In case you missed this - interesting perspective.
---------------------- Forwarded by Peggy Mahoney/HOU/EES on 08/28/2000 01:26 
PM ---------------------------


kpope@enron.com on 08/28/2000 11:45:00 AM
To: <pmahoney@enron.com>, <meberts@enron.com>, <kpope@enron.com>
cc:  
Subject: Industry News: Consumers Grow More Anxious As They Are Cut Loose In 
<B>Electricity's< ...



fyi from kpope@enron.com

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Headlines:
Consumers Grow More Anxious As They Are Cut Loose In <B>Electricity's</B>
New
Free Market

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  Metropolitan Desk; Section 1
Feeling Powerless In
Consumers Grow More Anxious As They Are Cut Loose In <B>Electricity's</B>
New
Free Market
By KIRK JOHNSON

Aug. 27, 2000
New York Times
Page 29, Column 2
c. 2000 New York Times Company

   Over the last 20 years, a dogma has taken root in America that says
people would be happier and better off if they were all continually
shopping for the best deals. Consumers, according to this theory, should
be empowered and freed from the old business monopolies and the dictates
of fussy bureaucrats.



  So airlines were deregulated, and telephone service, and then the
Internet arrived, giving people the ability to choose from 10 different
sellers of the same merchandise. The bull market on Wall Street brought
5,000 mutual funds begging for attention. Having more choices became an
end in itself.

   But for millions of people, especially in New York and California,
the doctrine of the sovereign consumer has come into question this
summer around a commodity that most had taken completely for granted:
<B>electricity</B>. A recently deregulated <B>energy</B> market, which was
supposed to
increase choices and reduce prices, has, for most residents, done
nothing of the kind. Many community leaders and politicians, calling for
investigations and caps on rising <B>electricity</B> bills -- up 30
percent to
40 percent from those of last August in many areas -- have denounced
<B>energy</B> <B>deregulation</B> as either a failure or a fraud.
   Some social scientists say that the anxiety over <B>energy</B> is
exposing
something even deeper in the human wiring. At a time when protesters
have railed in Seattle and Washington against chain stores and global
branding, and prominent social critics have denounced the intrusion of
endless choice into every corner of life -- a phenomenon that Barry
Schwartz, a psychologist at Swarthmore College, calls ''the tyranny of
freedom'' -- the public's worries about <B>electricity</B> may say more
about
human nature than about kilowatts.
   Perhaps, this alternative theory says, there is a point at which
people no longer wish to be autonomous, rational consumers at all. Maybe
they would just as soon delegate their decisions regarding some
transactions, as they did when Consolidated Edison was the only game in
town and government was assigned to make sure that the company played by
the rules. Maybe when it comes to <B>electricity</B>, a mysterious and
dangerous thing that is also the foundation of modern living, Americans
are just a little afraid to be alone.
   ''In the past we trusted that state regulators who were appointed by
our elected officials were watching out for us, which may or may not
have been true,'' said Edward A. Smeloff, a former utility industry
official who runs a research group on <B>electricity</B> at Pace
University.
''The new model is, 'Figure it out for yourself.' ''
   Some economists and <B>energy</B> industry experts say the sense of
powerlessness and confusion that many people feel is perhaps as much a
source of anxiety and anger as higher <B>electricity</B> bills. The
players
have all changed and no one seems to be in charge.
   The old Brooklyn Union Gas Company, for example, still remembered by
many New York residents for the fuzzy, feel-good images of its
advertising, has become the cool and metallic-sounding KeySpan
<B>Energy</B>.
The old Con Ed, on the other hand, was like a crotchety grandfather who
sometimes had to be prodded and yelled at, but who nonetheless presided
over the system.
   The company now throws up its hands  and says it is not responsible
for recent price increases; Con Ed's wires are simply a delivery
mechanism for the unregulated corporations that own generating plants,
Con Ed's chairman said at a recent hearing at City Hall.
   Opinion poll takers say anxiety about deregulation may also have
something to do with a contradiction in the American psyche that they
say has opened up in recent years, a contradiction about what people
really want. Surveys conducted by Yankelovich Partners, a research and
consulting firm based in Norwalk, Conn., have said, for example, that a
majority of people want more control over the details of their lives,
but a majority also want to simplify their lives, a result that Barbara
R. Caplan, a partner at the firm, has called ''the paradox of our
time.''
   Deregulated <B>energy</B> arrived right in the middle of those
conflicting
goals; because only a handful of <B>energy</B> competitors have been
attracted
to the New York market, most people still do not have much choice in
their <B>electricity</B>, and yet it all seems more complicated than ever,
as
well as more expensive.
   Another factor, some researchers say, may be a result of timing.
People have had experience with deregulation, and they have seen that it
did not always unfold to their benefit. The hub-and-spoke system
developed by the airline industry, for example, has given airlines
near-monopoly power at many airports around the country, resulting in
less competition, not more. Consumers have also seen that although tools
like the Internet have made buyers more powerful in getting good prices,
corporations on the other side of the transaction have become more
powerful, too, in gathering information about them.
   ''Years ago, you went into an auto dealership and had to negotiate to
buy a car, but only the corporate side had knowledge of what the real
costs were,'' said Mark L. Gillenson, a professor of management
information systems at the University of Memphis. ''Now you go into the
Internet, and lots of places will give you that information for free.''
On the other hand, Professor Gillenson said, the data that corporations
are collecting about people are creating what the old car dealer could
never have imagined: knowledge about what people want before they even
ask.
   Lurking behind all those forces, some psychologists say, is the
growing sense that people are simply being asked to decide too much.
Economic deregulation has accompanied what may be called social
deregulation, as issues that were not even considered decisions in the
past  have become issues of conscious choice: whether to get married and
have children, or how to express oneself sexually, as gay, straight or
somewhere in between.
   And the more choices there are, the more it can seem possible to
achieve an ideal result in every case, leading to a doomed, treadmill
kind of behavior often seen in people who continually change their
long-distance telephone service as they endlessly seek an incremental
price advantage.
   ''Over what domains in life are you supposed to have control?'' said
Professor Schwartz, the Swarthmore College psychologist. ''Nobody gets
depressed when you can't control the weather, and years ago nobody got
depressed because they couldn't control your telecommunications or
<B>electricity</B> either, because those things couldn't be controlled,''
he
said. ''But now you can, or you're told that you can, and so you're
going to be continually frustrated.''
   And <B>electricity</B> is also just different. Unlike a telephone call,
or
an airline ticket, nobody ever really wants to buy <B>electricity</B>
itself --
rather, people buy its expression and result: a cold beer in the fridge,
a light to read by. By the standards of American marketing, it is barely
a product at all.
   ''People want to make choices about clothes and restaurants and what
houses they live in, but a lot of us would rather not be bothered with
having to make a choice about <B>electricity</B>,'' said Wendy Kaminer, a
public policy fellow at the Radcliffe Institute for Advanced Study in
Cambridge, Mass. ''It's not a desire to be disempowered,'' Ms. Kaminer
added. ''It's a desire not to be bothered.''
   Finally, some experts think that the long bull market for stocks, in
which share prices mostly just go up, has made people forget a
fundamental truth about how markets work: they are genuinely fair only
over the long run, while at any given time, there are likely to be as
many losers as winners.
   ''Deregulation and privatization were sold implicitly on the
assumption that everybody can win from this, but I'm hard pressed to
find an example in the real world where that has happened,'' said Willis
Emmons, a professor in the strategy, public policy and ethics department
at Georgetown University's business school. Right now, Professor Emmons
added, ''maybe somebody is winning, but it isn't the consumer.''


NYTF0024000432


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