Marc Gunther on GE and DC, and how to reduce the influence of special interests

Michael Giberson

I complained the other day about a modest little $13 million grant of U.S. taxpayer money to General Electric for some research into high temperature electronics.  The electronics are intended for deep well drilling applications such as for oil and gas or geothermal resource development.  The program is just one of many, many connections between GE and the federal government in Washington, DC.

Marc Gunther provides a more complete assessment of the GE-DC link under the heading “GE and Washington: Too cozy?”  Gunther notes that GE’s performance since Jeffrey Immelt became CEO in 2001 has lagged the market as a whole.  He sums up a lengthy post, worth reading in its entirety, with the following observations (emphasis added, link in original):

I don’t know GE well enough to say whether there’s a connection between GE’s focus on Washington and its subpar performance. Certainly questions could be asked (by the board?) about whether GE executive time and shareholder money might have been better spent elsewhere—developing new products, say, or improving service to customers. To its credit, GE has sustained a big, global R&D operation while other companies have cut back.

I do know that as the federal government grows in size and influence, corporations will spend more of time and money in Washington. (The Times reported today that the health care and insurance lobbies spent more then $648 million in 2009.) Business will also do more to influence elections, particularly after the recent U.S. Supreme Court ruling.

What to do? Surely one way to reduce the influence of special interests in Washington is to give them less government to be interested in.

The REVISED history of electric competition in Lubbock

Michael Giberson

At the time of the initial announcement that Lubbock Power & Light would acquire the distribution assets of competing electric utility Xcel within the city, leaving LP&L as a monopolist, I took note of several inconvenient statements about the benefits of competition included in official LP&L history.  (See “The (soon to be revised) history of electric competition in Lubbock,” November 5, 2009.)

At the time I wrote, “I’m guessing the official story is about to change.” Guess what? Now available on the LP&L website, a somewhat revised version of the document, “The History of Lubbock Power & Light.”

Here is a comparison of selected old and new paragraphs from “The History of Lubbock Power & Light.”  Old first paragraph (emphasis added in this quote and in quotes below):

In the electric utility industry, retail competition for electric customers is a relatively new concept. Not so in Lubbock, Texas. The good people of Lubbock have benefited from retail competition for electricity since 1916.

In the new history the first two sentences are:

Lubbock was a relatively new town at the time having been created in 1891 when two smaller settlements both moved their towns from several miles away to our present location. The first county court house was built at this time with the county itself having been created in 1876 by the Texas State Legislature.

Obviously a shift in emphasis (and a somewhat awkward first sentence) produced by the revision.

The old version of the history noted that the emergence of competition in the city immediately produced lower rates. This paragraph remains the same in both versions:

The effort by those early Lubbock leaders was realized a success on September 28, 1917 as the municipal power plant began producing electricity priced at only ten cents a kilowatt-hour. The other utility cut its rates accordingly soon after. Imagine that!

In the older version of the history, that early success was followed by a report of steadily falling prices in subsequent decades and then the following claims about the continued value of competition: low rates and high quality customer service:

Today, the vast majority of Lubbock remains dual-certified and customers still have a choice of electric utility providers. Customers whose account balances are current are allowed to switch from one company to the other at their discretion. The competition for the electric dollar in Lubbock has resulted in some of the lowest electricity costs in the state of Texas and in the nation. Another major benefit of competition is that customers enjoy increased levels of customer service than would be found in cities this size with only one electric provider.

Lubbock Power & Light’s mission is to provide low cost, reliable electric service. We feel we’ve been successful in that mission. All electric customers in Lubbock have benefited from the decision of those early pioneers to begin retail competition.

In the new view of Lubbock’s electric power history, the report of steadily falling prices jumps directly to a claim about LP&L’s mission:

Lubbock Power & Light’s mission is to provide low cost, reliable electric service. LP&L has competed with many private companies, but in the end the majority of the customers have chosen LP&L, leaving the private companies looking for other options.

Compare the final sentence above, in bold, with the final sentence in the old paragraph.  The old paragraph emphasizes the benefits to consumers, while the new official story shifts the viewpoint to that of the utilities.  The shift seems to me a possible harbinger of the future of utility service for LP&L customers: a shift in viewpoint from customer benefits to a utility perspective.

UPDATE: Link to a copy of the history of LP&L showing the post-November 2009 changes.