Category Archives: playing monopoly

Public Utilities

On Wednesday, while I was visiting my mom, a young woman came to her door selling contracts for a power provider. Since then public utilities have been on my mind, especially natural gas suppliers. When the courts, the government, whoever, decided to break the monopoly our local power companies enjoyed they did a terrible job of it. Now we have a plethora of people who can supply natural gas, which was supposed to help consumers, but this deal did not create a level playing field. These companies do compete, but the consumer is left to choose from a bewildering array of prices that are actually almost identical but have so many decimal places it is difficult to comprehend how the rate will affect your costs. There is a web site http://energyguide.com. where you can see most of the rates listed but it is like comparing apples and oranges. There apparently is little regulation. These people come to our doors with badges that make it look like they are from the public utility. They call on the phone and trick elderly people into saying “yes” to things they don’t want. Picking an energy provider is closer to gambling than it is to shopping. Actually it feels like it is closer to highway robbery.

In addition to making the process as confusing as possible all of these companies (except the public utility) force you to sign a two year agreement and they charge a penalty if you want to switch providers before the term of your contract is up. If you guessed well and have locked in a low price, not a bad deal, but if you jumped the wrong way and locked in a high rate, the two years can be costly. The increase in the number of choices has resulted in increased delivery fees from the utilities to offset losing customers to other providers. By increasing their delivery fees, they can also afford to keep their rates low. In this manner they win twice, they keep most of their customers and then they charge more for delivery. The utilities do not require customers to sign timed contracts. The whole system is a zoo. If we can’t do a better job of breaking up monopolies than this then let’s keep the monopolies.