Molly Ivins May 8

AUSTIN — Look out! Heads up, here it comes. Uts deregulation is upon us. Gov. Shrub Bush has endorsed a plan that ingeniously combines the worst elements of the several choices available on this issue, and it's starting to move in the Legislature.

As the Houston Chronicle pointed out in an exceptional piece of public-service journalism on May 1, almost every member of the House and Senate committees who will vote on the bills to deregulate utilities has received campaign contributions — in most cases many thousands of dollars — from the state's largest utility companies.

All 11 members of the Senate's Economic Development Committee got campaign moolah from Houston Industries (parent of Houston Lighting & Power), Texas Utilities, Central & South West Corp. and Texas-New Mexico Power Co. — as did 13 of the 15 members on the House State Affairs Committee. In addition, the same players got contributions from Enron Corp. and Destec Energy, both large, independent power concerns that stand to make a big load of money from deregulated electricity. Enron is probably the largest single lobbyist on the uts dereg issue and a major player at both the state and the federal levels.

The first drawback to Bush's plan is that it would give the utility companies the right to soak customers for every penny of their own "stranded assets," that being the polite euphemism for such white elephants as HL&P's South Texas Nuclear Power Plant and Texas Utilities' Comanche Peak nuclear plant. Got the picture? The utilities made billions of dollars of bad investments in nukes and dumb power-purchasing contracts (somewhere between $45 billion and $400 billion, depending on who's counting). The utilities claim that if they have to eat the cost of their own stupidity (many of you will recall that we told them not to build nukes), it will drive them into bankruptcy. On the other hand, if the customers have to pony up for these giant boo-boos, utility shareholders will get the most undeserved, overly generous bonus since the Chicago Cubs got paid for signing. Talk about redistribution of wealth!

Next thing you want to notice is that the promises you will hear about the savings you might see on your utility bill are based on the worst case of smoke and mirrors since the Laffer curve. Someone has promised anything between 15 and 43 percent off on your utility bill — seen any suckers lately? Sure, you could see big savings — if you use electricity at off-peak hours. All you have to do is get up and do your laundry at 3 a.m.

The fact is that the big beneficiaries of utilities deregulation will be large industrial companies. So, naturally, they're the ones lobbying for the change and, of course, claiming that it's all for the benefit of the li'l ol' residential rate-payer. According to The Washington Post, residential users now pay an average of 75 percent more for electricity than industrial users — under uts dereg, that will go up even more.

Now count: How many suckers have you seen lately?

Let's pass lightly over the seriously unpleasant environmental impact of this scheme for now. It guarantees dirtier air. According to Merrill Lynch, dereg will push coal consumption from 850 million tons a year to 1.1 or 1.2 billion tons and reactivate a bunch of mothballed coal plants that don't meet the 1970 Clean Air standards. But that's in the Midwest, and there's more to worry about here.

Let's look at what's happened in the few states that have already passed uts dereg. In California, which had way-above-average utility rates, there was great enthusiasm for dereg. But when they started the process, they found that they couldn't give the uts back the cost of their stranded assets AND give big price breaks to big industry AND cut costs to rate-payers. Upon realizing that rate-payers would actually wind up paying more, the state issued billions of dollars in bonds to finance a 10 percent rate cut. According to utility watchdogs in California, rates would have dropped 12 percent without deregulation and the taxpayers wouldn't have had to pay for it.

In Rhode Island, the suckers believed they'd get cheaper electricity, so they deregulated. Their rates promptly went up. Surprise! Adrienne Southgate of the Public Utilities Commission told The Washington Post: "It was no secret that the electric companies essentially wrote the bill and got everything they could get to position themselves well for competition." And you think that can't happen in Texas? With our Lege?

Perhaps you think this would be better handled at the national level, where at least they have to pay more in legal bribes to get anything through. Nah.

Texas' own Rep. Tom DeLay is leading the dereg charge up there. He wrote a touching little article about it for Roll Call, once expressing that sweet Republican faith that competition cures all ills. "Your local utility is a monopoly: It can charge you as much money as it likes, and there's almost nothing you can do about it." Actually, it's a regulated monopoly, and in the past, we have had some brave consumer advocates over there at the Public Utility Commission.

DeLay went on to tout the wonders of deregulation in general — in telecommunications, the airline industry, trucking and railroads. That's fairly funny. We've already got Republican members of Congress regretting that they ever voted for telecom dereg, and the consequences of airline dereg are well-known. You got your winners and your losers, just as you will have with uts dereg.

The only thing different about the way that airline dereg worked out is that the winners are "leisure travelers," folks who can book long in advance and take advantage of special price deals. The regular customers, who are mostly business travelers, are big losers. Also, smaller cities and rural areas have had their service cut completely. Same with uts dereg — rural rate-payers will get the short end of the stick.

I say again that uts dereg can be done in a way that will produce a net public benefit, but that requires careful crafting of the legislation to take into account the impact on the environment, small users and renewables. Above all, attention must be paid to the stranded assets problem. Otherwise, this deal is a swindle. If you see a sucker in the mirror, tell him not to bite.

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

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