A rchive Date
[ 23-02-2005 ]
Category
[ International Relations ]
sub-Categoy
[ Canada ]
|
[http://www.canoe.ca/TorontoMoney/ts.ts-06-11-0086.html
A big energy drain
Consumer Reports takes on deregulation
By Linda Leatherdale, Business Editor
Tuesday, June 11, 2002
Fellow Ontarians, be warned: We're being lied to when our leaders tell us deregulation, including electricity, has worked wonders in the United States.
Yesterday, Consumer Reports - the U.S. magazine backed by consumer advocacy group Consumers Union - revealed these startling revelations about deregulation.
"Broken promises, deceptive marketing and dreadful service have become accepted business practices in an increasingly Wild West marketplace, where incessant telemarketers interrupt your dinner, but customer service won't answer the phone," warn the editors of Consumer Reports, who yesterday released their July cover story that delves into deregulation of airlines, telephone companies, cable TV, banking and electricity.
Associate editor Jeff Blyskal, in an interview yesterday from Washington, even issued this warning to Ontario's Tories:
"Read our article first, to clear all the smoke and fog," Blyskal said, referring to the opening of Ontario's electricity market to competition, May 1. "The conventional wisdom that deregulation is a smashing success is based on myths and half truths."
Blyskal added that the very fact Enron spent most of the 1990s pushing for deregulation of electricity, while manipulating prices and policy, should be warning enough.
Enron - which donated money to the Tories - became the biggest bankruptcy fraud in U.S. history when company executives walked away multi-millionaires but left behind destitute investors and employees who lost $4 billion US.
What sparked this in-depth look at deregulation was constant complaints from readers. "The Consumer Reports mailbag is overflowing with complaints about deregulated services," said Consumers Union president Jim Guest, who added complaints included price gouging, confusing phone bills, skyrocketing cable rates, paying more money for using less electricity, and ever-expanding bank fees.
Blyskal said clearly their research shows consumers have lost ground: "Service has typically deteriorated. Claimed price cuts are often not all they seem. And when free markets have gone bad, deregulated industries have seen no contradiction in getting multibillion-dollar government bailouts," he said.
California's electricity crisis, he added, is one of the biggest examples of deregulation failing consumers. "Enron signed up customers promising 5 cents per kilowatt hour, but when wholesale prices jumped to 30 and 40 cents, they walked away," he said. "People like to blame government for the crisis, but Enron is responsible because it not only manipulated prices, but public policy."
California has now re-regulated its market, but consumers will be paying higher prices for some time, he warned. "A couple in California wrote us to complain their $325- US-a-month cost for their all-electrical home jumped to $745-US-a-month in just a year." So far, some 16 states have deregulated their electricity markets and Blyskal warns not all are success stories.
Even in Pennsylvania - hailed the model state for electricity deregulation - retailer New Power, partly owned by Enron, has left 180,000 consumers stranded by not honouring their contracts. In fact, out of some five million residents, only 530,000 consumers opted to sign up with new retailers. "Ninety per cent of the people decided to be loyal to the old utility," he said.
Consumers Union president Guest is urging governments to wise up and step in. "Regulate monopoly markets when there is not enough true competition," he said. "We need strong and effective government oversight."
So, can Ontario be saved?
"(Ontario Premier) Ernie Eves looks like he's getting tough," said Liberal Leader Dalton McGuinty yesterday, referring to the firing of Hydro One's board for dishing out obscene executive compensation packages. "But the bad news is he doesn't know what he's doing."
McGuinty is demanding a consumer bill of rights, including a longtime cooling-off period until this hot issue is clearly explained to taxpayers, who remain the No. 1 shareholder of our electricity market.
To read the truth about deregulation, go to www.consumerreports.org
 World Fact Book (CIA)]
|