Ralph E. Shaffer and 
Frank Norris

                             AN ADJUSTMENT IN RATES:

             WHAT FRANK NORRIS MIGHT SAY ABOUT POWER DEREGULATION

     The Public Utilities Commissioner looked pleased as he prepared to 

anounce the long-anticipated reduction in Eden's electric rates. His audience, 

mostly utility officials, eagerly awaited word that deregulation had arrived.  

    Scattered among the onlookers were the legislators who had ended regulated 

monopoly after nearly a century and had sold the deal to the public by 

mandating lower rates.  Hardly noticeable in the crowd were a handful of 

citizens, members of a consumer group that had fought for years to achieve 

fair rates for residential use.  Somewhat apprehensive, they suspected the 

forces behind the scheme were not really interested in the people's welfare.

    "I'm pleased to announce that the change in the method of supplying power  

in Eden, and the charge for that power, is now in effect." 

    His words, spoken as though he were solely responsible, elicited cheers   

from most of the audience.  Skeptical consumers waited for the details.  

    "Until January, Edenites paid rates 50% higher than the national average.   

On Jan. 1 residential customers and small businesses saw their monthly 

electric bills drop 10%.  The legislature has required another 10% reduction 

in 2002, and rates are expected to fall 25%-30% thereafter."

    The commissioner's remarks momentarily reassured the skeptics.  But as he 

continued, their doubts returned.

    "This will not come easily, without some slight bumps along the way.  To 

have delayed the introduction of this great reform because of a minor glitch 

or two would have been a colossal economic disservice to Eden. Your 

commissioners, pledged as we were to achieve an immediate 10% drop in your 

electric rates, have accomplished that with but little inconvenience to the 

residential consumer."

    "Well, hold on," exclaimed one consumer, standing and waving his latest 

utility bill in the air.  "I used the same amount of electricity last month as 

I used in December and my bill isn't ten percent lower, it's higher."

    "No, no, you're wrong, there.  Look beneath the sub-total under 'Energy  

Charge' and you'll see a line - 'Legislated 10% rate reduction' - subtracted  

from your bill.  We promised to cut the cost of power 10% and we did it."  A 

self-assured smile crossed his face.

    "But," protested another consumer, "you've charged me more than 10% for    

something called a 'Trust Transfer Amount.'  I didn't transfer anything."

    "That item permitted the utilities to cut the charge for power production.  

It will pay off a bond issue, enabling the companies to renegotiate old loans    

and lower the interest rates they pay so they can cut power rates even more."

    "But they aren't paying off the loans.  We are, through this trust    

transfer amount.  And how long will it be before I get a notice with my bill   

announcing that the company is seeking to raise rates again?"

    "An increase is unlikely.  Competitive markets produce competitive prices,  

and lower rates provide us the ultimate benefit of exponentially enhancing   

Eden's economic viability as businesses choose to remain, or relocate, here."

    By now consumer advocates were squirming in their seats.  Why all this    

talk about economic viability?  Why the emphasis on business?  

    "Besides," the commissioner continued, "while there will be a small number   

of bad actors, as in any industry, your commission has taken steps to ensure    

that only companies that meet the highest standards are authorized to supply    

electricity.  A variety of consumer protections are now in place to prevent   

unauthorized switching of customers from their chosen provider to another one. 

    "Competition inevitably brings new, improved products.  Competition means   

choice, and consumer choice drives the growth of the free market..."

    "Oh," interrupted one impatient consumer, "you mean Boston-Finney will 

give us better electricity?  The quality of their volts will be improved?  

They'll offer more amps per kilowatt?  Maybe their electricity will travel 

faster, be more powerful? "

    Ignoring this, the commissioner continued: "We were pledged to deliver a  

10% reduction in the cost of power and that is exactly what we did.  To do 

that we had to relieve the utilities of a portion of their debt burden. It's 

only right that the consumers of this state pay their fair share."

    "Fair share?" an angry dissident shouted, rising from her seat. "Fair    

share?  When did the utility companies ever care about our paying a fair 

share?  

    "We, the people of Eden, were never told about a 'trust transfer amount'    

when the legislature adopted this.  All we heard was that rates would fall 

10%, and how good this would be for the 'business climate.'  Well, I'm all for    

business, but how far does that go?  I'll bet business will get more than a 

10% cut and pay less than their 'fair share' of the trust transfer amount.

    "I think the real purpose of this legislation is to let the big boys  

devour municipally-owned utilities such as the DWP.  By Jingo, we're a bunch 

of damn fool suckers and we've been had."

    With this the meeting turned to chaos. The commissioner hurriedly left the    

podium.  Legislators and executives were heard murmuring something about 

rabble rousers, communists.  The handful of consumers, bewildered and 

outraged, headed for the nearest fax machine.  It was time to take matters 

into their own hands.

                                    - - -

    (Ralph E. Shaffer is professor emeritus in history at Cal Poly, Pomona;   

Frank Norris wrote "The Octopus," which served as the model for this piece.  

Send comments to reshaffer@csupomona.edu)