The Ugly Side Of Deregulation

I have been thinking about deregulation lately, as the Sharyland grid will be deregulated soon. I am in the Oncor service area, so we have been deregulated for over a decade.

I have always been a fan of the concept: divide service providers (basically, the billing platform) separately from the delivery platform. This allows people to find ways to scratch out revenues by combining various tactics combining, in essence, either volume driven revenue (basically, you make small amounts in the margins by providing cheaper priced plans. Theses companies are portfolio companies, and not meant to make a fortune in and of themselves). Or price a little higher, and provide more robust service offerings. This is what TXU has opted for.

I, however, went with Cirro. Today I recieved the following in an email:

Dear valued Cirro Energy customer,
We're excited to announce that Cirro Energy is now part of NRG. This is great news for your business because it means you get the best of both worlds. You'll continue to enjoy all the benefits of your Cirro electricity service. Plus, with NRG, you'll also have the peace of mind that comes with a parent company that is the largest competitive power generator in the U.S. and serves more than 1.9 million Texans.
We expect this to be a smooth transition for your business because you'll remain on your current electricity plan through Cirro. As you already know, Cirro provides customers with smart, money-saving plans, online and mobile account management, convenient payment options and local customer service, as well as some of the lowest fixed rates available.
You are now part of an energy family dedicated to bringing innovative, sustainable power to households and businesses nationwide. We're here to help you and look forward to powering - and empowering - your business for years to come.

It has since occured to me...."portfolio company"....

The world of deregulation is doomed to end up just like it was before. Smaller companies that sprout up and develop a smaller customer base become easily bought out supplies of new customers to add in to your base.

Eventually we will end up with a national level monopoly, with a company like NRG acting like a hoover and buying up all the smaller companies, bringing in their customers.

"Deregulation" will only transfer the monopoly from a state level to a national (and thus, global) level endeavor.

To be honest, I already had piece of mind. Cirro is just a billing platform that allows me access into the Oncor distribution network.

When they broke up Ma Bell, it only temporarily brought down the cost of phone service. It seems like it did not work as anticipated, with added charges adding up on bills and lessening of services for free. On top of that the government lost revenue from the phone industry for a while, adding special taxes to compensate the loss later on. Bell had a lot of decent paying jobs at the time that stabalized the economies of communities. Small companies had low paying sales jobs at a central location which was not in your hometown.

Sometimes having a big company provide services is good and stress free. Other times it is a curse. It all depends on what type of people run the company, if they are extremely greedy, it is bad for us.

reply to post by rickymouse


This is where i have no issue with creating laws. I have no problem at all with creating laws that limit the ability of businesses to victimize their customers. And I would presume that the laws would not become bloated in that regard, given the nature of what we are talking about.

There are legal solutions to monopolies. I guess the problem then becomes that it starts to look like a government run utility.

THERE IS NO EFFICIENT WAY TO DO THIS.............The customer ends up getting screwed by the industry AND the government.....
A huge change in peoples attitudes must first take place, and that aint likely soon....
I believe well have to go through a very SHTF scenario before we awaken....
Meanwhile you are subject to the machinations of corporate greed and government wastefulness....

So what exactly does that mean to deregulate electricity providers? Here it is mostly consumers energy. In Lansing they have the board of water and light and have their own power plants.

I guess I have never paid much attention to it, you are saying energy is regulated now? deregulating would mean what? Now I'm sure it could be turned into a very complex answer with pros and cons.

In regards of ma Bell.. was the telephone industry regulated back then? I remember Mi bell and then MCI coming in...is that when it was deregulated?

Wait till Obama hammers the coal industry. Prices for electricity will go way up and we the people will suffer. Wonder how deregulation is figured into that?

tinner07
So what exactly does that mean to deregulate electricity providers? Here it is mostly consumers energy. In Lansing they have the board of water and light and have their own power plants.

I guess I have never paid much attention to it, you are saying energy is regulated now? deregulating would mean what? Now I'm sure it could be turned into a very complex answer with pros and cons.

In regards of ma Bell.. was the telephone industry regulated back then? I remember Mi bell and then MCI coming in...is that when it was deregulated?

With Cirro i pay about $0.046/kwh. Before deregulation you had TU (Texas Utilities). Their deregulated version, TXU, provides energy at about $0.13/kwh. What do you get with that extra 8 cents? A very robust network of services, along with some stuff like rewards cards. To me, totally not worth it. But they have the largest customer base of all the providers in Texas. Who knows why people stay with them. Likely either ignorance or convenience.

But that is the difference. In a deregulated industry you can have other companies choose to offer the most bare bones services, at a discount rate. Kind of like choosing Esurance over State Farm.

rickymouse
When they broke up Ma Bell, it only temporarily brought down the cost of phone service. It seems like it did not work as anticipated, with added charges adding up on bills and lessening of services for free. On top of that the government lost revenue from the phone industry for a while, adding special taxes to compensate the loss later on. Bell had a lot of decent paying jobs at the time that stabalized the economies of communities. Small companies had low paying sales jobs at a central location which was not in your hometown.

Sometimes having a big company provide services is good and stress free. Other times it is a curse. It all depends on what type of people run the company, if they are extremely greedy, it is bad for us.

edit on 8-4-2014 by rickymouse because: (no reason given)

It worked for a time,

But telecom is a horrible example as why Monopolies are bad.

I would argue that the Telecom ma bell split was a stupid idea from the start, and if anything should of been made a government self funded service like the Mail.

Telecoms infrastructure is massive, and with one company doing it, one massive company, it was easy to build.

When they split, they had to split that network up, and hence generated massive cost for the new individual company that created high overhead for the consumer.

You see it today in the wireless industry, the cost of network bog down the business.

Its what brought the First ATT down, they spent all their money on network, got bought by Cingular, They than bought the ATT land line service, and became it again.

Most of that was motivated by the network infrastructure and band witdh the mergers brought.

It really should be on a case by case basis, and depending on what the company provides.

reply to post by bigfatfurrytexan

Hey BFFT. My take?
Deregulation, in my opinion, was sold to the American public as a panacea for a slowly stagnating economy in the 1980s.
Following WWII, most of the rest of the worlds industrial base had been bombed to smithereens. American industry flourished and in doing so established cousins of itself around the world with with programs such as the Marshall Plan and the re-industrialization of Japan.

Three decades later as the rest of the world had been catching up and the demand for fossil fuel increased, American hegemony around the world began to be threatened by not just the Soviets but the rest of the growing industrial world. To boot, the industrial infrastructure of WWII manufacturing was decaying and becoming obsolete.

Two groups promoted deregulation. Group one was the old guard of previous decades who wanted to get a better grip on their sliding profits.
Group two were up and coming profiteers who wanted a bigger bite of the existing pie. Both found a Messiah in Ronald Reagan. Through out the 80's a slick PR campaign was waged upon the American public, decrying the evils of government regulations on American business as if that alone was the cause of the sliding economy.

Those who could foresee the natural outgrowth of deregulation were labeled Commies, a word sure to gather support from many who really had no idea about what was going on.

On it's face, deregulation, sounded, and continues to sound like a good thing. But in reality it was nothing more than a well orchestrated Madison Avenue con job on the American public to give up what little control we had through our government over the burgeoning control of corporations.

rickymouse
When they broke up Ma Bell, it only temporarily brought down the cost of phone service. It seems like it did not work as anticipated, with added charges adding up on bills and lessening of services for free. On top of that the government lost revenue from the phone industry for a while, adding special taxes to compensate the loss later on. Bell had a lot of decent paying jobs at the time that stabalized the economies of communities. Small companies had low paying sales jobs at a central location which was not in your hometown.

Sometimes having a big company provide services is good and stress free. Other times it is a curse. It all depends on what type of people run the company, if they are extremely greedy, it is bad for us.

edit on 8-4-2014 by rickymouse because: (no reason given)

Actually, Ma Bell is a really interesting case. They broke it up due to anti-trust and lack of competition; however, Ma Bell ( aka AT&T these days) was reacquiring or realigning its formerly divested assets soon after. It was broken up in 1956 and 1984. Each time, "baby bells" merged together afterwards and it just basically rebuilt the entire monstrosity.

Double post.

WhiteAlice

rickymouse
When they broke up Ma Bell, it only temporarily brought down the cost of phone service. It seems like it did not work as anticipated, with added charges adding up on bills and lessening of services for free. On top of that the government lost revenue from the phone industry for a while, adding special taxes to compensate the loss later on. Bell had a lot of decent paying jobs at the time that stabalized the economies of communities. Small companies had low paying sales jobs at a central location which was not in your hometown.

Sometimes having a big company provide services is good and stress free. Other times it is a curse. It all depends on what type of people run the company, if they are extremely greedy, it is bad for us.

edit on 8-4-2014 by rickymouse because: (no reason given)

Actually, Ma Bell is a really interesting case. They broke it up due to anti-trust and lack of competition; however, Ma Bell ( aka AT&T these days) was reacquiring or realigning its formerly divested assets soon after. It was broken up in 1956 and 1984. Each time, "baby bells" merged together afterwards and it just basically rebuilt the entire monstrosity.

"Mergers and acquisitions". This is how empires are built.

You build a business big enough to maintain a revenue base. You then allow smaller start ups to establish a customer base. You then buy out the smaller start ups, and acquire their customer base.

That is how it works. In any industry. Big fish eat little fish, and become bigger fish.

bigfatfurrytexan

WhiteAlice

rickymouse
When they broke up Ma Bell, it only temporarily brought down the cost of phone service. It seems like it did not work as anticipated, with added charges adding up on bills and lessening of services for free. On top of that the government lost revenue from the phone industry for a while, adding special taxes to compensate the loss later on. Bell had a lot of decent paying jobs at the time that stabalized the economies of communities. Small companies had low paying sales jobs at a central location which was not in your hometown.

Sometimes having a big company provide services is good and stress free. Other times it is a curse. It all depends on what type of people run the company, if they are extremely greedy, it is bad for us.

edit on 8-4-2014 by rickymouse because: (no reason given)

Actually, Ma Bell is a really interesting case. They broke it up due to anti-trust and lack of competition; however, Ma Bell ( aka AT&T these days) was reacquiring or realigning its formerly divested assets soon after. It was broken up in 1956 and 1984. Each time, "baby bells" merged together afterwards and it just basically rebuilt the entire monstrosity.

"Mergers and acquisitions". This is how empires are built.

You build a business big enough to maintain a revenue base. You then allow smaller start ups to establish a customer base. You then buy out the smaller start ups, and acquire their customer base.

That is how it works. In any industry. Big fish eat little fish, and become bigger fish.

Yep.

Even independent start ups, however, are yet another set of prey. My family's business was a little fish that was eaten by a big fish. I told my dad to take their offer of purchase and he thought he could refuse. They crushed him instead and THEN picked up all the pieces they could. Nowadays, he credits me for being right about that. It's an unfortunate reality that, if one does try to fight being eaten, that the big fish will find yet another way to eat you.

reply to post by bigfatfurrytexan


Having been in the trucking industry since before it's version of deregulation, I fail to see where acquisitions wouldn't have occurred regulated or not.

As a previous poster has pointed out the "water" gets to the same place no matter which route it's forced to take.

At least with deregulation, a bunch of new guys moved on up, made money, sold it out or chose not to. At least that route "irrigated" new fertile ground which is better than have not done so.

For every Ma Bell, there's a "big Blue"....

reply to post by nwtrucker


We are trading 1 evil for the bigger evil.

State regulated industry is being deregulated. The result? National level providers are starting to buy it all out.

We are going from a state regulated monopoly, to a completely unregulated monopoly on a national level.

reply to post by bigfatfurrytexan

I guess I'm not genned up on this.

The example that comes to mind is Hershey's in Pa. Not a regulated industry by any means that I'm aware of.

Nestle attempted a buy-out with lip-service to slipping a small portion to another company and avoiding federal intervention.

Ultimately, Pa. killed the deal based on Hershey's active social programs(?) which were deemed threatened by a Nestle takeover(?).

The point being Pa. killed an unregulated business buy-out by a monster international.

So my question is, one, didn't these states that "deregulated" and allowed national monopoly take-overs gain something in return for these moves that made it in their interests to do so? I.E. expansion of facilities within the state or some such?

Secondly, what stops a national buy-out even if the state is "regulated".

The only downside I see is no longer having as much influence/control over that company now that it's national. (By the way, gov't control isn't looked upon as a positive by most).

Sorry if these "101" type questions. LOL.

reply to post by bigfatfurrytexan

We are going from a state regulated monopoly, to a completely unregulated monopoly on a national level.

Indeed. Once deregulation happened on the national level, the states were in many cases allowed to more fully govern themselves. But as you point out, the deregulation of the more local state concerns has made them easy pickins for the unregulated national and international concerns.(monopolies)

In 1868, or there a bouts, John Rockefeller founded Standard Oil. Within 15 years he had, with emerging technology developed his company into control of 90% of oil refining across the country. He controled prices, and supply, and this of course helped him to slaughter any competition. It took until 1911 for Standard Oil's control was quelled, for a time, by the US Supreme Court when they made a placating overture to the public by breaking down that monopoly. Of course as we see happening again in more modern times, it was only a short matter of time before the little guys were again bought up by the bigger fish.

At least, at least, through government regulation the public possibly had some say controlling these huge monopolies. That is now history.

The cry of deregulation and "leave it to the market place", and the idea that "if someone does not want something then don't buy it" and "vote with your pocket book" rings false in my ears.
When so many citizens are making no more than minimum wage and then are happy to go out every other day or so and spend half an hours salary on a bag of potato chips and a bottle of fizzy sugar water, it is very easy to see that this free economy is based on the lowest common denominator.

That lowest common denominator is a citizen who, raised by mass media and the corporations that fund it, consumes large amounts of stuff that does not promote a healthy life. That's one hell of a foundation upon which to build an economy.

reply to post by TerryMcGuire


Here's my query to that. the local monopolies held sway with the state gov'ts as much as the Nat'l companies do now with the Feds.

If I tried for interstate authority during the regulated era, all any existing company had to do was state it was capable of servicing the account I intended to do business with and I was toast. there was no way to even start a trucking business, nation wide!

Again, this is only the trucking industry, but that's how closed off the existing companies had.

reply to post by nwtrucker


Deregulation pertains to energy, etc. In this case, electricity.

The power grids are managed on a state level, interconnected in regional type set ups.

I am not for regulating people. Utilities....i am far more in favor of.

reply to post by bigfatfurrytexan


Now that's a nice statement a dumb-ass trucker can relate to..LOL.