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Posted: 1/3/2002 3:50:29 PM EDT
[url]www.nytimes.com/2002/01/03/national/03DERE.html?ex=1010725200&en=92a0dd7c429ba680&ei=5035&partner=MARKETWATCH[/url]
Still uncertain is whether Texas customers will embrace deregulation, particularly after the problems in California. The rules here establish an immediate retail price reduction of 11 percent to 17 percent, a drop partly attributable to the low price of natural gas, which is often used to fuel electric generation plants. This savings is built into the "price to beat," the state-mandated price per kilowatt hour that the old utilities will be allowed to charge under deregulation to keep their customers. New retailers will be allowed to offer lower prices as a way to entice customers to switch. Texas officials have taken pains to reassure consumers (and journalists) that California's problems were unique. In California, the state deregulated the wholesale power market while keeping retail prices capped. This caused the state's two biggest public utilities to lose billions of dollars when wholesale prices spiked and the retail price caps prevented them from passing the costs along to consumers. One reason the prices jumped was the price of natural gas, then at a record high. California officials, including Gov. Gray Davis, also accused several energy companies, including Enron, of manipulating prices and making the state's problems worse, a charge the companies denied. California's problems were also partly attributable to a lack of supply; the state had not built a major power plant in roughly a decade. The state endured rolling blackouts and other problems before federal regulators ordered restraints on electricity prices last summer. In September, the California Public Utilities Commission voted to shift away from deregulation. While about two dozen states, including most of those in the Northeast, have begun deregulation, others, like Nevada, New Mexico and Oklahoma have postponed plans in the wake of California's problems. Texas officials, on the other hand, express confidence in their plan. Unlike California, Texas deregulated the wholesale electrical market in 1995, providing a time buffer to work out any kinks before introducing retail deregulation this year. And also unlike California, Texas has seen about 30 power plants built in the state in the last six years. Officials say the state's electrical supply exceeds demand by 23 percent. Nor does the state's plan mandate the sort of retail price caps that crippled the California utilities. "We have more than enough capacity and supply of electricity," Mr. Hadley said. "And the mechanics are in place to make adjustments for any dramatic spike in fuel costs."
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Man, good luck to you guys. It looks like you have some people with half a brain running the show. Unlike our Gov. Davis, the Communist.
Link Posted: 1/3/2002 4:01:47 PM EDT
Still uncertain is whether Texas customers will embrace deregulation, particularly after the problems in California. The rules here establish an immediate retail price reduction of 11 percent to 17 percent, a drop partly attributable to the low price of natural gas, which is often used to fuel electric generation plants. This savings is built into the "price to beat," the state-mandated price per kilowatt hour that the old utilities will be allowed to charge under deregulation to keep their customers. New retailers will be allowed to offer lower prices as a way to entice customers to switch.
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Ok, correct me please if I am wrong but this is stating that the older companies have to charge a higher rate for power than any new company coming into business? Doesn't that sound inherently wrong? [RantOn] What this is stating is that in order to give the little ie incompetent ie inefficient companies a chance they have to cripple the other companies by making them charge a higher rate? That isn't deregulation, in fact, that's about one step down from facist control of the industry. If people really wanted to switch companies, let the companies themselves try to offer lower prices and better services. Making (and remember, they do this with a gun pointed at the companies) the older companies charge more only cripples them and just might bankrupt them, helping no one and only promoting shoddy business practices. That isn't a free market. [):)] NSF
Link Posted: 1/3/2002 5:28:44 PM EDT
Link Posted: 1/3/2002 5:40:31 PM EDT
Link Posted: 1/3/2002 5:41:05 PM EDT
Personally I think electricity was better under the old system where it was a [i]regulated [/i] monopoly. Under the old system the Utilities had to come before the Public Service Commissions and justify their costs. The law also required the Commissions to grant the increases [i]if they were justified [/i]. Under the new system anything goes...ENRON for example.
Link Posted: 1/3/2002 5:43:45 PM EDT
Deregulation for the most part is working in Texas. Deregulation is a good thing but it will take time to work it out because politics f*^#s everything up. Why shouldnt people be able to compete in a totally free market? Ropes
Link Posted: 1/3/2002 5:52:48 PM EDT
The Enron failure had nothing to do with deregulation. Dereg didn't take effect until Jan.1 What this article is also not telling you is that the largest power company in Texas, TXU, is required to lose 40% of it's customers before it can raise it's rates. I would call that more regulation, not less. Also the customers service will stay the same no matter who they buy electricity from. The new companys don't have to build power lines, the existing companys have to carry the power over their lines and maintain them for a small transportation fee. Does that sound like less Gov. regulation to you?
Link Posted: 1/3/2002 6:14:23 PM EDT
Oh so much more than that fellows. The reason there is a price to beat: To foster the beginning of competition in a now, no longer monopolized industry. The issue is that no one wants the big guys to cut prices and deliver services at a loss to force someone who is not as large as them out of business. The idea is to foster competition, which in turn is supposed to create liquidity. By the way guys this is all just Retail Dereg. Wholesale dereg came about a few years ago. And was a huge sucess. WL Btw Ropes, we still need to go shoot!
Link Posted: 1/3/2002 6:15:24 PM EDT
I hope Texas does better than Calif in this electricity deregulation. It's going to take a generation to pay-off the $10 BILLION power bill that we incurred in the past 2 years. The Democrats are mostly to blame, but a few Republicans also voted for this bill, and a Republican governor signed it into law. The Democrats wanted cheaper electricity for their poor people, and the Republicans wanted cheaper electricity for the business. Pretty much an unholy alliance. You know you got troubles when both the Repubicans and Democrats support a bill. But the current debacle is squarely blamed on Gray Davis. He selected people to buy power for the State who knew ZERO, nada, zip, about buying & selling electrical power; and they bought too much, and since this electricity can't stored, it has to be sold on the open market at greatly reduced prices, and suffering a loss. And now the democrats are whining that they paid too much and want out of their long term power contracts after prices of power has dropped. I wonder what is the definition of a long-term contract? Of course the electrical power providers don't want to let them/us off the hook. So stay to see what happens next. These legislators are still operating under the principle, "if we pass a bad law and we have problems with it, we will fix it later." And in the mean time, they still manage to pass more restrictive gun laws.
Link Posted: 1/3/2002 6:16:27 PM EDT
One last thing, we don't believe the bias of the NYTIMES on any gun issue, why should they be more believeable on this? WL
Link Posted: 1/3/2002 6:24:45 PM EDT
TxLewis, let me get this straight. If you own the only car lot in town and have gone to the expense to build and maintain it and I come in and decide I want to sell cars, you think it would be fair for me to get the city council to tell you that you have to let me sell my cars on your lot for a small rent fee paid to you and you have to price your cars higher than me until I have taken away 40% of your business?
Link Posted: 1/3/2002 6:43:25 PM EDT
[Last Edit: 1/3/2002 6:44:57 PM EDT by TxLewis]
No, and thats not what it is. The fed gov't deregulated the phone industry, and made them share the lines. Don't forget, the transmission system in this country was not a standard investment for these utilities. They were GUARANTEED a specific rate of return. NO RISK!!!! Period. They also have rights to their own transmission to make sure their own load is covered. Now though, they must make all excess capacity available to anyone (qualified), on a first come, first sold basis. This is per FERC order 888, pertaining to open access. There was TONS of value, and inefficiencies to be taken advantage of. Just like intel w/o AMD, the Utilities needed a kick in the ass to come up to date, and see the value. WL
Link Posted: 1/3/2002 7:08:29 PM EDT
California did not actually dereg they f'd the whole thing up trying to repair something much more complicated than the politicians were prepared to deal with. Sooner or later a free market will be for the better - look at your choices when it comes to telephone services. Ropes TxLewis I am only waiting for my stock to get here and my AR will be done! I still have your email and will contact you once it is done..you going to hit market hall this weekend?
Link Posted: 1/4/2002 7:49:11 AM EDT
I will be at MArket hall, I think its the best show in town. Be there on Saturday. But only till about noon. Gotta babysitting duty, wife has a shower to go to. I'll be wearing a black Jcrew ball cap if you see me. WL
Link Posted: 1/4/2002 5:43:49 PM EDT
WL Look for me I will be in a red northface jacket.. and hopefully be carrying a bunch of parts ;o} John
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