Sunday, April 29, 2007
Editorial: Re-, uh, partial regulation
Virginia was right to abandon its electricity deregulation experiment. But the untried re-regulation model might prove as experimental.
From the RoundTable blog
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The electricity deregulation horror stories detailed in an Associated Press story last week are proof enough that Virginia did right by turning back its failed attempt to open power generation to competition.
Or more accurately, a piece of something right.
An AP analysis of federal data showed that consumers in 16 states and Washington, D.C., that have clung to deregulation paid an average of 30 percent more for their power in 2006 than consumers in regulated states. A single mother of four in Illinois, a state deregulated for about 10 years, has watched her bills climb from $200 a month to nearly $500.
We can almost see Virginia lawmakers patting themselves on the back for having steered the state off a similar, treacherous path.
But the "hybrid" regulatory model that Gov. Tim Kaine recently signed into law provides yet-unknown assurance that consumers won't experience the same power bill spikes seen in states that have pushed forward with deregulation.
Kaine amended the re-regulation bill with an eye toward ensuring appropriate consumer protection. He directed the State Corporation Commission to keep utility prices in line with peer group utilities in specific Southeast states, all of which have regulated electric utilities. That could help stem wild rate increases.
Or not. Del. Clarke Hogan, R-Halifax County, who sponsored the House re-regulation bill, said himself that anyone "who says they can predict exactly what this bill, or any other bill, might do to electrical costs in the next 20 years frankly doesn't know what they're talking about."
That comment was supposed to ease consumer concerns?
This hybrid model is the first of its kind in the country. It is untested and, as such, amounts to yet another experiment with the business of power in Virginia. The half-rollback to regulation might indeed, as consumer advocates have argued, provide too much financial certainty to power companies and too little to consumers.
Most lawmakers likely have no real clue. They didn't give the bill the kind of scrutiny such a densely worded, complicated measure required to determine if the traditional, pre-deregulation, cost-of-service rate-making model would have better served consumer interests.
Virginia will have to first engage in wait and see. And at the first sign that the re-regulation model results in precisely what consumer advocates fear, lawmakers must give serious thought to a complete return to the pre-deregulation model.
