No energy regulation equals rip-offs

by Wade Rathke

March 9, 2021

New Orleans   Picture this, if you will. The crippled power grid in Texas triggered by the polar vortex bringing freezing temperatures and snow, left millions without power and others with exorbitant bills because of an ill-begotten anti-regulation scheme it turns out was just the beginning of the consumer rip-off. By allowing the price surge to last an extra day and a half, Texas consumers were overcharged another $16 billion dollars. The Public Utilities Commission announced that it was just too hard and difficult to do the math of figuring out how to force the companies to refund the money. Unbelievable!

It turns out such coddling of retail, unregulated power companies is in fact standard operating procedure not only in Texas, but just about everywhere in the states that have allowed such retail power companies to operate. The companies, in a standard free enterprise scam, promised consumers that escaping regulation by utility commissions would create competition and lower their utility bills. Yeah, right. The Wall Street Journal found “consumers who signed up with retail energy companies paid $19.2 billion more than they would have if they’d stuck with incumbent utilities from 2010 through 2019.” Who is surprised? The retail companies are essentially just resale companies. They buy power from producers large and small, add their profit, and sell it to consumers, sometimes unknowingly, depending on the billing arrangements and other details often lacking transparency.

Texas, being Texas, where everything has to be larger, was of course the biggest loser allowing their consumers to be fleeced for $12.6 billion in those ten years, but they weren’t alone. Customers in Pennsylvania were hit with almost $2 billion in overcharges and Pennsylvania’s consumers had their pockets picked for $1.7 billion. The Journal found that 2019, was the high-water mark of this consumer takedown with $3.1 billion being clipped from consumers in the thirteen states and the District of Columbia that fell for this hustle.

Who were these consumers being victimized? They were inordinately neighborhoods where families of color lived. Investigators found this in Connecticut, New York, Illinois, and pretty much wherever they bothered to look. In Connecticut, “… the poorest households – families that got assistance from the state for their electric bills known as ‘hardship customers’ – paid premiums on their bills that were on average nearly 50% higher than other customers…”

In Texas, they know something about cattle, but that doesn’t keep the politicians that allowed these schemes from trying to shut the barn door after the cows – and companies – were long gone from the barn. The Lieutenant Governor, a well-known rightwing scold in the state, in a spasm of reinvention has demanded that the utility commission figure out over the next thirty days a way to refund the $16 billion to Texas consumers no matter how “hard” the job.

That’s well and good, but the work needs to not just be in the cleanup of the consumer crime scene after the fact, but in prevention for the future. When it comes to utilities that are essential to the public, only regulation can stop rip-offs, whether power, water, internet, or other common goods.

Wade Rathke is founder and chief organizer of ACORN and ACORN International. You can find Wade’s recent past posts here Chief Organizer Reports. And you can link to his website here Chief Organizer ACORN/ACORN International.

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