Pennsylvania’s Organized Market Thriving, Says Public Utility Commissioner

Pennsylvania has one of the most dynamic and robust competitive retail markets in the nation, declared Robert Powelson, Pennsylvania Public Utility Commissioner. Powelson wrapped up an exciting opening day at KEMA’s 21^st Executive Forum by leading a panel discussion on the outlook for competition and choice in Pennsylvania.

Regulatory certainty from the state public utility commission (PUC) is creating stability and enabling competition’s benefits to flourish. “The numbers tell the story right now,” said Powelson. Beyond the success in PPL Electric Utilities’ territory, restructuring’s results prove a powerful point:

• Customers have enjoyed 10 years of stable rates and saved over $7 billion
• Generation sources have increased their operational efficiencies
• Before competition electric rates were 15 percent higher than the national average, but are now well below the national average

Leggett & Platt supports well-structured competition in organized markets like Pennsylvania because they provide clear economic benefits. “When adjusted for inflation, today’s residential electricity rates are either largely unchanged or lower than before competition,” said Powelson. These markets unbundle opaque monopoly-protected pricing, create market transparency and eliminate supplier cost-shifting between customers and classes of customers. This means both residential and commercial and industrial customers benefit. For example, Leggett recently took advantage of retail choice for its manufacturing plant in Berwick, PA to switch to a competitive supplier on March 1^st.

Competitive electric markets also encourage investment in generation resources. “Eight thousand megawatts of new generation have been brought online by non-incumbent generators,” said Commissioner Powelson. The success in generation investment brings another advantage of competitive electricity markets into play – shifting the risk of supply-side investment from utility ratepayers to private investors. Unlike ratepayers captive to monopoly-protected utilities, customers in well-structured competitive markets are not saddled with the cost of poor utility investment decisions.

Finally, competition fosters innovation along the entire electricity supply chain from generator to consumer. Smart grid technologies and behind-the-meter energy efficiency and management solutions are evolving through well-structured competitive electricity markets. In other organized markets across the country, Leggett participates in energy efficiency upgrades and employs demand management strategies to move energy consumption to lower-cost periods.

Policy makers in state legislatures and public service commissions play a vital role toward facilitating successful energy markets. It’s important to remember these markets are not “deregulated” as some suggest, but are well organized and regulated to offer consumers more choices with increased individual and societal benefits.  Leggett commends Commissioner Powelson and his fellow commissioners for their leadership and continued support of retail choice, because consumers are the ultimate winners of electricity competition in Pennsylvania.

By Steve Elsea, Director of Energy Services, Leggett & Platt, Inc.  Leggett & Platt, a member of the COMPETE Coalition, is a diversified manufacturer that conceives, designs and produces a broad variety of engineered components and products for customers worldwide. Joel Malina | April 1, 2010