|Bigger is better?|
|In case you don't remember, perhaps 10 years ago, there was a company called Enron that was in the business of buying and selling electricity. When the government was in the process of "deregulating" utility companies, supposedly to spur competition and lead to lower rates, Enron devised a "shortage" of electricity, leading to prices 10 times higher than they were! I don't recall all the details of what happened, but they went bankrupt, with the big wigs walking away with millions, and the shareholders, screwed.
For the longest time, the utility company that provides our electricity and natural gas, was called Wisconsin Public Service Corporation (WPS). At around the same time of the Enron ordeal, instead of us just having WPS Corporation, we also got WPS Resources, and WPS Holding Company. I'm no expert on what that all means, but if I got it right, WPS Corporation is a "regulated" division, and WPS Resources is a "non-regulated" division of WPS Holding Company. And I see "WPS Transportation Company" painted on their service trucks, too. My guess is that having all these divisions allows them to get more money from the customers, through various loopholes in the law.
Around the beginning of 2007, one of the WPS's, I think WPS Holding Company, merged with People's Power Company in Chicago, forming Integrys Energy. (Don't confuse Integrys with Enron, they are different. Integrys has 3 syllables, and Enron only has two!)
Within a week, two at the most, after the merger was completed, the accountants for the new company "discovered" that back in 1995 and 1996, People's Power failed to charge the maximum allowable rates for electricity! The share-holders were entitled to an 11% or so return on investment, but only received 5% or so. That was 12 years ago, but resulted in immediate steps being taken to raise the rates now to make up for it.
That's kind of like getting a phone call from Sears saying they didn't charge you enough for that new lawnmower you bought 12 years ago, so they are sending the collection agency over to get it now! (Remember, Integrys and Enron are not the same, they are spelled differently!)
And, around the same time the merger was completed, WPS sent out notices that they failed to charge Wisconsin customers the maximum allowable rate for natural gas last winter do to a software malfunction, so you have to pay it now.
Pretty soon the grocery store will be doing that too. "Oh, by the way, that bag of cat food you bought last year was $20, and we only charged you $10 because our cash register wasn't properly programmed. So you owe us ten bucks" (Remember, Integrys is not the same as Enron, they are pronounced differently!)
Now about 5 months after the merger, the local newspaper prints that 'Integrys stocks are way up....largely do to rate increases'.
So much for the "competition" and lower rates and all that. I'm sure that mergers really create lots of competition, by having everthing owned by the same company. (I can't think of anymore differences between Integrys and Enron right now. If I do, I'll let you know!)
It's 6 months later, and I just came across some more news on this subject. In October '07, Integrys says a lightning strike damaged one of it generating stations near Weston, Wisconsin. In years gone by, a lightning strike to utility equipment would blow out perhaps a hundred-thousand dollar transformer, at the most. But they seem to be following in the steps of the oil companies now. They're claiming millions of dollars damage to generators, turbines, and oh yeah, even the boiler! Gonna take months to fix it, and in the mean time they're going to have to buy electricity from elsewhere to make up for the lost generator, at a cost of 16 million dollars! And of course, they be filing for a rate increase to make up for it. Remember, Enron and Integrys are not the same, their logos are a different color!
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