Molly Ivins March 19

AUSTIN, Texas — And now for something completely different. Sort of. You know how you always feel that these huge, horrible mistakes they make in Washington get sprung on you only when they announce the bad nooz that you have to pay the bill for them? Like the time they told us it would cost $500 billion to bail out the savings-and-loan industry after they cleverly deregulated it? But nobody ever told you about the Garn-St. Germain bill, which did the deregulation, at the time it was being passed in 1981, did they?

Well, we've got one for you now and in plenty of time, so you can make a difference in the outcome. The magic words are "utilities deregulation," and the bills are even now floating around Congress, although we should have as long as a year before they actually come up for a vote.

That gives us time to shed quite a bit of light on just what it will mean to us. This one is as big as the telecommunications bill that Congress just passed and has real potential to end up costing us — as rate-payers rather than taxpayers this time — in the neighborhood of the S&L bailout.

Utilities dereg is not a bad thing in itself; the electricity industry could use some restructuring, and several states have been horsing around with various schemes that may or may not make it work better. That's the "Let a Hundred Flowers Bloom" approach that the Republicans supposedly favor: Get the feds out of the way, and let the states try different ideas and see what works best.

But Republicans, as we know, are also prone to the happy idea that "increased competition" will work like a charm if big, bad regulation will just get out of the way, and the carrot they always dangle before us when they come up with these crazed schemes is "lower prices in the end." Fifteen years after deregulating the airlines, we have decreased (not increased) competition in the industry, and prices are a wash — cheaper on some high-volume routes and much more expensive in smaller markets.

Sen. Bennett Johnston of Louisiana is one of several players with a bill that will pre-empt state experiments in deregulation. Some states are talking about going to wholesale competition in the electric industry, but the Johnston bill would require all states to go retail competition.

The big industrial users of electricity — for example, Dow Chemical and General Motors — want retail competition.

They want to be able to go around the utilities and directly to generators of electricity and cut themselves the best deal they can. True, most generation is still owned by the utilities, but an unintended consequence of PURPA (the Public Utilities Regulatory Policies Act of 1982) was the development of an independent generator sector in the industry. Some are truly independent, and others are owned by big companies — Dow, for example. About half of the top 20 independent power producers are already subsidiaries of investor-owned utilities.

The Johnston bill would also mandate that utilities be allowed to recover 100 percent of "stranded assets." Isn't that a lovely phrase? That's the one that will cost you a zillion dollars.

Here's how it would work: In this lovely new competitive environment in which all the generators have to compete with all the other generators, no one in his right mind will buy electricity from the South Texas Nuclear Project because it costs a whole lot more, right? But the utility stupid enough to have built that dog in the first place (hello, Houston Lighting & Power) will be allowed to recover the entire cost of its investment in it. And more. The company will get to project costs out over the entire projected life of the plant and get paid for that too. Presto! The largest public bailout of a private industry in history.

Some utilities have made bad decisions, and some have made good ones. Now those who made lousy decisions will be let off the hook, their shareholders will not have to take a hit, and consumers will pay for the bad decisions.

Estimates of the cost of "stranded assets" range from $130 billion (by Moody's) to $550 billion (by ICF Kaiser). Matthew Freedman, energy policy analyst for the Critical Mass Energy Project, a Public Citizen (i.e., Ralph Nader) consumer organization, is normally alarmingly articulate, but he is almost reduced to incoherence as he contemplates the size of this rip-off: "It is just major. Major. Major."

This is a nice, fat, complex issue, so we can come back again to look at some of the truly awful environmental effects that utilities deregulation could have, in addition to some of its social impacts. But for now, just keep in mind the downside to retail competition in electricity — and whenever anyone says "stranded assets," run screaming from the room and call the cops.

***

Molly Ivins is a columnist for the Fort Worth Star-Telegram.

COPYRIGHT 1996 CREATORS SYNDICATE, INC.