Monopoly utilities: just another way to tax us

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by Britt Storkson

Monopoly utilities such as water and sewer systems, power companies, and phone companies traditionally were operated on a “at cost” basis – ratepayers were charged whatever it cost to provide the utility and no more.

Not anymore.  Governments, faced with howls of protest if they raise taxes, haven’t been able to raise taxes as much as they would like to.  So rather than scale back government to match the tax revenue, they get the money from other sources.

These “other sources” of revenue now include monopoly utilities.  Sometimes this revenue comes from taxes on the utility.  More often, however, ratepayers of monopoly utilities are charged much more than the actual cost of providing the utility – with the difference going to government to spend on whatever they wish.

Monopoly utilities have extraordinary privileges:

Monopoly utilities have unlimited ratepayer money to:

•  Buy media (advertising)
•  Buy politicians (campaign contributions)
•  Buy lawyers to initiate lawsuits and/or defend even illegal/criminal activity

There are several types of monopoly utilities with widely varying levels of accountability:

•  Public utilities.  These are public entities “owned” by the public like other government agencies like cities, counties and the state.  Examples of Public utilities are Public Utility Districts (P.U.D.) are Emerald People’s Utility District in Lane County, OR and Northern Wasco County P.U.D. in Wasco County, OR.  Public utilities are not regulated by the Oregon P.U.C. (public utility commission) except for safety issues.  Typically, elections for P.U.D. directors are held when other government officials are elected.

•  Investor-owned utilities.  These are for-profit corporations owned by stockholders.  They are regulated by the Oregon Public Utility Commission.  The utility rates are also set by the Oregon P.U.C. – which isn’t much in the way of consumer protection as we will see later.  Examples of investor-owned utilities are Portland General Electric and Pacific Power.

•  Co-operatives.  These are non-profit corporations legally “owned” by the members or stockholders – those who buy the utility services from them.  They are governed by the statutes in ORS (Oregon Revised Statutes) 62.  While this statute requires the Co-operatives to hold board of director elections yearly there is nothing in the statute that requires these elections to be honest or impartial.  Board of directors’ candidates will not win a seat on the board no matter how many votes they get if those currently in power do not want them there.  In other words “rigged elections” are legal, or not illegal.

The Oregon P.U.C.  The Oregon P.U.C. currently is a three member board whose members are appointed by the governor, not elected. Its mission, as stated on its official website, is “to regulate[s] customer rates and services of the state’s investor-owned electric, natural gas and telephone utilities; and certain water companies”.  However in practice the P.U.C. operates more like a lapdog than a watchdog. The P.U.C. is often staffed with current or retired utility company executives or those with ties to the utilities – which means that most of the time the appointees represent the utility companies and not the ratepayers.

Nearly all utilities “feed back” some of the money they get from the ratepayers to the politicians to make certain this very privileged status does not change.  For a monopoly utility to directly give money to a politician is illegal.  However, they get around that proviso by giving the money to trade organizations like the Northwest Public Power Association, who then gives the money to the politicians.

Also, why do monopoly utilities advertise?  They have no competitors and captive customers who are forced to buy their product at whatever price they determine.  Some would say that’s how thy make sure that certain things about the utility are reported.  The far more likely scenario is that advertising money is to make sure that certain things about the utility aren’t reported.

Another “dirty little secret” is that utilities can and do charge different rates to different customers – or give away the utility to anybody or any business for nothing.  There is no law that prohibits that practice.

Until we end this game of monopoly – state-sanctioned monopolies buying off the politicians and media with your ratepayer money – we had better look forward to skyrocketing utility rates with only a very small percentage of your money going to deliver that utility.

Britt Storkson (The Dalles) – to learn more, visit Britt’s Reform Wasco Electric web site