Putting the Squeeze on Rural America:
By WES SIMS
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
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
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
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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