As anniversary of blackout nears, group calls for return to regulated markets
The Baltimore Sun Knight --Jul. 31
Nearly a year after the worst blackout in U.S. history, a national advocacy group says the nation's electric system is becoming increasingly less reliable while costing consumers more and called for a return to regulated markets.
The association said that the deregulation of the electric industry that
started in the 1990s, touted as way to lower consumer costs through a
competitive market, has instead led to less accountability on the part of
utilities and energy companies and higher bills for consumers.
The shifting market helped contribute to the California energy crisis of 2001
and the blackout last August, which left more than 50 million people in the dark
in the U.S. and Canada, said Rob Sargent, Senior Energy Policy Analyst for the
national association and a co-author of the report. Sargent said the group's
analysts set out to take a hard look at the state of the electric system from a
consumer's viewpoint.
"The reliability of the electric system has suffered under
restructuring," Tony Dutzik, an association policy analyst and the report's
primary author, said during a conference call yesterday. "Voluntary
compliance with reliability rules no longer works."
A spokesman for the Washington-based Edison Electric Institute, an
association representing investor-owned electric companies, said the industry
disputed many of the report's claims and criticized what it called its
"alarmist tone on reliability."
"Our electric power system is second to none, and our industry has taken
great strides in reinforcing that level of reliability since last August's
blackout," said Jim Owen, the spokesman. Owen said he believes wholesale
electric competition has offered benefits to customers nationwide, but that the
transition to retail competition in many states is still in its early phases.
Proponents of deregulation say that prices have initially increased as a
competitive market is established because they had been kept artificially low by
rate caps. Eventually competition will drive rates down, they say..
But the report argues that a decade of industry restructuring has led to few
benefits for the majority of consumers, and that any benefits will likely be
short-lived
While residential electricity rates declined by 18.3 percent in
inflation-adjusted terms between 1993 and 2002, mostly because of lower
wholesale coal prices, they started turning up is 2001, the report said. Between
2001 and 2003 they registered the first year-to-year increases in nearly two
decades, the report said.
Dutzik cited Maryland as an example, where rate caps were lifted in some
parts of the state this summer, boosting utility rates in some cases by double
digits.
"It's time for states to end experiments in retail deregulation,"
Dutzik said. "Sustained competition has not developed anywhere, and we
believe it will not develop. Everyone ought to have access to regulated products
available to them at the lowest overall cost. We need to return to the notion
that electricity is a public necessity, and public policy should promote the
greater good."
Peter Bradford, a former chairman of the New York Public Service Commission
and a former president of the National Association of Regulatory Utility
Commissioners, said he generally agreed with the report, especially findings
that policy makers have tended to undervalue energy efficiency.
"The public benefits for the consumer and the environment need to be
locked in as firmly as the benefits for other players," such as large
industrial customers, he said.
Ellen Vancko, director of communications for the North American (Electric)
Reliability Council, or NERC, which oversees grid operators across the country,
said the organization wholeheartedly supports the call for mandatory reliability
standards governing the nation's power grid.
"Deregulation is causing the grid to be used in ways that it wasn't
designed for -- that's a true statement," Vancko said. "And this
increased use of the grid has increased the strain on it, making it more
important than ever that people follow the rules."
The report's recommendation on this one point "is consistent with what
NERC has been seeking," Vancko said. "
Sun staff writer William Patalon III contributed to this article.
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