ENERGY: Leaning on the Consumer

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Hard Realities. The deal has aroused a storm of protest. Especially outraged are older persons on fixed incomes who may not live long enough either to use the new gas or get their money back. They have banded together with other consumer groups in a new organization called CAUSE (for Campaign Against Utility Service Exploitation). CAUSE is backing a bill in the California legislature that would set special low rates for both individual and industrial customers who use minimal amounts of gas. An effort is also under way in the legislature to enact an involved scheme under which taxes would be eliminated on the surcharge levied by SoCal Gas on consumers, so that SoCal Gas would not have to collect almost $2 for every $1 to be advanced to Arco. Nonetheless, the SoCal Gas-Arco deal reflects some hard realities: 1) the nation currently faces a severe shortage of natural gas—supplies this winter, in fact, are expected to fall 15% to 30% below demand; 2) developing new supplies is expensive; 3) federal controls, by keeping the price of gas artificially low, are pushing producers and users into odd methods of raising the money—at the consumer's expense.

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