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Thursday, January 05, 2006

The Problem with Monopolies

This is just one more reason we need to push for more free trade / free market, not less. When companies, through what ever means, gain monopoly status things like this happen.

TMWA didn't need rate hike, audit says (RGJ.com)

The Truckee Meadows
Water Authority ignored significant revenue from developers in justifying its
past two rate increases -- money that could have been used to avoid hiking rates
for consumers, according to a state audit released Wednesday.
The audit
found TMWA is in strong financial shape, but noted that while its customers are
paying higher than average rates, the utility continues to underestimate how
much money will come from charging connection fees to builders. (more)

They were already in great shape financially and yet they decided to raise the rates, simply to get into "better financial footing". Usually I would agree, if a company can make more for what they provide, more power to them, but when you hold a monopoly on an area those same rules cannot apply. At some point these monopolies make record profits by standing on the backs of the common consumer that has no choice but to use their product.

Utility monopolies are not free market or free trade and need to be watched very closely.

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