Putting the Squeeze on Rural America:
Electric Utility Deregulation


The fact that the number of family owned and operated farms is declining in Texas and the rest of the country's map is no secret. In 1935, there were 6.8 million farmers. By 1987, that number had dropped to a little over two million. Since then we have lost 200,000 more, meaning American farmers now make up less than 1 percent of the population .

Statistically, farmers are getting older, too, with the average age of the farm operator now at 57 compared to the national average age of the American worker of 25 years younger. Life in rural America is definitely not getting any easier.

Headlines in major magazines across the country have announced that "Americans are working harder for less." This is certainly the case for family farmers. In 1993, the family farmer's net yearly income was $4,400, while the average net yearly income for the rest of the U. S workforce was $35,000.

And yet few professions in this country contribute as productively and efficiently to America's prosperity and to the nutritional health of this country as the American farming industry.

Still, assaults on rural America in the name of efficiency and competition continue. In 1996, Congress passed a seven-year farm bill that will systematically eliminate any safety net for family farmers and will set up a new system in the name of competition, that is certain to cause a continued downturn in the number of farmers in the United States.

Next on the crisis list for many rural Americans: federal deregulation of the electric utility industry. The fact is, there are many rural families who are one step away from a life of poverty and many family farmers who are one electric bill increase away from foreclosure. For these Americans, an increase in their utility costs could be the final straw. That is exactly what could occur with rapid, forced deregulation of the electric utility industry

As is often the case, this effort to mandate federal deregulation pits the Fortune 500 companies against everybody else. In terms of electricity policy, it is a case of the haves and the have-nots The giants of industry want Congress to deregulate electricity because it will lower their rates -- electric suppliers will then compete for that business because manufacturing uses so much electricity.

But homes, small businesses, and farmers in rural areas are all much less desirable customers. Power providers are not expected to rush out to rural Texas in order to solicit customers where there are an average of only six electric users per mile. So electricity rates will go up for rural customers, placing yet one more burden on farmers in this state.

Another factor that could contribute to higher rates for small customers is something called "stranded investment." These are the costs regular customers will have to pay when manufacturing or other industrial customers switch to a different electric supplier to find a cheaper electricity -- an activity known as retail dereg.

The original power supplier will still have to pay for plants, transmission lines and other facilities it built for large customers and is going to have to collect that money from somewhere. Unless protection is provided at the local level, that somewhere will be its remaining customers. Us.

Compounding the problem is the very real possibility that the utility companies now serving family farmers and rural communities may find it no longer economically viable to do so under deregulation. Their departure from less profitable rural areas could severely limit our ability to receive the reliable and accessible electricity we need to keep our farms productive and our families warm.

Worse, deregulation could do further harm by forcing rural Americans to buy power from fly-by-night power companies that enter local rural markets, offer lower rates, and then disappear, leaving us literally in the dark.

We believe that federally mandated electric utility deregulation represents an attempt by Congress to fashion a one-size-fits-all policy whose outcome unfortunately will be detrimental to some regions and beneficial to others

Our average residential rates are currently lower than many states. Industrial customers already pay an average three cents less than that per kilowatt hour. We don't want to pay the higher rates that people pay in California or the Northeast, and Congress should not mandate that we do so.

Our goal is to make sure that rural citizens, like our urban counterparts, are able to enjoy the same quality living standards that we have enjoyed for generations. Our goal is to insure that farming continues to play an integral role in the future economic prosperity of this nation. We believe rushing electric deregulation seriously threatens those goals. And that is why we oppose federal deregulation of the electric utility industry.

Wes Sims is president of the Texas Farmers Union, based in Waco.

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