How do the rich get richer and the poor get poorer? Simple the rich lie, cheat and steal.
Here's the monthly electric rates Mary paid for electricity for the last couple of years compared to the average residential prices in Pennsylvania.
There are four different electric generator companies. The blue line is the residential price as reported by the U. S. Energy Information Administration. Up until November of last year she paid approximately the average rate for the state. She could have paid significantly less if she had chosen lower cost suppliers. There higher rate areas of the state and Pennsylvania's version of electric choice is crafted to ensure that the elderly and poor pay higher rates.
Mary has had electric power most of her life. Her second husband was in middle management with Pennsylvania Power and Light (PP&L). She knows electricity. She also knows how to grab a chicken with two fingers under the throat, and holding the thumb behind the head and a quick flick pop the head off. But the hands don't work so well anymore and she hasn't had any chickens since she was a girl on a Pennsylvania Dutch farm early in the last century.
Because of new regulations she must choose an electric supplier. It is intentionally confusing, complex, and lays open the public to hoards of out of state grifters and reavers.
Mary tending her husbands' graves.
Electric choice creates a virtual market where a real one doesn't exist. Driven by purist economic theory the virtual market realigns the costs first between the class of customers; Industrial, Commercial, and Residential basically, and then within the classes.
Below are some notes on Harvey Freyling, Mary's first husband, then back to electric rates.
PFC Harvey Freyling 1919 - 1945
1940 High School Yearbook Entry
Excerpt from the 11th Armored Division records on April 24, 1945.
Vividly awakened to the stark reality of German brutality evidenced by atrocities and the thousands of starved human slaves that had been liberated in and around Cham, the Thunderbolts needed no urging to quickly continue the decisive action which had placed it, so far, 50 kilometers ahead of all Third Army units toward the alleged German National Redoubt Area.
A secondary road through Vilzing to Mitach required constant engineer maintenance and slowed the advance considerably. First contact was made with the enemy in the vicinity of Voggerzell where sporadic mortar fire fell on the column. Some small arms resistance was reduced and the advance continued. Defended Viechtach fell by 10:00 AM with the cessation of resistance by small arms equipped enemy troops. An unsuccessful attempt was made by the enemy to make a stand on the wooded hill crest in the vicinity of Arnestied. Tank fire destroyed several enemy vehicles.
During this light action, six days before Hitler shot himself, Harvey received fatal wounds. While America celebrated Victory in Europe, Mary buried her husband a couple of hundred yards away from where she now lives. For sixty nine years she has gone and cleaned off the marker and placed flowers and flags on holidays. Harvey lies beside her second husband, the father of her three children. There is a space reserved next to them for her.
Sometime after the funeral Mary's thirteen year old sister received this letter:
Feb 3, 1945
Well well hello there Toots how is everything back home? You see I don’t know anything about any of the latest because I still haven’t had any mail at all since I am away from our good old America. Yes I am beginning to believe that I am an orphan and the fault still is with the army. Oh well someday a pile of letters will arrive for me, and then everything will be partly okay. Don’t forget, I only said partly okay. Oh by the way before I forget it, are you still singing on the choir regularly and also attending Sunday School every Sunday like all good girls do? I sure hope so as it doesn’t hurt anybody to go every Sunday, take my word for it, because I have already seen what bad teachings will do to a persons mind and then an injured body and damages to some nice homes and churches where sometimes only the huge steeples remain standing. Yes Gladys just keep on doing that good works and don’t let anybody laugh at you or tell you otherwise because that is the type of person who has helped in some way to destroy that type property I told you about. Good – nite and good luck kid.
Harvey
Electric Companies Come Calling
With the help of Meals on Wheels Mary still lives in her home. Now the children have grown and most of the grandchildren are adults. She watches the golf channel and tennis channel and has figured out how to use the DVR, calling her daughters sometimes for help with the machine. At this point there are few friends or relatives funerals to go to. When the phone rings she answers it. Answering the phone is an expedition fraught with many perils. The route is well known, but must be followed with rigor and attention. Along the entire path gravity claws and yanks at her bent body trying to pull her into the bone crushing floor lurking below. Her hips are held together by metal rods from a prior attempt by the earth to slam her first on to the surface and then embrace her inside. Soon it will win, but not today. The final outcome is known, but it is not who wins; it is the journey that's important. She has equipment to traverse the dangers. Four footed canes are strategically placed at the top and bottom of stairs to the basement and upstairs to provide the necessary three point support required for the journey. She should be in a wheel chair, but she knows from caring for her husband during his final years with Alzheimer's disease that once the wheel chair gets you escape is unlikely. Her pride requires the path at home be undertaken like a free climber scaling the Matterhorn.
With luck the call will be a relative. Regularly it is a power company trying to get her to switch electricity providers. Look again at electric rates she paid over the last couple of years.
There are four different suppliers. First one was Dominion Power based in Virginia. The preferred way to choose an electricity supplier is to check the rates on the Pennsylvania Utilities Commission (PUC)website Power to Switch. This isn't required and the rates and terms posted there are not always up to date. Companies maintain their entries on page, and are not bound by them. The results can be down loaded to a spreadsheet and compared, but an actual contract is not in place until the consumer is approved by the supplier under terms dictated by the supplier.
The Excel spreadsheet is not helpful since Mary does not have a computer.
On September 26th the 97 different rates for her area ranged from $0.729 to $0.1399 per Kilo Watt Hour. The default rate paid if no electric generator is chosen is $0.8814. A high electric bill at her historical usage could range from $104 to $200 the default rate comes to $126. Over the last two years Mary has been paying between $0.13 and $0.24 cents.
The other way residential customers can obtain an electric supplier is over the phone. Companies call and market their services. In this case the distribution company is Pennsylvania Power and Light (PP&L). She gets a PP&L survivors pension from her second husband's career with the company. Her goal is to get her electricity from PP&L. Over her lifetime electric rates were set by the PUC and there was no discussion.
Electric generators tell the customer that they want to ensure the customers get discounts and service as explained on the bill. Could you get your bill and we will review it. The goal of a caller is to get the customer account number of the electrical distribution company. Once that is obtained the generator like Dominion Power notifies the distributor (PP&L) that they now own the monies coming from the customer. The generator sends a form letter to the customer and if no response is received in five days the customer generator portion of the bill is given away. When Mary gets one these letters she saves it for a couple of weeks and asks her daughter what the letter means.
No actual changes are made to the electricity being used at the end point. The generator supplies energy to the grid and the grid supplies electricity to the customer. If you are located next to a nice cheap coal burning electric plant which supplies power to you nothing changes except the bill and the rate. The electric generator my actually be an electric broker that buys electricity and sells it to some distributor somewhere in another state. The electric supply system has been monetized. All of the contracts state that the customers promise to pay may to sold, but the customer can not resell the electricity.
PENNSYLVANIA RATES
Let's discuss the effect of electric deregulation on classes of customers in Pennsylvania. Below are the monthly rates since the final implementation of the electric "market".
The red line on top is the residential rates, in the center closely tracking each other are the commercial rates and the lowest rate is the industrial user rates. Industrial rates are logically lower due to policy, economic, and market reasons. Electric usage is varies with time and season. More power is used during the waking day and during summer and winter. Industrial users especially those that work around the clock have a constant demand for power. Their demand is fairly constant, without the peaks and valleys caused by commercial and residential customers. Lower electric rates help a locality attract jobs and grow the economy. Also they have the capability of building their own generator plants if it would be cheaper than getting it from the grid.
Larger commercial customers have the financial responsibility to keep their overhead low and are able to bargain for the best rates available. The economic argument for lower rates for them is not as strong as for industrial customers.
Residential customers vary greatly in resources and economic sophistication. More money can be extracted from this class by applying the time honored principle of "We cheat the other guy and pass the savings along to you." Overall residential rates will increase, but those with the time, resources, and knowledge can be bought off with lower than average rates while the others will be charged more. Rates are only changed after the next meter reading so it is possible to get several months of exorbitant bills through to those customers unwary enough to be trapped in a variable rate plan. Notice how over time the residential rates are pulling away from the commercial rates.
There is a spot market for electricity sold to distributors during peak demands. At one point last year the rate for kilowatt hours went to $5,000.00 per Mega watt hour in Texas and $2,000.00 in Pennsylvania the two states with hyper deregulation regimes. These spikes can be used as an excuse to send rates soaring.
Illinois Electric Rates
Illinois rates are similar to Pennsylvania's. You can see the increases when deregulations is put into effect and a similar separating of residential rates from commercial rates. There is a difference in the individuals rates not apparent from the overall prices. Illinois allows municipalities to bargain for rates rather than having each homeowner left alone to be preyed upon by scammers. This stops some of the targeting of the poor and elderly that occurs in Pennsylvania.
The Illinois rates illustrate a structural problem with trying to jury rig a market onto the electrical system. An efficient market will drive pricing to costs. It is cheaper to provide a steady quantity of power where all of the power which can be produced will be sold. However there are large fluctuations in demand. The costs for providing power in times of peak demand are very high. Some portion of the generating capacity must be idle 90% of the time if power is going to be available on the hottest and coldest days. There must be a reserve capacity and an efficient market will not allow for that capacity to exist. In order to prevent blackouts and brownouts Illinois passed regulations require generators to increase their standby power capacity. The effect of this can be seen in the large spike in prices on the right side.
Tennessee Electric Rates
Tennessee electric rates are set by the Tennessee Valley Authority. Since the TVA holds to the philosophy of a bygone era which valued service and fairness as well as economic development the rates are regulated.
NES energy rates are set and regulated by the Tennessee Valley Authority (TVA). All residential customers in the NES service area pay the same electric rate regardless of social status, income, or place of residence.
Commercial and residential rates closely track each other. Residential customers do not have to spend days trying to figure out which unfair contract to sign and which Enron inspired organization they wish to subject themselves to. They do not have contract provisions which penalize them for cutting back on their electrical use. They do not have to beg permission of some out of state company to talking to their Utility Commission. They will not be insulted by the
Utility commission by telling them they are stupid consumers which should have read their contract before they signed it and
deserve what they got.
Mary's latest electric bills were due to Ethical Energy a Daily Kos partner. Last winter she was paying triple the available rate for her electricity. She doesn't know why her account was assigned to them. Perhaps it was a phone call where she gave out her account number. Perhaps HOP electricity which no longer services the area sold her account to Ethical Electric. What she wants is to get electric service from PP&L where she gets a pension from her husband.
Ethical Energy combines advocacy to their core business like Koch Industries. Their business model works to put the lessen the public costs energy production like air pollution and global warming by extracting money from the unwary and those with a heightened sense of public responsibility. A rational system would spread the costs across the public by regulation instead of privatizing the profits and targeting the costs to the powerless and the principled. Instead clean energy premium is being paid by the same people who already bear the brunt of the public costs of the polluters.
The electric system was built with public support for universal service. It is now being converted to a financial system which extracts money from the many to the already wealthy few. It is a perfect symbol for our times. Do not vote for Ayn Rand inspired politicians which think this is ALEC promoted scheme is a good idea.
Wed Oct 01, 2014 at 8:11 AM PT: I called the Pennsylvania Utilities Commission to see if they had any comments on the above. Gave contact info and they guy on phone looked at the diary and said he'd talk to someone and see if they had a response. I'll added any reply if received.