Editor, The Highlands Voice

Dear Sirs:

I have only recently started reading your publication, and have been impressed with the reasonableness of your rhetoric, and the apparent accuracy of your presentations. Although, as in the case of the 11 Oct 00 Kentucky coal sludge disaster, there is, as you point out, no coverage in the major media, against which your facts can be compared.

Have you submitted information on this event to media representatives? One could send a very reasonable, fact-filled letter to people like Jim Lehrer, of PBS, and the Wall Street Journal, making your comparison to the Exxon Valdez and pointing out that no-one has publicized it at all (which is horrifying). Or "Frontline" or one of those programs. You might just get a very enthusiastic response.

But what I’m really writing about is Mr. Hasty’s article, "Power Grab," in the February issue. Don’t let him pull you into an economically indefensible position in opposition to deregulating electricity. He compares electricity deregulation to that of airlines and telecommunications, which had, he says, "disastrous consequences." But although these industries are much less peaceful than they used to be, his recollection of the status quo ante is not too good.

These businesses have diversified and prices have come down markedly since deregulation. People fly now, when they used to go by bus. Just look at who travels: it used to be business people in suits, now it’s also young people with backpacks. People used to write letters or, in emergencies, send telegrams because long distance calls were so expensive. It used to be that a long-distance call meant a death in the family. And remember when there were only phones that plugged into the wall, and the princess phone was a big innovation? We would not have had phone cards with long distance calls at 2.5 cents a minute and cell phones, without deregulation.

And, although it may not seem like it from this perspective, the same turmoil of innovation, expansion and price declines will happen in the electricity business, if governments can be persuaded to get their ham hands out of it. What happened in California gives deregulation a bad name, because the only thing that was deregulated was the wholesale market.

Nothing was done to relax regulations to permit new supply coming on line; nothing was done to discourage use. It’s only when it got to rolling blackouts that people begin to discover that they can conserve, or creatively use power at less-than-peak times of day (as Mr. Hasty pointed out, too). TV is even starting to feature people (in California) who have energy-sufficient houses, with solar panels, who feed back into the power grid. I refer you to an article by Nobel prize winning economist Daniel McFadden in the 13 Feb 01 Wall Street Journal which describes the California situation very well. (I am sending a copy by snail mail.)

Mr. Hasty is quite correct to oppose the proposed so-called deregulation here in West Virginia, which shares many of the features of California’s. But let’s not confuse that with real deregulation. That distinction has to be made.

A couple of additional, small, notes: I enjoy the little line drawings you insert. And a couple of bloopers (or, spell-check doesn’t cure everything!): P. 10 (col. 1, para 3), "glutinous timber barons," actually an amusing mental picture; and p. 3 (col. 3, para 3), "shear volume." It’s good for discipline to know that people do notice these things.

Keep up the good work!

Sincerely,

Lucretia Lee February 18, 2001

Hasty replies:

This is a thoughtful and nuanced letter, whose reasoned tone is such a delightful change from the ideological rants I usually get at the Hampshire Review (where I write a weekly column) that I’m reluctant to challenge Ms. Lee’s opinions. However, while it is in the nature of the "creative destruction" of capitalism to produce both winners and losers -- thus providing some of the anecdotal benefits that she describes -- taken as a whole, the deregulated scenario is even "less peaceful" than Ms. Lee paints it.

For an authoritative consumer’s-eye view of deregulation, I consulted the web site of Consumers Union, one of the nation’s premiere consumer watchdog organizations and the publisher of Consumer Reports magazine. In both the telecommunications and airlines industries, CU’s analysis directly contradicts Ms. Lee’s statement that "these businesses have diversified and prices have come down markedly," finding instead a greater concentration of monopoly power and higher prices.

Cable TV rates, for example, have "increased nearly three times the rate of inflation" since deregulation. And, contrary to industry assertions, CU notes, "the majority of residential long distance consumers are actually paying more today for the same amount of calling made right before the passage of the Telecommunications Act of 1996." Furthermore, because of higher access charges, "residential consumers of below average long distance use, about 70 million households, are paying a net annual increase of about $2.3 billion."

CU says the deregulated airline industry "is basically not competitive, and threatens to become even less so," with most air travel "controlled by the nation’s six largest carriers...The industry has been characterized by poor service, with dramatic increases over the last year on an already poor record of on-time performance, provision of information on the reasons for delays and cancellations, lost luggage, and lack of basic passenger services." CU also accuses the airlines of "opportunistically" pricing tickets, "using sophisticated, complex computer systems" to get "the maximum price the carriers calculate a passenger is willing to pay."

CU concludes that "the poor air travel service and the industry’s unfair pricing have become a national scandal. It is only getting worse." They are equally unenthusiastic about electric utility deregulation. _