As I write this, there are still over 500 people in the St. Louis area without electricity, according to AmerenUE‘s outage map. Granted, that number is down from almost 700,000 people. And, granted, this is following the worst storm damage in Ameren’s 100-year history. But is it acceptable?
A half-million customers went 3 days or more without power following the July 19 and July 21 storms. My power was out for exactly one week, and when it came back on, there were still hundreds of thousands left in the dark. You know the situation is grim when the Reverend Al shows up to voice his concern. Despite only stepping out of his car for a few minutes to address the media, he did make one worthwhile comment, “when power companies fail, people should not have to pick up the tab.” Indeed.
But we do. And the important point here is that we have no choice because the electric utilities in this country are, almost universally, government-mandated monopolies. It is interesting how many people find fault with monopolies, perceive them as a failure of the free market, and welcome any government intervention to prevent them. However, when the government *creates* monopolies (for the good of the people, of course), it’s fine. Except when they fail.
The consensus that public utilities (especially electricity) must be run as government-regulated monopolies is starting to change, however, and incidents such as this outage in St. Louis only serve to spur those changes on. The Progressive Policy Institute issued this report in April 2000 calling the emergence of a competitive retail electricity industry “highly likely,” since 13 states have already enacted some legislation to begin this transition. That is encouraging news, but to the rest of us still suffering under our government-imposed monopoly, things are perhaps not moving swiftly enough in that direction.
So in the meantime, what will the monopolies do to mollify their customers? Probably nothing. There is no incentive to make their service more attractive because they are not competing for your dollar. If you want electricity in your home, you will continue to pay them for it. And I should like to point out that losing power, especially in midst of the summer heat, is not merely an “inconvenience” as AmerenUE’s spokespeople were so fond of calling it. It is truly a life-or-death situation, as the St. Louis residents who succumbed to the heat could attest (if they were still alive). The monopolies (and by proxy, the government) should be held accountable for these deaths.
In markets where electric utilities must compete for business, there is a clear incentive to provide the best (i.e. uninterrupted) service to their customers. In practical terms, this means investment in the infrastructure used to deliver the product. There is a clear business case for an electricity provider to make their wiring as bullet-proof as possible. If this means spending $1 million per mile of wire to bury it in the ground, making it impervious to storm damage, that is what you do in order to achieve a competitive advantage over other providers who are still using the 19th-century technology of stringing wires on poles.
AmerenUE has no such incentive. In fact, when asked about his plans to bury the company’s power lines over a period of decades, the August 6, 2006 edition of the St. Louis Post Dispatch quotes Ameren CEO Gary Rainwater as saying, “Scratch that one off the list.” He cites the prohibitive expense of burying some 61,000 miles of power line in the St. Louis area. Claiming the cost would “triple or quadruple the price of electricity.” This coming from a company with annual revenues approaching $7 billion. Where is all that money going, Gary? Obviously, some of it is paying for your $800,000 palatial estate in Chesterfield.
I bet the storms didn’t knock out Gary’s power.