Tocque Deville has shamed me into writing about the repeal of a 1935 utility regulation, called The Public Utility Holding Company Act (PUHCA).
But first, I’m going get all philosophical on your ass.
Let’s be frank, forget Iraq. American oil does not belong to the American people. Neither does our coal, copper, lead, molybdenum, phosphates, uranium, bauxite, gold, iron, mercury, nickel, potash, silver, tungsten, zinc, natural gas, or timber belong to us. It belongs to the great, great grandchildren of people like Deadwood’s Al Swearengen.
We can clearly see how today’s energy moguls are direct descendants of Swearengen by comparing the following:
Cheney, who as president of the Senate was present for the picture day, turned to Leahy and scolded the senator over his recent criticism of the vice president for Halliburton’s alleged war profiteering.
In response to Cheney, Leahy reminded Cheney that the vice president had once accused him of being a bad Catholic, to which Cheney replied either “f— off” or “go f— yourself.”
Public ownership of natural resources is not the American way. The oil in the ground and the gold in them thar hills has always been the property of the enterprising souls that rolled up their sleeves, drove off the Indians, and found it for themselves. These mini-conquistadors thrived in the libertarian paradise of the Wild West. And while New York bankers consolidated most of their gains, a few of them retained their own stakes and became the power elite of the emerging West.
The history of energy utilities is complicated and I can’t give a comprehensive history here. For a good overview of the economic landscape that led to the passage of the PUHCA, see Meteor Blades recent article.
Briefly, in the 1920’s Sam Insull and J.P. Morgan and a few other East Coast bankers began buying up utility companies and created a classic pyramid scheme. Much like cable television, by the very nature of the method of its distribution, the distribution of electricity is a monopolistic enterprise. But unlike cable television, we don’t have the option to go without electricity. We are captive customers and we are forced to buy electricity at whatever price it is made available.
So, the American public not only has zero ownership of the country’s sources of electricity, the owners of the power grids can charge us whatever they want because there is no competition for their services. That is, they can charge us whatever they want unless the government steps in and regulates the industry and provides some consumer protection against gouging.
That is what FDR did when he signed the PUHCA into law. And the law has been effective for 70 years:
That is all going to change now that the PUHCA has been repealed by the passage of Dick Cheney’s energy bill.
The repeal removes obstacles to utility corporations owning non-regulated businesses. It will lead to a rapid series of mergers and acquisitions, including by foreign owned corporations. It will become increasingly difficult for state and federal regulators to exert control. These new mega-corporations will have a powerful incentive to squeeze out innovators in alternative energy and maintain our reliance on fossil fuels and foreign oil and gas.
The repeal of the PUHCA is bad for consumers and it’s bad for the environment. The big mystery is why the vast majority of Americans never question the private ownership of all our natural resources, while we think Iraq’s oil should belong to Iraqis.