Pennsylvania Should Not Deregulate Electric Rates
Pennsylvania Should Not Deregulate Electric Rates
By William L. Massey
The Bulletin, PA
February 11, 2009
To the Editor:
In response to Tom Knox (op-ed, “Pennsylvania Should Not Deregulate Electric Rates,” Feb. 2), it is important to understand that Pennsylvania electricity consumers have yet to see the full benefits of competitive markets because competition hasn’t been allowed to work freely.
There has been a decade of artificial rate caps at levels well below the real cost of electricity. This has deterred competitors from entering the market and shielded consumers from the reality of the rising cost of generation fuel in a global energy market.
But no state, whether a regulated or competition state, can ultimately escape the impact of fuel cost changes and it is a fairy tale to assert otherwise.
Moreover, recent reports are showing that, in fact, electricity prices are decreasing as the cost of fuels is falling from historic highs. Just last week, the Pennsylvania Public Utility Commission released its quarterly price projection report with figures that reflect significantly lower market prices than those in assumptions released just last August.
Likewise, consumers in New York are seeing significant rate decreases, with a report last month indicating that electricity prices dropped 54 percent since June. Much of the same is coming out of other competitive markets including Texas, Rhode Island and Maine, among others.
The conclusion is obvious: the price of electricity is closely connected to the costs of fuel in a global energy market.
But price is only one measure of success. Competition has spurred the development of renewable wind energy and related jobs in Pennsylvania. Before competition, there were no wind projects in the state. According to the American Wind Energy Association, more than 70 percent of wind resources are in competitive markets like Pennsylvania, despite the fact that only 44 percent of wind energy potential is found in these areas.
I testified in December before the Pennsylvania PUC alongside consumer representatives about the real benefits provided by competitive electric markets. Generators operate longer and more efficiently. Big employers like Wal-Mart talked about major energy savings, which not only help them provide jobs but let them pass savings on to customers.
State manufacturer Leggett & Platt touted the efficiency and flexibility of competition to control energy costs and preserve jobs. These and other consumers strongly favor competitive electricity markets.
Returning to the failed system of monopoly utility regulation won’t avoid global fuel prices, won’t provide job growth and won’t help meet our enormous energy challenges with clean energy sources and other innovations. Competitive markets hold the best promise for addressing these challenges.
William L. Massey, Counsel, COMPETE Coalition, Washington, D.C.
