By: Hank Kalet
A group of Monroe seniors wants the state to abort its failed experiment with energy deregulation.
The group, known as the Energy Group of Clearbrook, has been battling to lower electricity rates in the state for more than a decade, primarily because residents of the senior community are among those hit hardest by high rates.
That’s because Clearbrook retirement community is one of three in Monroe to be heated by electricity. Concordia and part of Rossmoor also use electric heat.
Members of the group are concerned that a rate cap built into the 1999 law that ended nearly a century of state control over the utilities expired earlier this month meaning that the big utilities who still provide most of the power in the state will be able to jack prices up.
PSE&G, which serves South Brunswick, Cranbury and Jamesburg, and is the largest energy provider in the state, already has approval from the Board of Public Utilities to increase its rates by 15.1 percent and the other utilities like GPU Energy, which services Monroe are looking to do the same.
For most of us, this rate hike will be difficult to swallow. My utility bill from PSE&G tends to hover around $200 in the summer, the bulk of it for electricity (pool pump, air conditioning, lights, etc.). Another $15 to $20 a month (the hike does not apply to the entire bill, only electricity generation) is not what I would call chump change.
It’s far worse for seniors living in electrically heated homes. Utility bills for some Monroe seniors have run as high as $500 a month in the past, a figure that promises only to go higher, and this is for a group of people who are on fixed incomes.
It wasn’t supposed to be this way, of course. According to the utility companies and the state Legislature, the competitive markets created by deregulating the state’s electric industry would drive prices down. The idea was pretty simple:
Break the electricity industry into two separate parts. Let one group of companies compete to provide the juice, setting prices as the new market dictated, while regulated utilities continued to run the power grid, charging a state-controlled rate. The theory was that the market would keep prices reasonable and force companies to be more efficient.
That was the theory, anyway. In practice, the experiment has been a failure and, so far, the people of California and the Northeast have been paying the price. Californians, as everyone knows by now, have been the victims of rolling blackouts and rate hikes caused in part by Enron’s jobbing of the market.
Rates are expected to rise here and elsewhere in the Northeast, and there was the blackout earlier this month that shut down parts of eight states and several Canadian provinces.
This should not have come as a surprise, according to Robert Kuttner, co-editor of the American Prospect. In a New York Times op-ed the Saturday after the Aug. 14 blackout, he detailed the failures of logic that underpin the free-marketers devotion to energy deregulation.
"In principle, deregulation of the power industry was supposed to use the discipline of free markets to generate just the right amount of electricity at the right price," he wrote. "But electric power, it turns out, is not like ordinary commodities."
It can’t be warehoused in large quantities like other products. It needs excess generating and transmission capacity for times when it is in great demand. And it "requires a great deal of planning and coordination, and it needs incentives for somebody to maintain and upgrade transmission lines," he wrote.
Deregulation, he says, created the wrong kinds of incentives. There was an excess of power was generated, while the power grid and the planning necessary to keep everything functioning was ignored.
So, what should have been a small-scale blackout spread across the country, closing businesses and stranding commuters.
The fact is, electricity is not a luxury item and its provision is too important to too many people and too many businesses to be left to folks whose sole interest is in creating profit. It is time we admit this experiment has been an abject failure and retake control of a very necessary public resource.
Hank Kalet is managing editor of the South Brunswick Post and the Cranbury Press. He can be reached via e-mail at hkalet@pacpub.com.
