Utility bills could soar due to deregulation

[The Goon]

Not meaning to fearmonger, but I really don't think I could handle my gas and electricity jumping to insane levels in the winter:

Article

I don't really understand the volatility of the utilities market - can anyone else here say that this could or could not happen?

[BlackArcher101]

He gave ZERO reasoning behind what he says.
I wonder if he's working for Direct Energy now. They seem to do this same schtik every year saying your bills will soar, then say to sign up for their long term contracts.

[Swarly]

time to find a rental place that includes utilities

[Hemi-Cuda]

same thing happened to car insurance before the government stepped in. i remember moving to Calgary and deciding to keep my BC plates after seeing that i would be paying more than double per year if i had gotten Alberta insurance. and it was such a pain in the ass finally switching over when i was done school, calling countless insurance companies for quotes trying to find something decent, then having to go to a separate place for the registration. same chore back home was a 10 minute stop at the local ICBC once per year. and they don't automatically cancel your coverage after one speeding ticket like a few friends i know in Calgary

[4X4]

Originally Posted by Hemi-Cuda

and they don't automatically cancel your coverage after one speeding ticket like a few friends i know in Calgary

I call BS.

[Azure]

Didn't California have some kind of crisis a while ago because the government was setting prices for utilities which ended up bankrupting numerous companies?

[BlackArcher101]

Originally Posted by 4X4

I call BS.

That's definetely BS, especially since companies actually became more lenient towards tickets (ie one or two free ones before affecting costs).

[BlackArcher101]

Originally Posted by Azure

Didn't California have some kind of crisis a while ago because the government was setting prices for utilities which ended up bankrupting numerous companies?

http://en.wikipedia.org/wiki/Califor...tricity_crisis

A different situation than here I believe.

[Azure]

Well I don't think you can say that regulation or deregulation is good....I think the answer is somewhere in the middle.

Because of the nature of the service, its impossible to deregulate it completely.

[Hemi-Cuda]

Originally Posted by 4X4

I call BS.

when i was attending SAIT a 19 year old friend of mine got tagged doing 42 in a playground zone that he wasn't aware of (he was new to the city like i was). he had just gotten his license transferred a month or two prior, and his coverage was canceled after the ticket hit his insurance company (allstate or state farm, one of those state ones)

now i admit that Alberta is a more favorable choice for those over 25 with clean driving records, but the insurance companies crap all over any driver under 25 any chance they get

[Raekwon]

Insurance companies in Alberta can't drop anyone from insurance, its an "all comers" rule. Worst thing they can do is charge you the max rate on the grid to get you to leave.

Edit: Just wanted to clarify that is for auto only, They can drop you from property insurance.

[CaramonLS]

Originally Posted by Azure

Well I don't think you can say that regulation or deregulation is good....I think the answer is somewhere in the middle.

Because of the nature of the service, its impossible to deregulate it completely.

Anytime you have an essential service with very limited competition (ex. due to extremely high infrastructure costs), the government needs to keep a watchful eye on the service to make sure people aren't being taken advantage of.

We've seen it with Car insurance (in Alberta) and telecommunications (across Canada).

This is one of the reasons that Slappy's anarcho-capitalism theory couldn't function in a practical setting.

[Bring_Back_Shantz]

Originally Posted by Hemi-Cuda

when i was attending SAIT a 19 year old friend of mine got tagged doing 42 in a playground zone that he wasn't aware of (he was new to the city like i was).

Why is this relevent? Do they not have playground zone signs in BC?

[FlamesKickAss]

Originally Posted by Raekwon

Insurance companies in Alberta can't drop anyone from insurance, its an "all comers" rule. Worst thing they can do is charge you the max rate on the grid to get you to leave.

Edit: Just wanted to clarify that is for auto only, They can drop you from property insurance.

but prior to oct 1 2004 some would drop you for that

[jammies]

$1500 a month for gas and electric? I'm far from a fan of the so-called "deregulation" of the utilities, but it's been several years (2001?) since they started the process, and if that was at all realistic you'd think prices would already have spiked somewhere along the line to levels approaching 50% of that - which so far as I remember, they haven't.

Reading the article it sounds like the guy just picked a random number that sounded high for no reason at all other than drama.

[Flame Of Liberty]

Originally Posted by CaramonLS

Anytime you have an essential service with very limited competition (ex. due to extremely high infrastructure costs), the government needs to keep a watchful eye on the service to make sure people aren't being taken advantage of.

We've seen it with Car insurance (in Alberta) and telecommunications (across Canada).

This is one of the reasons that Slappy's anarcho-capitalism theory couldn't function in a practical setting.

I think what a Slappy anarcho capitalist would tell you is that government regulating the industry (for example by keeping the prices down) pretty much GUARANTEES that no new company will enter the market and create more competition. High infrastructure cost and artificaly low profit margins cements the status quo.

If you let markets be and companies start to "take advantage" it means the margins in the industry are high, which is a good incentive for a new company to enter the market, compete, drive prices down.

No?

[Cliche]

Originally Posted by Azure

Didn't California have some kind of crisis a while ago because the government was setting prices for utilities which ended up bankrupting numerous companies?

Enron was a direct cause of the California energy crisis as they manipulated pricing for power in California to keep an arbitrage situation to fund profits.

Everybody needs power, however, there is need to have strict regulations in place. Otherwise, the government is declaring open season on the populace, more so than ever.

Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared. Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until federal regulators intervened in June 2001. These blackouts occurred mainly as a result of a poorly designed market system that was manipulated by traders and marketers. Enron traders were revealed as intentionally encouraging the removal of power from the market during California's energy crisis by encouraging suppliers to shut down plants to perform unnecessary maintenance, as documented in recordings made at the time.[8][9] These acts contributed to the need for rolling blackouts, which adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers. This scattered supply raised the price exponentially, and Enron traders were thus able to sell power at premium prices, sometimes up to a factor of 20x its normal peak value.

[CaramonLS]

Originally Posted by Flame Of Liberty

I think what a Slappy anarcho capitalist would tell you is that government regulating the industry (for example by keeping the prices down) pretty much GUARANTEES that no new company will enter the market and create more competition. High infrastructure cost and artificaly low profit margins cements the status quo.

If you let markets be and companies start to "take advantage" it means the margins in the industry are high, which is a good incentive for a new company to enter the market, compete, drive prices down.

No?

No, not in this case.

You could probably count the number of people on one hand who have the means to build the infrastructure network required to run a utilities company. How many years would it take before this additional multi-billion dollar network was built? 10? 20? What happens in the mean time? What happens when after the network is built that the two companies decide to form a utilities cartel, because it is in their best interest?

Also in that sort of system you are essentially placing a value on human life - how much is it worth to the average consumer to not freeze to death during winter? Drink clean water? Power their homes? Have health care? Have access to emergency services?

I guess I could always power up my wood burning stove for some warmth in the winter

[VladtheImpaler]

Originally Posted by Hemi-Cuda

when i was attending SAIT a 19 year old friend of mine got tagged doing 42 in a playground zone that he wasn't aware of (he was new to the city like i was). he had just gotten his license transferred a month or two prior, and his coverage was canceled after the ticket hit his insurance company (allstate or state farm, one of those state ones)

now i admit that Alberta is a more favorable choice for those over 25 with clean driving records, but the insurance companies crap all over any driver under 25 any chance they get

And for good reason , but that's a topic for a different thread...

[Tron_fdc]

Originally Posted by Flame Of Liberty

I think what a Slappy anarcho capitalist would tell you is that government regulating the industry (for example by keeping the prices down) pretty much GUARANTEES that no new company will enter the market and create more competition. High infrastructure cost and artificaly low profit margins cements the status quo.

If you let markets be and companies start to "take advantage" it means the margins in the industry are high, which is a good incentive for a new company to enter the market, compete, drive prices down.

No?

Well, electricity is a little different. In this case a lot of the generation is owned by the retailers (in Calgary's case, Enmax) so in order for a new retailer to come on line they would have to own their own power generation facilities, buy spot market from the power pool, or enter into a long term contract from Enmax.

There are small retailers that own generation, but they don't have enough to supply large municipalities like Calgary. They focus on large industries. Add to the fact that banks won't lend money for a new power plant unless you have long term contracts with an end user in place, and you can see how hard it is to become a generator or a retailer in Alberta.

Electricity has been a gong show since day one when we spent countless hours on radio and TV fighting it, but finally gave up when every fact and fallacy that we came up with was largely ignored by the Klein government. It was quite the introduction to politics for us, and ultimately changed the way we did business.

I'm actually surprised it took this long for it to go completely sideways.