http://server781.dnslive.net/pipermail/mainlinenews_laborgroups.org/20030822/001743.htmlLights Out on Deregulation
By Dennis Kucinich
With and estimated 50 million Americans and Canadians left without power and in some cases water, common sense requires us to reflect on the absurdity of deregulation of public utilities. In the first case, the right of utility franchise is vested in the people. We give utilities permission to operate, and enable them to set up a profit making business in exchange for the promise of affordable and reliable service. In 1992, investor owned utilities pushed the Democratic House to pass HR776 which granted electric utilities broad powers. The bill was supposed to restructure the electric utility industry to spur competition.
Utilities used deregulation to effect a series of mergers limiting competition. In order to accelerate profits, cost cutting ensued, involving the layoff of thousands of utility company employees, including some who were responsible for maintenance of generation, transmission, and distribution systems. A number of investor-owned utilities stopped investing in the maintenance and repair of their own equipment, and, instead, cut costs to enhance the value of their stock rather than spending money to enhance the value of their service.
A prime case in point is FirstEnergy Corp, late of Ohio. FirstEnergy formed through a merger of utility companies which owned nuclear power plants which often were neither used nor useful, and as a result incurred huge debt. FirstEnergy's predecessor, The Cleveland Electric Illuminating Company (CEI) in the 1950s and 60s was a high performing blue chip stock until they invested in nuclear power. FirstEnergy has tried without success to keep online a very troublesome nuclear power facility at Port Clinton, Ohio, the Davis-Besse plant. Davis-Besse is currently shut down and has been for some time. FirstEnergy and federal regulators failed to properly monitor the operations of the plant, resulting in conditions where the plant's reactor vessel was threatened with a breach when boric acid ate into the head of the reactor.
Millions of people in the Midwest and the water supply of our entire Great Lakes region were at risk because of First Energy's negligence, improper maintenance, and actual cover-up of the degradation of the reactor. Furthermore, federal regulators determined that notwithstanding the peril which was presented to one of the largest populated areas of the United States, FirstEnergy's financial condition necessitated the continued operation of the flawed reactor. The regulators put profit ahead of public interest.
If there was ever an example of an unholy alliance between government and industry, this is it. If there was ever an example of the failure of necessary regulation by the government of an investor-owned utility, it is found in the government's failure to regulate FirstEnergy, because now, according to published reports by the Associated Press, CNN, and ABC News, the blackout which affected an estimated 50 million people began in the FirstEnergy system.
I've been familiar with First Energy and the challenge of utility monopolies for over 30 years. Early in my career, in the 1970s, I watched FirstEnergy's predecessor, CEI, as they were hard at work trying to undermine the ability of the City of Cleveland to operate its own municipal electric system. CEI conducted a tireless crusade to attempt to put the city's publicly owned system, Muny Light, out of business. Muny Light competed against CEI in a third of the city and provided municipal power customers with savings on their electric bill of 20-30 percent. It also provided cheaper electricity for 76 city facilities and thousands of Cleveland street lights, saving taxpayers millions of dollars each year. In the 1970s, CEI applied for a license to operate a nuclear power plant. The license application triggered an antitrust review. The antitrust review revealed that CEI had committed numerous violations of federal antitrust law in its attempt to put Muny Light out of business. The
Atomic Safety and Licensing Board of the Nuclear Regulatory Commission, in an extensive investigation, determined that CEI blocked Muny Light from making repairs to its generator by lobbying the Cleveland City Council to place special conditions on Muny Light Bonds which made the bonds more difficult to sell, thereby depriving the city of revenue it needed to repair its generators in order to provide its own power. The delay in repairs to the generators caused Muny Light to have to purchase power. CEI then worked behind the scenes to block Muny Light from purchasing power from other power companies. CEI became the only power company Muny Light could buy from. At that point, CEI sharply increased and sometimes tripled the cost of purchase power to Muny Light. And, as a result, Muny Light began to lose money. CEI used Muny Light's weakened operational and financial condition (which they created) as evidence of the public system's lack of viability and as proof that the only way the
people of Cleveland could have reliable power was for the city to sell its electric system to CEI. The antitrust review cited one incident when during a period of inclement weather, Muny Light asked CEI for a special transfer of emergency power. The transfer of power was conducted in such a way so as to cause an outage on the Muny Light system. CEI used the incident as further proof of the city's inability to operate a municipal electric system. Throughout this period, the Cleveland media, which received substantial advertising revenues from CEI, crusaded against the city's ownership of a municipal electric system. When the federal government came to review CEI's practices, CEI executives appeared at a city council committee meeting to declare that they had no interest in the acquisition of Muny Light even as they worked behind the scenes to put Muny Light out of business.
more.....
I think Dennis makes some Great Points here! :bounce:
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