Deregulation has not left consumers smiling about prices, service, and choice, report shows

YONKERS, NY, June 10, 2002 — Broken promises, deceptive marketing, and dreadful service have become accepted business practices in an increasingly Wild West marketplace, a new report on deregulation of several industries asserts.

Deregulation of multiple markets in the US was supposed to cut prices, expand choice and enhance service, according to the Consumer Reports’ July 2002 report entitled “Deregulated.”

But the report’s section on electricity summarized the market as follows:

“Wholesale electricity prices were deregulated in 1992. Rates have fallen in some states due to regulated cuts, not free markets. Customer satisfaction ranges widely. There are new rights on billing and slamming. The safety infrastructure has remained regulated. Residential choice is abundant in some states, limited in others. Innovations include some ‘green’ energy choices.”

The report takes a closer look at five industries where deregulation has had a direct impact on consumers: airlines, telephone, cable TV, banking, and electricity. For each they assessed six key measures-savings, service, consumer rights, safety, choice, and innovation-and dug for data in over a hundred public and private studies.

“Our research concluded that while consumers have made some gains under deregulation, on balance they’ve lost ground. Service has typically deteriorated. Consumer rights have sometimes suffered. Claimed price cuts are often not all they seem. And when free markets have gone bad, deregulated industries have seen no contradiction in getting multibillion-dollar government bailouts,” reports Jeff Blyskal, Associate Editor at CR.

“The Consumer Reports mailbag is overflowing with complaints about these deregulated service industries,” said Consumers Union President Jim Guest. “Twenty percent of the letters from our readers focus on everyday frustrations such as price-gouging, confusing phone bills, skyrocketing cable rates, paying more money for using less electricity, and ever-expanding bank fees.”

Guest said there are only so many options available to individual consumers, so the answer should be strong and effective government oversight.

Consumer Reports recommended that elected officials:
* Regulate monopoly markets when there’s not enough true competition.
* Enforce antitrust laws vigorously.
* Provide strong consumer safeguards, such as a truth-in-airfares disclosure and a passengers’ bill of rights.
* Reintroduce legislation such as a bill from 2000 that would have allowed state attorneys to initiate enforcement action under federal consumer protections.

“Deregulation should never be no regulation. Free markets are always changing, and government must play a firm and steady role in protecting consumers from unfair practices,” said Guest.

To subscribe to Consumer Reports, call 1-800-234-1645. The July 2002 report “Deregulated” is available free of charge at http://www.ConsumerReports.org.

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