Saturday, November 5, 2011
Utility Deregulation Explained: Why Competition works
I believe I live in the worst big city in America as far as Electric Company's go in Washington called PEPCO. I live in area of about 6M people a metropolis and every time we have a major storm. And because of where we are located halfway between Maine and Florida, tow hours from the Atlantic Ocean. We get short winters generally, 2011 being an exception to that. Our winters are generally between January and February but then starts to warm up in late February. With long hot humid summers starting in late May going through October in what we call Indian Summer. 2011 being an exception we've had a chilly and wet fall so far. So we can get some nasty Winter Storms in January and February, sometimes in late December as well. Where we can get northeasters and blizzards, the blizzards of 1979 and 1996 and 2010 are excellent examples of this. And then in late May our heat and humidity role in and we can get a couple of weeks of 90-100 degree weather with 85% humidity as well. 2011 being an excellent example of this and we get these long Heat Waves again with the humidity. I've gone bike riding in the summer around 7PM to escape the heat and humidity a little bit. And its still 90-95 degrees with the humidity and because of these Heat Waves we get these Tropical Storms. And every time we get one of these Northeasters in the Winter or Tropical Storms in the Summer. You can basically guarantee that there will be about a million people or so. Without electricity because we have so many people and we have such a lousy cheap Electric Company.
PEPCO is not cheap with its rates but cheap with their service and what's worse they are a monopoly. PEPCO is a Private Monopoly meaning it has no competition in the market that they operate in. And because of this they can pretty much get away with providing any service that they want to good or bad. For whatever reasons Maryland, Washington, DC and Virginia have let PEPCO get away with this. Even though every time we get one of these nasty storms Winter or Summer, our Public Officials here about the complaints from constituents. That they are out of power, they've been out of power and want their Representatives and PEPCO to fix the problem. Hurricane Irene is the only storm where I didn't lose power but thats only because Governor Martin O'Malley of Maryland. Brought in reinforcements to help PEPCO deal with this situation If PEPCO had competition then they would be forced to provide a better service or drop their rates. Or risk losing money or go out of business, because their customers would have other and probably better options. In where they could go to get their electricity from.
Again with competition you force business's and services to bring a good service. Or risk losing money or going out of business. Thats what capitalism is at its best. With monopoly's whether they are private or public, unless they are run by saints and most people aren't saints. There isn't any built in incentive to provide a quality service.