The Consumer Republic: Freedom From Choice

My octogenarian father proudly announced to me the other day that he'd found the long-distance dial-up service that delivered the best value. "No gimmicks, no hidden charges," he bragged, proud to have outwitted disingenuous commercials. I was impressed, since I had neither the time nor the energy to wade through the seemingly endless promotions and ferret out the best deal. Perhaps I should put him on the case later this year when I'm called on to choose my power company. Like it or not, the deregulation of power is here. Deregulation's biggest selling point is that it's an enabler of choice. Yet thanks to the unceasing march of technology, our choice may have already been made. In the long-distance business, the monopoly-busting advancement was microwave transmission; in the power business, it's high-efficient, combined-cycle gas turbines. Thanks to this invention, mammoth manufacturers such as General Motors can now produce their own electricity for less than they've been paying the utility companies. And, as the saying goes, what's good for General Motors is good for the country. As the movement gathers speed, every household in deregulated markets will derive the benefits of cheaper electricity. Well, maybe. Skeptics argue that the real savings will go to wholesale buyers of electrical power, not to small businesses and residential customers. For example, deregulation usually requires that utilities, which will retain control of the grid, sell their generation plants. Unfortunately, utilities in states such as Illinois, California and Massachusetts have assets nobody wants: nuclear power plants whose electricity is too expensive to be competitive. Yet somebody's got to come up with the money when the bonds floated to build these white elephants come due. Even now there are utility companies in court making sure that customers, not stockholders, get stuck with the bill. There are other twists and turns to the power deregulation debate but I'll stop here, dear reader, for fear of being boring or overtaxing. When it comes to the subject of electricity, I figure you're just like me: As long as the light comes on when you flip the switch, you're happy. The beauty of our electrified world is that we don't have to think about it. Which is why, even if competition succeeds in knocking a few cents off every kilowatt we use, deregulation fills me with dread. Money is money, but freedom from yet another burden of choice is priceless. Apparently a lot of people are as unenthusiastic about this prospect as I am. Deregulation went into effect in California and Massachusetts last year. According to Wallace Roberts in The American Prospect, as of October 1, 1998, less than 1 percent of consumers in those states opted to change power suppliers. Unfortunately, this is the most ominous portent of all. As we know from our experience in the long-distance wars, the less interest we consumers have in a category, the more relentlessly we are flogged into paying attention. Commodities require more marketing, not less. I have visions of calls from power telemarketers interrupting the interruption of calls from long-distance telemarketers. I imagine the barrage of lower-price claims and counterclaims whose truth is impossible to determine. If only it were possible to assign a negative dollar value to the irritation, disruption and confusion inflicted on consumers by competition or tally what an educated choice costs us in time and effort, the economics of deregulation might look different. Already I see ads from power companies that, in hopes of creating a brand aura, assure me they care for my well-being and want to build our relationship. But I don't want a relationship. All I want is the blender to work when I press the button--and I've already got that. Given this attitude, you won't be surprised to learn that I've never joined a long-distance calling plan. I politely hang up on telemarketers soliciting my business. I toss away offers of $100 checks for switching companies. The result is that I and millions of other consumers who can't be bothered pay the highest rates possible for long-distance service. In short, we subsidize the rates of those with the time, patience and investigative skills to seek out the cheapest prices. Deregulation doesn't just permit consumer choice, it imposes a penalty on not choosing. In today's long-distance market and tomorrow's power market, nonchoosers do earn a benefit from the extra money their sloth and disinterest costs--though it's not better service, a higher quality product or a more meaningful relationship with a brand. Dial tone is dial tone, and electric power is electric power, after all. What we get is the freedom not to think about it. We pay a premium to preserve the simplicity the status quo ensures. To me, it's worth it, because the more complicated life is made by choice, the more valuable simplicity becomes.

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The Consumer Republic: Freedom From Choice

Debra Goldman

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Debra Goldman