Shu Watanabe, a member of the Japanese Diet and head of delegation that visited Consumers Union in December.

CU to Japanese visitors: deregulating electricity not the answer (Jan. 2003).

A 13-member Japanese delegation comprised of legislators and labor leaders visited Consumers Union's Austin office in December to get a taste for what electric deregulation has meant for Texas consumers in the year since its debut.

The answer was swift and unequivocal: The promise has failed to match results. Complaints -- particularly billing and service related -- are at an all time high; high profile companies such as Reliant and Dynegy are ailing financially; investor confidence is down; new power construction plants have been canceled; and only about 5 percent of residential customers have switched companies.

Pointing to a newspaper headline that read "Difficult year for electric market, CU senior policy analyst Janee Briesemeister said: "That certainly also is our analysis of the electric market today. It's been difficult for consumers when moving to a new home; it's been difficult for consumers who don't get bills on time or don't get them at all; it's been difficult for consumers having to face unscrupulous marketing practices."

"Ask yourselves, what is your reason to go forward with deregulation if there are less risky ways to achieve the same goal?" Briesemeister said.

Janee Briesemeister, CU senior policy analyst with Japanese delegation interpreter Mie Arnston seated to her right.

One of the guests noted that lowering the price of electric power is currently a particularly attractive proposition in Japan because of a stagnant economy, high business costs and the opposition to lowering wages for workers. But the question remains how to best achieve this goal.

Shu Watanabe, member of the Japanese Diet's House of Representatives and head of the delegation, noted the average power outage in Japan each year is just 9 minutes. He contrasted this with more routine power blackouts in the deregulated market of New Zealand -- one of which he experienced personally during one of his trips to Auckland-- calling it "a traumatic experience."

Reggie James, director of CU's Southwest Regional Office, summarized the deregulation dilemma by saying: "Quick fixes for social problems have very bad long-term consequences."

"For a competitive market to work for consumers, the consumer has to be able to say 'no'," James noted. "When it comes to airline travel, for example, it is possible to take a car or not take a vacation. But there's no real substitute for electric service."

Briesemeister noted that while competitive markets are good for consumers, "deregulation does not automatically result in competition.

Reggie James, director of CU's Southwest Regional Office (center), discusses the perils of electric deregulation.

What we see in many markets is that deregulation does away with key consumer protections, allows prices to increase and results in an unregulated monopoly."