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HEA has been granted the status of a public utility by the government officials elected by the citizens to be serviced by that utility. HEA has been granted the right to the sole provider of electricity, excluding any competitors, to its service area because of the necessary extremely high fixed cost of providing electric service to all customers in a large area. Allowing competing providers of electricity would require expensive duplication of generating plants, power lines, and service facilities that would substantially increase the cost of providing electricity to the public.

HEA has been granted monopoly status by the public, in exchange for an agreement by HEA to provide reliable electric power and service to its customers at a low cost as reviewed by regulators indirectly elected by HEA's customers. In return HEA's customers have agreed, through their elected officials, to be charged electric rates that will guarantee the monopoly, HEA, a rate of return on HEA's invested capital that will exceed all of HEA's total average costs over time -- guarantees HEA a low profit because HEA's invested capital is at low risk of nonrecovery since the public has agreed to forbid any competing electric providers.

Those customers of HEA who become dissatisfied with the cost or quality of HEA's service have virtually no ability to switch to alternate electric providers since the customers have granted HEA monopoly status. To resolve their dissatisfaction, HEA customers must file complaints with HEA and then if still not satisfied, the customers' only avenue of appeal is to the indirectly publicly elected government utility regulators.

As I understand the proposal being considered by HEA management, the customers of HEA would lose Their only avenue of appeal if they are not satisfied with their treatment by HEA. The cost saving concept of HEA self-regulation would have some logical benefits if the customers of HEA had the right to choose an alternate electric provider. But HEA customers have contractually agreed with HEA to forfeit their right to choose a competitor.

Has the folly of "taxation without representation" been repealed?

George D. Barnes, CPA

Sterling