Let me say this about that

By Gene Klare

April 18, 1997

A MAJOR economic issue threatening consumers and workers in the United States comes from the big push by those who see fortunes to be made through the deregulation of the nation's electric power industry.

An historical perspective into the electric utility industry and an exploration of the pitfalls of deregulation are contained in an article in The Builders newsletter published by the Building and Construction Trades Department of the American Federation of Labor and Congress of Industrial Organizations in Washington D.C.

The article, published under the byline of Robert A. Georgine, the department's president, carries the headline "Deregulation Will Return Us to the Dark Days." Because the issue affects all of us, the Northwest Labor Press herewith repeats Georgine's comments:

"MANY OF US are too young to remember the dark days before the 1930s. Back then, our electrical generation industry was disorganized, unregulated, and dominated by 16 powerful holding companies. During the Great Depression, many of these holding companies propped up their profits by overcharging consumers for electricity. Exposure of extensive abuses spurred public interest in reforming the fundamentally troubled electric industry.

President Franklin D. Roosevelt championed reform and reined in the holding companies, setting the stage for successful regulation of the industry.

FDR's New Deal integrated and expanded electrical usage across rural America. He put construction workers back to work, building dams for hydro-electric power and flood control. The establishment of regional authorities such as the Tennessee Valley Authority (and the Bonneville Power Administration in the Northwest) simultaneously created jobs and assured universal access to safe, reliable and affordable electricity.

FOR THE PAST six decades, Americans have enjoyed the best system of electrical generation in the world. We have the lowest prices for electricity, the most reliable service, and a good safety record, as well as the most highly skilled electrical workers.

Despite this, some industry groups, economists, state governments, and members of Congress believe that economic restructuring should be fostered through deregulation of the nationŐs utility industry.

'Economic restructuring' refers to changes in ownership or business practices that separate generation, transmission, and distribution functions. Those functions can be separated by creating open market access rules, while splitting up generation and transmission operations.

The economic question is: Would deregulation of market rules harm our electrical power system's overall effectiveness in terms of prices, reliability, safety, employment, and environmental effects?

REMEMBER THE NATIONWIDE oil boycott of 1974? American people and our government panicked like never before. This resulted in passage of the Power Utilities Regulatory Policy Act of 1978, the first substantial move toward deregulation. The bill flopped. A dozen years later, gasohol, ocean-wave action, and windmills remained no better than experimental processes.

Utilities were profitable again by the 1990s. Demand for electricity made utilities cash rich, a sweet prize for greedy Wall Street speculators. On their behalf, the Bush Administration pushed through the 1992 Energy Policy Act, which radically deregulated wholesale energy generation and transmission.

With passage of the '78 and '92 acts, we've witnessed a radical transformation of the industry structure toward non-utility, independent power producers and exempt wholesale generators. Once again, we're being threatened by legislative proposals.

Deregulation buffs think 1997 is their year. The 1996 elections reinforced the perception that deregulationŐs time has come. The White House seems likely to propose a bill to give states authority over energy issues. In the House, Representative Dan Schaefer's (R-Colo.) bill would totally deregulate the industry and increase competition in retail electricity generation. In the Senate, Majority Whip Don Nickles' (R-Okla.) bill would remove all federal controls. NEARLY ALL STATES have introduced bills to deregulate distribution of electricity. State experiments with competition in electricity may sound harmless, but when these lead to an uncontrolled and rapid dismantling of the existing system, all of North America's electric supply could become expensive, unreliable and unsafe.

Deregulation has very severe implications not only for our members and their families but also for the nation's economy and well-being. Further attempts to deregulate electric power transmission would undermine the construction and maintenance of safe, reliable, and economical power systems, and will ultimately lead to higher prices for the consumer.

We will fight such radical attempts. In developing a legislative strategy, the Building and Construction Trades Department is gathering information about the electrical production and transmission process so the building trades union can lead a vigorous effort to stave off further deregulation. We've got to protect the consumer, keep energy prices stable and affordable, assure universal access, improve service, ensure safety both of workers and users, and safeguard the environment.

WE BELIEVE deregulation would not only pull the plug on many more construction and maintenance jobs, it would cost American families a ton of money. Prices for residential and commercial users would increase ultimately, while industrial users would pay lower rates.

Deregulation would especially penalize senior citizens on fixed incomes. And, of course, it would lead to cost-cutting and outsourcing on maintenance and, hence, less training, less safety, and less reliable service.

That's why we are fighting efforts that would return America to the dark days of greed and monopoly, and we urge you to join us."


IN NEW YORK CITY last month, 4,000 job-hunters lined up in the cold for hours and hours to apply for 700 jobs at a hotel which will reopen this month following a large-scale renovation. The hotel advertised for housekeepers, maintenance workers, security guards and managers with pay ranging from $6 to $15 an hour.

A man in Virginia sent a letter to the New York Times in which he estimated that the annual payroll for the 700 successful applicants at less than $14 million. He said that even adding a liberal 30 percent for fringe benefits, the total cost of employing those 700 will be less than the $20.2 million in total pay received last year by just one man, the chief executive of the IBM Corporation.

A corporate chief executive who made even more last year was General Electric's John F. Welch Jr., whose total compensation in pay, bonus and stock options was valued at $30 million. This is the same Jack Welch who noted recently that GE's union contracts expire this summer and that "we are the best prepared company in the world to take a strike." Welch's GE owns NBC. So if you ever wonder about some of those news stories on NBC's news programs, think of Jack Welch as being the de facto editor-in-chief.


IN CANADA RECENTLY, the Ontario Labour Relations Board certified the Steelworkers as the collective bargaining representative for employees of a Wal-Mart department store in Windsor, which is near Detroit. Employees at the store voted 151 to 43 against the union last summer but the government panel ruled that the Arkansas-headquartered chain had violated Canadian labor law by intimidating employees and making them fear for their jobs. A Wal-Mart spokeswoman said the chain was "surprised and disappointed" by the ruling that made the store the first of the chain's outlets to be unionized. Wal-Mart will appeal.


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