Sunday, December 21, 2008

And here I thought all costs are sunk

My latest post on the Blog at Mises.org:








And here I thought all costs are sunk

Jim Fedako


Not for state-regulated utilities. Last week I received my December natural gas bill and I was shocked at the rate, especially considering that natural gas prices have been falling. So I called the company. The office manager stated that the rate -- filed with the state PUC a month ago -- was based on the cost of natural gas purchased in the summer. Furthermore, the company does not have to file again until after winter ends.

The company is simply transferring the July natural gas price to me -- the consumer -- in December. And here I thought all costs are sunk.

Funny, the managers of my local gas stations can't pass poor price forecasting to me in the form of higher rates at the pump. Sure, they may try, but they face competition across the street -- and I can turn left almost as easily as I can turn right.

According to the Public Utilities Commission of Ohio: The PUCO was created to assure Ohioans adequate, safe, and reliable public utility services at a fair price.

But, isn't the market price the fair price?

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