Home > Uncategorized > Extended Power Outage Illustrates Risks of Deregulation & Privatization

Extended Power Outage Illustrates Risks of Deregulation & Privatization

Christie Pushes Privatization of Drinking Water, State Parks, & Toxic Site Cleanup

Companies put profits before people, public health, and sound public policy.

[Update 2: 11/18/11 – The NY Times reports that Connecticut Gov. Malloy basically forced the power Co. CEO out over failed storm  response, see: Connecticut utility chief quits after delays in restoring power.

Most of the time, you have to read between the lines to figure out what’s really going on. But once in a while, the door opens a crack, just wide enough to see what’s going on. One thing I found particularly of interest in that regard was the reporting on the underlying economic and political influences and their concerns. It no longer seems necessary too mask the exercise of raw Wall Street economic power on policy decisions – I guess things have gotten so bad that it’s OK to report these things openly. Check this out:

” … although Mr. Butler’s sudden departure might placate some of the company’s critics, the upheaval was likely to unsettle investors just as the company is trying to complete a merger with Nstar, a utility in Massachusetts.

Now who would have thought that Wall Street investors influence an electric utility’s emergency response planning? What investor interest could that be related to? – end update]

Update 1: 11/13/11Star Ledger story attempts to drill down on reasons why response was so poor – audit shows JCP& reduced spending on maintenance. But, as usual, they ignore the policy elephants in the room.

The abysmal JCP&L response to the snowstorm power outages produced at least one benefit.[Update: aside from providing another example of more frequent and intense storms that will result from global warming].

It shown a bright light on what happens when government abdicates its essential responsibility and allows a private corporation to make life and death decisions based on profits.

  • JCP&L was allowed to decide how many repair crews to deploy, where to deploy them, and when to deploy them.
  • JCP&L alone decided how to balance response costs with restoring service.
  • JCP&L was allowed to consider their costs and their profits in deciding how and when to respond.

As a result, thousands of homes were without power far longer than necessary –  many for over a week – people died, and businesses lost millions of dollars.

And to add insult to injury, JCP&L will recoup all their costs and even profit from this disaster, as consumers pay for the response in electric bills.

No one at JCP&L was held accountable for their miserable performance – how do you as a utility customer hold JCP&L’s corporate CEO accountable?

These are the kind of things that happen when essential government functions are deregulated and privatized.

But while the storm power outages put these issues front and center, few people realize that the same abuses are happening with public drinking water, parks and toxic site cleanups:

Private companies are being allowed – even encouraged – to put private profits before people, public health, and sound public policy.

Two stories in today’s news perfectly illustrate this set of problems:

First, the NY Times reports that the Coca Cola Corporation – using influence obtained by parks contributions and concessions – blocked a plan to ban bottles at Grand Canyon National Park – see: Parks Chief Blocked Plan for Grand Canyon Bottle Ban:

Stephen P. Martin, the architect of the plan and the top parks official at the Grand Canyon, said his superiors told him two weeks before its Jan. 1 start date that Coca-Cola, which distributes water under the Dasani brand and has donated more than $13 million to the parks, had registered its concerns about the bottle ban through the foundation, and that the project was being tabled.

Coke thought a ban might adversely impact profits and could become a model for many other places.

Instead of a bottle ban, the taxpayers picked up a $300,000 tab as the National Parks Service installed a bottle “filling station”:

In preparation, the park and its contracted concessionaires installed more water “filling stations” for reusable bottles at a cost of about $300,000, according to information provided by the park service to Public Employees for Environmental Responsibility

So there it is – this is what we get when we allow corporate interests to dictate public policy: more litter, lower quality park experience, taxpayer costs, and higher corporate profits.

Yet despite these kind of obvious problems, Governor Christie’s recently announced Parks Funding Strategy calls for more private concessions in state parks! (we wrote about some of those issues here)

Second, Tom Johnson at NJ Spotlight reports that the Christie Administration just approved a scheme to allow private water companies to increase rates and profits for infrastructure investments without regulatory review. (see: Water Utilities to Get Paid Faster for Fixing Infrastructure – New mechanism lets utilities pass along costs of routine upgrades to customers — without regualtory review

We wrote about why that fatally flawed policy will fail here: Christie Administration Dodges Water Infrastructure Deficits, Blames Regulatory Oversight

Aside from the financial issues of profits and infrastructure deficits, there are significant public health issues involved that are being ignored.

DEP’s own data show that millions of people drink water polluted by hundreds of toxic chemicals.(see: Filter the Chemical Soup in NJ’s Drinking Water – Available Treatment Could Screen Hundreds of Unregulated Compounds from Taps

Private water companies have under-invested in treatment and maintenance to increase profits.

Private water companies decide where to make investment decisions based on profits, not need or public health impacts.

Installing new water lines to serve new development and upgrading water lines to large populations can be more profitable than installing treatment, repairing old water lines, or maintaining lines to places where population density is low.

Private companies make these life and death decisions – with absolutely no accountability.

You don’t vote on the CEO.

The Corprorate Board rooms where these decisions are made are not transparent and are not open for public participation.

And then there is the privatization of the toxic site cleanup program (see: Mercenaries now fully in charge of toxic site cleanup in New Jersey).

All this stuff is not as visible as a power outage – but what you can’t see can kill you.

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