wallet was in the cable industry with the enactment of the Telecommunications Act of 1996, which was touted by Congress as a way for achieving a competitive, pro-consumer marketplace.

Effects: It left almost all cable subscribers without protection from unrestricted rate hikes, that have risen three times the rate of inflation since 1996. And when it comes to customer service, the latest American Customer Satisfaction Index survey ranks it among the worst rated businesses ever.

 In the late 1990's, nearly every state had passed, or was considering, deregulation of its electric power markets to purportedly breed competition. Effects: Opened the door for large utility companies merging as a means for cornering the market and increasing profits, a la the pending merger between Constellation Energy (CE) and the Florida Power and Light Group (FPL). However, instead of driving rates down, the rates in deregulated states are rising faster than in regulated ones, like in Maryland with BGE's rates skyrocketing 72 percent.

But as they say, misery  likes company and Maryland has plenty of it. In parts of Pa., electric rates have doubled since January; in Delaware, rates shot up at least 59 percent; in New England, rates surged 15 percent (except for Vermont); and in the Mid-Atlantic region, rates in New York have gone up 16 percent since 2002, while the Mountain State's rates remain about flat.

Today, just 16 states have fully deregulated power systems, with 34 states having repealed, delayed or suspended deregulation, or limited it to large customers, with electric rates for households remaining under a regulated umbrella.

Some states are considering re-regulation. But as an energy specialist at the National Conference of State Legislatures said, "getting the 'genie back in a regulated bottle' may be difficult or impossible, since many states sold their energy plants in the 1990's to power companies; and now that they're gold mines, would be very costly to buy back."

Now, if I came across a bottled up genie in my yard, I'd ask her to grant me but one wish: convene, el pronto,  a special session of the legislature for the purpose of (1) scraping the deal Ehrlich cut behind closed doors with CE for phasing in that gigantic rate increase; (2) blocking its pending merger with FPL; (3) giving those on the Public Service Commission the old heave-ho; and (4) repealing the 1999 legislation deregulating the power industry. (Hope I didn't leave anything out.)

And if she said that granting my wish was beyond her powers, I'd squeeze her worthless self back in the bottle and bury it so deep in the ground she'd never see the light of day again.