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Free Trade
-Willy Bethel |
The Sustainable Alternative -Aaron Mihaly |
Home | A final note |
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{A piece of information
necessary to understanding this article is that there is a PG&E
corporation as well as the subsidiary in California. This subsidiary is the one that we deal
with on a regular basis during the power crisis. Also, the reader should now that I, the author am biased in
the fact that I have very strong feelings against multi-national
corporations. Since
looking into the power crisis and studying topics of this nature I have learned some things that have turned me toward some
strong opinions against “the system”, or the culture
that is perpetuated by capitalism and the pursuit of self interest. The reader should also know that this
article was written at the end of May.
The information below is valid but you must be aware that
this crisis changes every day.
So the only advice I can give you is to visit the sites on
the bibliography and read the newspaper on a regular basis, this
way you will be aware of the latest news. Enjoy!} |
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The power utility market is one of the most lucrative in the
nation. Riding on the shoulders of the technological
boom, companies such as Enron and PG&E are flourishing. We live in a country that prides itself
in being “connected”, computers are the new necessity.
Energy draining devices such as TV’s, stereos, and microwaves
can be found in every household.
We as human beings have become dependent on energy, it not
only runs the machines we use, but it runs us as well.
Due to this fact, the California energy crisis is a situation
in which many people’s lives are being put on hold because there
just is not enough energy to go around.
Our dependence on this one commodity makes me wonder how a
state, or even a nation could let such a scenario as the California
power crisis arise? The answer to this question, according
to the media, governor, and power companies, is deregulation.
In 1995-96, deregulation was the hot topic.
The consumer was the king at that moment, and everybody wanted
government control out. For
the Public Utilities Commission, it was just a question of what type
of deregulation California would adopt.
Two proposals were put forward; one creating a “wholesale
market, or pool, from which utilities would purchase electricity from
suppliers all over the West.”[1], another giving the consumers direct access to
the rates produced by the generation companies or power marketers,
eliminating the middle men.
The PUC chose to create a wholesale market.
They were hoping that in this market the edicts of Adam Smith
and laissez-faire economics
would prevail, produces and distributors regulating each other through
competition. Yet the
government would still have the final say in the prices presented
to the consumer, regulating the retail price of energy from the distributor.
With the advent of this wholesale market, legislators hoped
the power industry was destined to a life of competitive and fair
competition, but this is not exactly what happened.
As published in a recent New York Times[2] article,
the following table shows the extremely limited competition in the
power industry. As shown,
ten companies own 50% of the market, this displays for us how despite
strict regulations, companies have been able to corner the market. |
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As you can see, these are the top ten power
companies who own the majority of the market. It looks as if it is fair competition, but if we are to look
closer, we would learn that the way they end up with such a huge share
of the market is truly immoral.
Let’s take a closer look at the California power crisis. In April of 2001, California’s biggest power broker,
Pacific Gas and Electric, filed for bankruptcy. This was understandable due to the current situation, understandable
until the same New York Times article as above reported on one of
PG&E corp. subsidiary companies (National Energy). According to the New York Times, National,
based in Maryland, “earned
$162 million last year and ranked as the nations third largest power
trader.” This sister
company of the well known PG&E, has been flourishing while it’s
sister has just filed for one of the biggest bankruptcies in the history
of our nation. It is
also speculated by the Times that National Energy got so big so fast,
“by using cash, partly generated by it’s sister utility.” Am I saying that National Energy should
help it’s sister company, no.
All I am saying is that there is some behind the scenes action
going on that the public is not hearing about, actions that are directly
affecting our power bill. This
is just one example of how alliances in this industry affect our bills. We should keep in mind, small subsidiary
companies are restricted from creating monopolies, but many times,
their larger, more indiscernible parent corporations are not.
Since the 1996 deregulation in California, the power companies
such as PG&E have been under restrictions on the state level;
but what most consumers don’t see is PG&E corp., the parent
to the California native. This parent corporation functions on the
national level therefor is exempt from the state wide deregulation
laws. Meaning, all the
work done by the legislature of so many states to deregulate the utilities
market were useless. These
corporations are free of regulation, creating monopolies throughout
the industry. As shown above, corporations such as PG&E
hold subsidiaries around the country in all different facets of the
industry. To the consumer
it seems that all these power companies are separated, distributor
from producer, but in reality the majority of the parent corporations
own both producing plants and distributing companies.
Due to this, the actual state of the utilities market is far
from the competition regulated utopia described by Adam Smith and
hoped for by the PUC. This wholesale market more resembles a
free for all on Darwinist economics.
Survival of the fittest is the norm, and huge multi-national
corporations import power from all over the world and cut deals with
consumers across the nation.
In a recent courtroom battle, the University of California
has brought charges against
the multi-national corporation Enron.
Enron (who has control of nearly 13% of the market) is going
back on a contract it signed with the University in which they were
given exclusive rights to the schools electricity in exchange for
a fixed rate to the University. Enron’s motivation in this is to
be able to free up those extra kilowatts and then sell them back into
California for a rate three times the value of that agreed upon with
the University. If Enron wins the court battle students
all over California might be carrying flashlights to their finals
as well as a pen and calculator.
This is just another example of a huge corporation taking advantage
of their power (no pun intended) to increase their profit margin at
the expense of the everyday consumer.
With the rise of the power crisis it seems as though the list
of scandals grows. Day
after day another corrupt energy company turns up in the papers, showing
the American citizen how these corporations are given free range to
due as they please. This fact is one of the major problems
behind the California power crisis.
The fact that these huge corporations are given freedom to
do anything necessary to increase profits, means that we the consumers
are loosing. Corporations such as PG&E do not care
if a family of five has to live in the dark because they don’t
have enough money to pay the exorbitant electric bill. To them it’s just simple mathematics, people are reduced
to numbers, and it’s whatever it takes to increase the bottom
line. The bottom line, making sure that we bring
home enough money to feed our families. This is understandable, but when companies are grossing at
the billion dollar per year level, I don’t think the company
executives are worried about putting food on the table. At this point it becomes a moral question. Let’s take National Energy Group
as an example. This PG&E
corp. subsidiary was flourishing while it’s sister in California
was about to file for bankruptcy.
In this situation PG&E corp. allowed money from California
to be channeled into National’s bank account; doesn’t
it sound like it should have been the other way around?
Along with this, during a 2001 audit of PG&E California,
authorities found that the subsidiary transferred a substantial amount
of money to PG&E corp. weeks before they filed for bankruptcy.
Occurrences such as these make me wonder whether or not company
executives apply morals to their business transactions. Since the personification of the corporation in the 1886 Supreme Court decision of Santa Clara County vs. Southern Pacific Railroad, companies have enjoyed the same rights as human beings. In this way, should these corporations be held to the same moral standards as other citizens of the country? This is a simple question of common sense, of course they should be held to the same standards. Yet for some reason happenings such as the power crisis and the scandal that come along with it still occur. Until we hold multi-national corporation responsible for their moral wrong doings, we can expect to see more crisis. The capital mindset is what is really under the microscope. The state of mind in which corporate executives feel justified in massive takeovers and slave labor. We can talk all day about green power and regulations, but none of it will matter if all people are worried about is the bottom line. It is our culture that we must examine if we want to fix the power crisis and all other crisis in the world.
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Free Trade
-Willy Bethel |
The Sustainable Alternative -Aaron Mihaly |
Home | A final note |