The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Utility Profiteering at Our Expense

Apr 2, 2001

In New York state, last year, electricity rates "spiked" up more than 40% several times. In New England, natural gas prices went up almost as much. This year, natural gas prices almost tripled in Illinois and doubled in Maryland, among other places. In Michigan, a natural gas utility proposed to nearly double its rates, only to pull back for a few months until the smoke from California has blown over.

For, as we all know, California has given the most complete–and most disgusting–picture to the whole nation of what happens when utilities are deregulated. In 1999, consumers in San Diego saw their rates double, then triple. In January of this year, millions of customers for the other two major privately owned electricity companies in the state were hit by rate increases of 20%, only to be followed by rate increases in March of as much as 50%.

But, this is only the beginning for people in California. To pay for this "electricity crisis," the state government increased its indebtedness by 90% in less than a year’s time–that is, it almost doubled. The bonds which the state sold, as well as the interests payments on them, will have to be paid by someone. That someone will be the people of California–in "surcharges" added to their electricity bill, in higher taxes, and in enormous cutbacks in public and social services.

The utilities imposed power blackouts in order to force through these enormous rate increases and government bail-outs. All the companies involved–even the two utilities who are claiming to be broke–made stupendous profits.

In the majority of states, affecting a very large majority of the population of the United States, deregulation of utilities has been passed and is in the process of being implemented. The main difference between California and the rest of the country is that California did it first. But other states aren’t far behind. And California’s deregulation law was the model used in most of the rest of the nation.

The power companies justified their demands for monstrous profits, saying that they were just obeying the "law of supply and demand."

In California, as elsewhere, there may have been small increases in the "demand" for electricity. But the real problem lay with "supply," that is with the large corporations, including the two utilities, which control the generating and transmission of electricity and the production and transmission of natural gas. They consciously took actions to restrict supply to the point that the utilities had to shut down.

Cutting off electricity, the utilities disrupted the lives of millions and the state’s economy. With no notice, they cut power to hospital operating rooms, personal medical equipment, traffic lights and elevators; in other words, they show they are willing to risk killing people.

The companies have been ready to use the power that their control over a necessary resource gives them to get their own way.

But working people have a power too, potentially much greater than these companies, because we make everything run. The whole society depends on us and our labor–including these companies and even the government offices in which the politicians carry out their dirty work for the companies.

It is neither natural nor normal we should accept companies’ demands for higher profits to the detriment of our own health, safety and well-being.