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Sat, 24 Sep 2005
And we're so glad he has finally seen the error of his ways. Apologies for quoting at such length, but this really is remarkable. From the Governor's office:
Carcieri Testifies in Support of ConsumersToday Governor Carcieri attended a hearing at the Public Utilities Commission, to testify against the adoption of the proposed 24% Narragansett Electric rate increase. Governor Carcieri asked the Commission to postpone action on the increase, in anticipation that the energy markets may soften once the impact of hurricanes on the Gulf Coast has been fully assessed.
"We are here today not because of the actions of Narragansett Electric," the Governor said, "but because oil and gas companies and the power generators that supply Narragansett Electric are totally unregulated. They are making huge profits at the expense of Rhode Islanders, and all Americans."
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"Speculators on the futures markets took advantage of the confusion by driving up the price of fuel at an alarming rate. And all the while, oil and gas companies continue to reap profits. All of this could be further exacerbated by Hurricane Rita.
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Governor Carcieri also addressed the larger issue, which is the 1996 decision to deregulate electricity. He asked if this is benefiting Rhode Island consumers.
"There is an inherent flaw in the system," the Governor said. "The price of fuel is controlled by the generators and the futures market speculators. With few new suppliers adding energy to the grid, distributors have little option but to pay and then pass that cost on to the ratepayer. There is no incentive for the distributors to control their energy cost. This is also flawed because the cost to draw the fuel to produce the energy, such as drawing natural gas from the ground or hydropower, remains relatively constant. So, while we pay more, those at the beginning of the chain reap the profits dictated by the market."
Which is to say that the Governor agrees that it can be the case that unregulated markets are bad for consumers and bad for the state. Free markets are not the be-all and end-all. To which we say, Hallelujah! At last someone has the nerve to recognize this explicitly. What's more, it's someone who won't get called a communist for doing so. (The Governor's partisans regularly make that kind of charge in RIPR's direction, but now I guess they'll have to either rethink that, or add him to their list of enemies. We await their apologies.)
Implicitly, of course, our governments have recognized the imperfection of markets for decades, and we regulate all kinds of markets in all kinds of commodities. Taxicabs, tow trucks, haircuts and shellfish are all markets with prices or competitors regulated by our little state. Milk, sugar and steel are all markets regulated or protected by the federal government. And this is just the beginning of the list.
There are several places where the citizens of our state would benefit a great deal by serious market regulation. That is, the electric market isn't the only important market that is failing to serve us well. Just to pick one, the real estate market is currently changing the face of our communities, putting people out of their homes, and forcing good citizens to move elsewhere in search of affordable housing. How about taking on that one next?
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