NYT: In Deregulation, Power Plants Turn Into Blue Chips

In Deregulation, Power Plants Turn Into Blue Chips
By DAVID CAY JOHNSTON

Four big investment firms bought a group of Texas power plants in 2004 for $900 million and sold them the next year for $5.8 billion.

Sempra Energy, parent of the utility in San Diego, bought nine Texas power plants with two partners in 2004 for $430 million, selling two of them less than two years later for more than $1.6 billion.

Goldman Sachs and its partners bought power plants in upstate New York, Pennsylvania and Ohio starting in 1998 and sold them in 2001 at a profit of more than $1 billion.

These extraordinary profits have come during a decade-long effort in about half the states to overhaul the business of producing electricity — in the name of stimulating competition and lowering utility bills.

But even as some investors have profited handsomely by buying and sometimes quickly reselling power plants, electricity customers, who were supposed to be the biggest beneficiaries of the new system, have not fared so well. Not only have their electricity rates not fallen, in many cases they are rising even faster than the prices of the fuels used to make the electricity. Those increases stand in contrast to the significantly lower prices in other businesses in which competition was introduced, such as airlines and long-distance calling.

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http://www.nytimes.com/2006/10/23/business/23utility.html?ei=5094&en=eed40071cf6e6552&hp=&ex=1161576000&partner=homepage&pagewanted=print

in my town and the next town over, Mirant (which is in bankruptcy) sued to have their power plants re-assessed for the past however many years, and won their case . . . the result: my property taxes this year -- both town and school district -- are rising almost 50% to pay for the rebates . . .

then, just to rub it in, Mirant announced that they will be closing the plant in my town because they don't want to pay for mandated pollution control upgrades (the plant has been one of the worst polluters in the state for years) . . . the result: loss of the largest ratable in town as of next April -- and probably another 50% increase . . .

people are starting to leave, especially the elderly who own their homes outright and who have lived here all their lives . . . they simply can't afford the tax increases (which, btw, come on top of large increases in utility costs) . . . I may be able to hold on, but I don't know for how long -- or what I would do IF I'm able to sell . . .

in the not-formatted-for-printing format:

http://www.nytimes.com/2006/10/23/business/23utility.html

n/t

A Utility is not a speculative venture, or it shouldn't be. They're asking to be taken over by the State, which has to care that the customers are not hung out to dry.

And how exactly is it that all the mergers and takeovers stimulate competition?

From my observations i have concluded that competition eliminates competition.