Securitization swindle: Bailout for utilities, bad deal for consumers
Securitization bonds can be described metaphorically as `neutron bonds.` Generating assets and corporate profits of incumbent, high-cost utilities remain intact, while both consumers and competitors are eliminated by the surcharges imposed to amortize the bonds. Securitization is so anti-consumer and so anti-competitive that it demands more considered public attention. Just when you thought consumers and competitive commerce could emerge as big winners in a restructured electric utility industry, high cost utilities and Wall Street have invented {open_quotes}securitization{close_quotes} of {open_quotes}stranded cost recovery{close_quotes}. Customers are told they will get to choose their electric suppliers and lower prices. In reality, they are about to be swindled. Under the guise of a minuscule reduction in electric rates, high cost utilities are to be provided a multibillion dollar up-front, cash-on-the-barrelhead bailout of their uneconomic, unfortunate past management decisions. What is obscured in the process is (1) that the rate decrease being offered is far less than customers could enjoy in an undistorted competitive market and (2) that the receipt of a heap of cash up front is a far better deal for high cost utilities than the cash flows they would experience through continued traditional regulation. Moreover, the anti-competitive aspects of securitization are so profound that they virtually guarantee that today`s inefficient high-cost utilities will control tomorrow`s generation supply.
- OSTI ID:
- 569350
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 8 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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