Wednesday, February 10, 2010
Utilities must be reined in
Editorial commentary
Recent contributions
- What Obama didn't say
- How my education and religious training failed me
- Can we be a two-trolley town?
- Striving for civility
- Commentary archive
From the RoundTable blog
Read the latest entries
Irene E. Leech
Leech is the president of the Virginia Citizens Consumer Council, a grass roots consumer education and advocacy organization and associate professor of consumer affairs at Virginia Tech.
Frustrated with your electricity bills? Take action to influence change. The General Assembly is in session right now and it has before it an array of bills. Some of them will help consumers struggling with unprecedented electric bills.
Based on conversations I've heard in meetings in Richmond and my years of experience following electricity legislation and regulation in Virginia, I'm afraid that our elected officials will not do enough to really help reduce electric bills. There has been discussion of prohibiting utilities from using interim rates. That's fine, but given the structure of the new electric regulatory process, I am doubtful that we'll have interim rates very often in the future.
Instead, the legislature, with the governor's approval and the attorney general's assistance under his constitutional duty to stand up for consumers, need to make the following three changes to the 2007 electric hybrid re-regulation bill:
1. Limit utilities to only one rate increase per year. AEP customers are drowning in repeated rate increases. In the Dominion rate increases now before the SCC, numerous individual cases have been combined into one by the parties that put forward a proposal to settle all the cases. As we have worked on individual cases this fall, it's been clear that cases overlap and that making them separate as the 2007 legislation requires is not working. Thus, it seems prudent to change the law so that instead of being able to make up to six rate increases a year, utilities would be limited to one. The SCC should be able to look at all the issues together and come up with a maximum of one rate increase per year.
2. Remove from the code of Virginia the opportunity for utilities to earn extra money or adders. Clearly consumers are already staggering under rate increases. The law specifies a procedure for the SCC to use to determine utility rate of return that is extremely generous to utilities. They are monopoly providers. They are guaranteed that prudent expenditures will be reimbursed and that they will earn a reasonable rate of return.
However, the 2007 legislation has reduced their financial risk and increased their opportunities for financial reward substantially. In other words, utilities now get increased financial earnings for taking decreased financial risk. That's not how things are supposed to work. The adders are simply not necessary and are unfair to consumers who must pay them. Utilities would still have extremely generous opportunities to earn money with the adders removed.
3. Assure that every rate increase is backed up by a solid cost-benefit analysis that demonstrates that consumers, especially low-income consumers, will benefit. There are a number of legislative proposals that will add costs for consumers. The 2007 legislation gives utilities multiple ways to provide service. It is critical that all proposals be evaluated to assure that consumers, especially struggling young people and families, those on fixed incomes and other consumers with financial challenges, are not harmed. This will also benefit businesses, especially small businesses. We need to be sure that utilities do not offer strategies that bring them more income but hurt vulnerable consumers.
Change is not going to happen unless consumers speak loudly and consistently. It will not work to assume that the few of us who routinely represent consumers will be able to convey the message. Every consumer who is concerned about high electric bills needs to speak up.
The state delegate and senator who represent you need to hear from you. You can contact them by phone, e-mail or U.S. mail. Tell them your concerns and ask them to take the three actions described above.
If you do not know who they are or need to find their contact information, go to legis.state.va.us/ and click on citizen participation on the right side. To get information to contact Gov. Bob McDonnell, go to www.governor.virginia.gov. For Attorney General Ken Cuccinelli, go to www.oag.state.va.us.
Take action today. Share this information with your friends and family. Every voice matters. We got to this point because consumers were not heard when the electric legislation was passed in 2007. These changes will not fix everything, but if they are enacted, they will go a long way toward rebalancing the playing field between consumers and utilities that serve Virginia.
