Letter: Electric power shortage will hurt middle class

Wednesday, Feb. 23, 2000 | 9:36 a.m.

When deregulation takes effect, we will have a free market. Then supply and demand will regulate the price. If I own a hydroplant that produces electricity for 2 cents per KWH, and I'm selling in a market where wind power costs 10 cents per KWH, I will sell my water power for at least 10 cents and have at least a 500 percent profit. In a free market with a limited supply the price will always be at least as high as the highest cost producer. For example, crude oil is in a free market and right now a producer in Texas is receiving $30 a barrel for oil that sold for $10 a barrel two years ago.

The laws of economics say that if the cost to produce a product goes down and you have free access to become a producer, the price will go down. (Long distance phone and air travel). In the world of generating electricity, you cannot just go build a power plant because the public is afraid of nuclear plants; environmentalists are against hydroplants, they even want to tear down the Glen Canyon Dam; and coal plants are unacceptable due to air pollution.

That leaves natural gas/oil or nonpolluting (wind, solar and geothermal, etc.). However, these are expensive sources that take time to develop and may never provide the additional power needed.

If the cost to produce goes up and there is a shortage, the price of the commodity goes up until someone does without. In the case of electric power, the rich will buy theirs regardless of the price, the poor will get theirs from government-owned dams by way of welfare and the middle class will do without.

CARL GIBBONS