A Free Market in Utilities
Years ago, the federal government deregulated utilities. When they did this, they created monopolies, whether or not this was intentional is not important. The point is that monopolies control utility markets for a vast majority of Americans; this is a fact. But not everywhere, I will use Texas as an example: Texas not only has an independent electric grid, they also have a consumer energy choice market place, for utilities. I’m sure some are asking what that is and how it affects them. Well. we will go over this.
Consumer energy choice is simple. It allows you, the consumer, to purchase utilities like natural gas and more importantly, electricity, on the open market much like you would buy car insurance or long-distance phone service. This allows consumers to pick a power provider with the best KWH price and/or best service. In most areas, consumers only have one choice of who they can purchase electricity from. Some areas have coops that work well, but most are independent utility companies.
Utility costs have risen year after year because of rate hikes. These hikes due to a number of reasons; most consumers believe these reasons are understandable and pay without question. What other choice do they have, right? Wrong! They do have choices and recourse. Here are some examples of rate hike reasons:
- Fuel delivery surcharge
- Maintenance of plants or delivery systems
- Forced outage(s)
Here is the reality: When the grid was built it was heavily subsidized by the federal government. Most upgrades and major maintenance still is. Any fuel price increase is tax deductible, as are all of the other things listed above, so now their tax liability went down and they save a ton. Are your utility costs tax deductible? Most times they are not. Energy choice helps alleviate that because consumers can say “I’m not paying for another rate hike; I’m switching companies.” Imagine that, an actual choice. So my point is that the taxpayer and the consumer are the same people; so we are paying for the same thing twice.
How many people know that the federal government knows exactly how much it costs to make and distribute electricity? And that it actually owns a utility company and has since 1933? The Tennessee Valley Authority is a wholly-owned government utility company that sold 152.3 billion kilowatt hours of electricity in 2017 and has a total capacity of 169,000 gigawatt hours. Yes, the federal government sells you, the taxpayers, electricity. At a time in our country when every penny counts in a household budget, when people are forced between buying food or paying for electricity.
All of this being said, we as libertarians need to work together to promote free market ideals like consumer energy choice. It is just one of many we can come together on. We have market data, we have case studies and we have markets that have implemented it with great success. We the people have a right to purchase our goods and services where we choose; not where the government says we should.
* Joe Paschal is a construction manager in the heavy industrial sector and a rancher in Montana.
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