About seven years ago, a small group of employees from different electric utilities ran into each other during an out-of-town conference. As they stopped to chat in a hotel hallway, those from a city investor-owned power company told those from the Kentucky electric co-ops that they were going down.
It was a time of deregulation fever. New rules allowing competition, so said the popular wisdom of the time, would lower bills for ratepayers. Large, aggressive utilities would get larger and richer. Smaller utilities not driven by profit motives would be forced out of businessï¿½especially if they dared to question the deregulation gospel that promised something for everyone.
Of course, a lotï¿½s happened since then. Real life has shown that carrying out deregulation theory is more complicated than a bumper sticker slogan. If anyoneï¿½s gone down itï¿½s been the overly aggressive utilities that rushed into expensive ventures without examining all the risks. Electric co-ops, which took a more thoughtful, careful approach, are doing very well these days.
Iï¿½m reminded of this story by news accounts of phone transcripts among Enron employees. Those conversations show that people who worked for the giant utility thatï¿½s since crashed into scandalous bankruptcy thought it was pretty funny that they were profiting off of Californians having to pay their high electricity prices.
On one level all this makes me mad and tempts me to want to say, ï¿½I told you so.ï¿½ In a more constructive way, I think there are some worthwhile lessons here:
ï¿½ Self-confidence is good. Arrogance is bad. How do you tell the difference? Arrogance starts when self-confidence stops listening.
ï¿½ Beware of bandwagons. Your parents told you about this through countless clichï¿½s: ï¿½If everybody was jumping off a cliffï¿½ï¿½ Even grownups have trouble resisting peer pressure. Doing the right thing can take a lot of, well, self-confidence.
ï¿½ Thereï¿½s a lot of wisdom in how co-ops are structured and organized. A local, not-for-profit utility owned by everyone who buys its electricity can act a lot smarter than its better-financed cousins. A utility beholden to its customers, rather than shareholders only interested in profits, can more easily step back from business fashions and consider what is best for its consumer-members.