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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Peggy Mahoney X-To: Steven J Kean, Mark Palmer, Karen Denne, Elizabeth Tilney, James D Steffes, Richard Shapiro X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Calendar\Untitled X-Origin: KEAN-S X-FileName: skean.nsf 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 ------------------------------------------------------------------- E-mailed by: Dow Jones Interactive (R) Server Software Folder: Industry News ------------------------------------------------------------------- Headlines: Consumers Grow More Anxious As They Are Cut Loose In <B<Electricity's</B< New Free Market ------------------------------------------------------------------- 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 To view all headlines in the folder Industry News, go to http://eeshou-dowj1/browsearticles.asp?folderid=1 To go to the front page of Dow Jones Interactive Intranet Toolkit Server Software, go to http://eeshou-dowj1/ ------------------------------------------------------------------- For assistance, contact Dow Jones Customer Service by e-mail at djip.itkhelp@dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada, call 609-452-1511 or contact your local sales representative.) ------------------------------------------------------------------- Copyright , 2000 Dow Jones Reuters Business Interactive LLC. All Rights Reserved.
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