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Everybody is talking about Enron, the energy-trading company that collapsed into a black hole that also sucked in its employees’ retirement funds and has exerted a powerful pull on millions of other stock portfolios. People who had never heard of Enron very quickly discovered that a) they owned it, and b) it wasn’t worth a cent. That was a painful discovery on top of the losses almost every investor experienced last year. Right now there’s considerable discussion about the folly of coupling investment and employment in the same corporation, and some people are lobbying congress to change the rules that allow it. Other questions center on whether regulatory oversight of Enron, which was a huge corporation and therefore a powerful economic force, was sufficient. It seems clear that it was not. But the third area of debate — the one that deserves more attention than it’s getting — is whether this could happen again, even closer to home. A couple weeks ago, when the directors of Empire Electric in Cortez voted to raise rates approximately 15 percent, there was some murmuring about paying the price for the failed REAnet, a telecommunication subsidiary shared by Empire and La Plata Electric that went bankrupt last year. The two electric cooperatives partnered to form the for-profit REAnet in an attempt to bring high-speed telecommunication services into this area. The profits generated from that entity were supposed to help rural electric co-ops survive electric deregulation. We know now what we didn’t know in 1978. California has struggled with deregulation, which is no longer held up as the model to save all of us from the utility monopoly. Enron, which would have profited from a deregulated climate, is gone. The Four Corners still does not have high-speed telecommunications. Electric rates are going up, and some creative rationale is being used to keep utility payments separate from the REAnet morass, for which Empire owes $7.5 million. Does that mean Empire and La Plata shouldn’t have done what they did? Not necessarily. Hindsight is always 20-20, but wide-angle hindsight will tell us that nothing is ever gained without first being ventured. Southwestern Colorado, for all that we love it and wouldn’t live anywhere else, is not one of the most prime markets for high-speed communications. The terrain is rugged, which makes provision of such services extremely expensive. The demand, while vitally important to us, isn’t concentrated enough to provide a great return on anyone’s investment. Yet if we’re ever to enter the 21st Century, investments must be made, and some of them will fall short of their goals. That’s the reality of capitalism. While we can debate long and hard whether public utilities should be capitalistic entities, the fact remains that they’re uniquely positioned to provide much-needed telecommunication services that in more densely populated areas might be subject to a bidding war. REAnet isn’t Enron. It may not have been the wisest plan, but it also wasn’t a gigantic construction of smoke, mirrors and shredded documents. When the REAnet bankruptcy is resolved later this winter, fiber-optic connections may yet materialize. No matter how far-sighted leaders are, they may not be able to see around the next bend. Local electric utilities are still looking forward, while Enron executives are looking back trying to figure out how to cover their own tracks. What we need is oversight to keep risks to manageable levels, while encouraging innovation.
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Copyright © 2001 the Cortez
Journal. All rights reserved. |
