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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
The idiots march on...
    #1235164 - 01/20/03 11:15 PM (14 years, 10 months ago)

link

U.S. eyes Canadian energy
Washington wants trade pacts to entrench right of companies to have access to deregulated electricity markets


MURRAY DOBBIN

Just how determined are private energy corporations to gain complete control of markets through deregulation?

A recent Toronto Star article that revealed a DFAIT (Department of Foreign Affairs and International Trade) plan to fully integrate all North American energy markets amptly demonstrates the corporate world's resolve.

Such a North American initiative will take some time to come to fruition. But there are other plans afoot that could lock us into energy deregulation much sooner.

Negotiations on services currently underway at the World Trade Organization could result in a wide swath of government policy decisions being held hostage to trade imperatives.

The risks are particularly great in the energy sector.

Leaked documents indicate the United States is asking WTO countries to entrench a particular model of energy deregulation under the binding terms of the General Agreement on Trade in Services (GATS).

Among other things, the U.S. is asking for its energy companies to be given complete access to "contracts for the operation and management of facilities for the commercial exploration, production and transport of oil, gas, or electricity."

But the U.S. also wants WTO members to ensure its companies get "access to, and use of, essential facilities for the transportation of the energy source necessary to providers of energy marketing services."

The plan is to impose, by way of an international treaty, the model of energy deregulation preferred by the big energy companies.

The U.S. government's position on energy at the GATS negotiations faithfully reflects that of American energy corporations.

In 1999, these corporations founded the WTO Energy Services Coalition to promote GATS negotiations on energy.

E. Joseph Hillings, a vice-president of Enron, and Donald A. Deline, a director of Halliburton, jointly chaired the coalition. The Bush family's long association with Enron, and Vice President Dick Cheney's with Halliburton, are well known.

The pro-competitive energy policies the U.S. wants to make permanent under the GATS are based on the assumption that the market can perfectly calibrate the supply of electricity.

By forcing utilities to allow competitors access to their transmission lines, electricity restructuring is supposed to create new sources of supply and low prices for consumers. Prices are to be set by the market rather than regulation.

When California started down this path, consumers were promised they would be paying 20 per cent less by April, 2002.

Instead, by that date they were paying 40 per cent more. California had to step in to buy electricity on behalf of distributors who had lost their credit status.

Albertans saw power prices jump from 1.4 cents a kilowatt hour in 1996, when deregulation began, to 13.3 cents in 2000, prompting the government to provide consumers with $3 billion in rebates to avoid a backlash at the polls.

Ontario will similarly spend lavishly on rebates and Britain recently provided $1.6 billion to keep the privatized British Energy from going bust in Britain's pro-competitive electricity market.

Excuses abound: If only energy companies had not manipulated California's market, if only Alberta had not drawn out deregulation, if only Ontario had not had such a hot summer, if only Ontario and Britain had not had nuclear power plants.

In California, Alberta, and Ontario the problem with the market was supposed to be lack of supply. Britain, in contrast, is experiencing a crisis in oversupply. But the results are the same, with governments having to intervene to fix markets that were supposed to run perfectly on their own.

Market advocates, though, chastise governments for their interventions and think they should just wait until the market starts behaving like the model says it should.

And if governments lock in deregulated energy policies through GATS commitments, that is exactly what they would have to do — sit back and watch regardless of the damage inflicted by extreme spikes in energy prices.

GATS bindings and disciplines severely restrict what governments can do in sectors they have agreed to commit to under its rules. A WTO paper states that: "Bindings undertaken in the GATS have the effect of protecting liberalization policies, regardless of their underlying rationale, from slippages and reversals ..."

But what if citizens and businesses hurt by escalating bills demand their governments reverse course?

The WTO guide to the GATS explains the agreement has the political advantage of "overcoming domestic resistance to change." In other words, it effectively hobbles democratic choice.

At a seminar of GATS experts, California's suspension of competition at the height of its energy crisis was given as an example of what GATS' commitments could block governments from doing. Price caps imposed on energy suppliers could also be challenged as a violation of GATS commitments.

While its WTO initiative to gain control of energy policy worldwide may not make as exciting newspaper copy as the looming U.S. war on Iraq, the two U.S. foreign policy initiatives have the same geo-political objective.

U.S. interests want control over world energy resources and infrastructure. Removing the ability of national governments to maintain independent energy policies is crucial to U.S. strategy.

All countries have to respond to the U.S. GATS energy request by March this year.

The revelations about the Department of Foreign Affairs and International Trade's North American energy plan strongly suggest that our trade officials intend to agree to the U.S. request.

If Canadians want to maintain any control over their energy resources in the future they have about six weeks to make their feelings known.


--------------------
  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
Re: The idiots march on... [Re: carbonhoots]
    #1235166 - 01/20/03 11:18 PM (14 years, 10 months ago)

Quote:

When California started down this path, consumers were promised they would be paying 20 per cent less by April, 2002.

Instead, by that date they were paying 40 per cent more. California had to step in to buy electricity on behalf of distributors who had lost their credit status.

Albertans saw power prices jump from 1.4 cents a kilowatt hour in 1996, when deregulation began, to 13.3 cents in 2000, prompting the government to provide consumers with $3 billion in rebates to avoid a backlash at the polls.





Quote:

In California, Alberta, and Ontario the problem with the market was supposed to be lack of supply. Britain, in contrast, is experiencing a crisis in oversupply. But the results are the same, with governments having to intervene to fix markets that were supposed to run perfectly on their own.






Choice morsels...


--------------------
  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: The idiots march on... [Re: carbonhoots]
    #1236131 - 01/21/03 10:09 AM (14 years, 10 months ago)

In California (where I live) they called it 'deregulation,' but in fact the government never deregulated, they only changed regulations and made things worse. Previously electricity was considered a 'natural monopoly' and government granted exclusive rights to sell it in geographic areas. They partially deregulated the retail market allowing companies to compete. This allowed prices to be driven down temporarily, but rate increases were still subject to regulation by the Public Utilities Commission.

The regulations limited long term contracts for the wholesale purchase of power. In a deregulated market, a retail seller of electricity, knowing the possibility of fluctuations in prices would be allowed to make long term contracts to lock in rates. These rates might be higher than the current spot price, but are a hedge against future price spikes. Reflecting typical government myopia the idea of paying a slightly higher price, even though it guaranteed a stable price, was deemed to be politically negative (with the rationalization that it was bad for the consumer/voter). Everything went okay until spot wholesale rates went through the roof. The overall cost turned out to be much greater than if the utilities had been allowed to lock in rates with long term contracts. The retail prices were not immediately allowed to reflect the rise in wholesale prices. Debt (and the cost of servicing the debt) piled up on the electrical retailers, driving sellers to stop doing business in the state. When the retailers were allowed to charge the higher prices reflecting their costs including debt service, the consumers and taxpayers were confronted with bills much higher than if the government would have allowed the power companies to run their businesses properly (make long term contracts to lock in reasonable rates).

Don't be fooled by the way words are constantly redefined and misused by the political class. In California, electricity was never deregulated, no matter what the politicians and the economically illiterate media may say. In some areas restrictions were eased, while in other areas restrictions remained or increased. A cynic might say, that those who designed the so-called 'deregulation' were well aware of it's shortcomings but set it up as a means of discrediting free-market reforms. In the very least it illustrates the inherent shortcomings of political compromise and the short sightedness of the parasite, er, ah, I mean political class.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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