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Power Crisis: Joe Kennedy Discusses How Low-Income Customers are Coping with High Utility Bills

Aired January 4, 2001 - 2:30 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN, CNN ANCHOR: We have been talking about the situation in California, where the high cost of electric power there is about to higher in that state. We will have more about that in a moment.

Here on the East Coast unusually cold weather is leading to some very high utility bills this winter. How are low-income customers coping with it?

For some insight, we turn to Joseph Kennedy of the Citizens Energy Corporation. The group provides low-cost heating oil to the poor and elderly. The former congressman joins us from Boston.

Hello, nice to see you.

JOSEPH KENNEDY, CITIZENS ENERGY CORP: Very nice to be with you, Natalie.

ALLEN: Tell us, how many more people are asking for assistance this winter?

KENNEDY: Well, we have seen really record numbers of people that are having such a tough and difficult time for two basic reasons: first of all, we have the coldest winter, certainly November and December in over a decade here in New England. And we have also seen a very significant increase in the cost of heating oil and other fuels as well.

So, you know, people are getting hit by a double whammy of being not only colder, and therefore having to use more fuel, but the cost of the fuel they are using is significantly, up to 30, 40, in many cases 50 percent more than last winter alone.

ALLEN: Why is that? And do you see a change any time in the future?

KENNEDY: Well, obviously, the bulk of the reason has to do with the rise in the cost of basic feed stocks, which is driven by OPEC price increases. But there is also a lot of speculatory price increases that take place as well where people see shortages, and obviously, people in the money markets are able to then take advantage of the stock market, and affectively make a killing as a result of people having to buy additional fuel at higher prices. So there are steps that, I believe, the government should be taking, in order to mitigate and to lessen the impact, particularly on low-income families.

I mean, this is a very, very tough time, people don't understand that little old ladies on Social Security, their incomes don't go up at all when they have to pay hundreds of dollars more to heat their homes in the middle of winter. So they do face very serious problems, and they faces choices between paying for their prescription drugs, or enough food to eat, or to stay warm at night. It's a real crisis for low-income people, who often don't show up on the TV screen.

ALLEN: Right, and many people probably take their power for granted, their heat, their air conditioning, and now we have this situation in California, where we are seeing some people not have power for times, small businesses not having power, and that certainly is an economic problem. What do you think about the situation in California?

KENNEDY: Well, I think that, you know, basically the whole issue of the deregulation of electricity is a controversial one. There had been, I think, an instinct, after watching what happened in the trucking and the airline and the telephone industry that, once these major industries in the United States have developed, and have no longer require government subsidies to be able to reach all of the corners of America, that there is an instinct that we would like to have those businesses deregulated.

The problem in California, of course, is that they deregulated at the time when they weren't building any power plants. At the same time, the economy of the country, and in California in general, took off, and at the same time, the Internet economy, which uses a tremendous amount of electricity, took off. So you had a situation where it appeared a couple of years ago that there was an excess supply of electricity, when in fact by the time deregulation kicked in there was a shortage of supply. So, therefore, the utilities, themselves, have to purchase additional juice on the spot market, and again, those spot market speculators are able to make a killing at the hurt and pain of many people and small businesses and vulnerable people that live in the state.

ALLEN: Joe Kennedy, we thank you so much for joining us and talking with us today.

KENNEDY: Very nice to talk to you, Natalie.

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