|
Deregulation sowed seeds for rate hike: A government policy that initially did some good is turning into a headache for Pennsylvania consumers.
(Reading Eagle (PA) (KRT) Via Acquire Media NewsEdge) Aug. 17--Electric deregulation in Pennsylvania seemed like a good idea at the time.
But times change and that good idea is about to become a big headache.
John Hanger, a former member of the state Public Utility Commission, outlined the history:
In the early 1990s the Pennsylvania electric power industry was a mess.
Utilities had tied up billions of dollars in the construction of nuclear plants only to have to retrofit many of them -- some in mid-construction -- after the 1979 accident at Three Mile Island.
Many of the state's nuclear power stations weren't operating at full capacity. Meanwhile consumers were being billed for all plants, even those not yet running.
Consumers began to complain that something had to be done about rising electric rates. Utilities were passing on to the consumer the hefty costs of building and operating the behemoth plants.
Two Pennsylvania utilities -- PECO and Duquesne Light -- had among the highest rates in the country. The state's electricity rates were 15 percent above the national average.
On top of that, the electric companies had monopolies in their territories.
If someone wanted to build a plant in PECO's service area and connect to the power grid, PECO could block them.
State legislators decided deregulating the generation side of the industry made sense.
Meanwhile the distribution, or power line side, would continue to be regulated by the state Public Utility Commission.
The deal was consumers would continue to pay the high rates they had been paying so power companies could recoup their nuclear investments, but the rates would be capped for seven years until 2003.
A legal battle extended the caps until 2010.
It turned out to be a tremendous benefit for consumers, because electric rates and energy costs in general have risen sharply over the past 14 years, and it benefited the power companies because they were able to pay for their nuclear plants.
When the rate caps are lifted, the electric industry in Pennsylvania will be completely deregulated.
Electric prices will increase initially, but when market forces take over, prices should moderate as competition takes hold, said Hanger, who is president of PennFuture, a consumer advocacy and environmental group.
"There was no reason to prevent someone who wants to build a power plant from building one," he said. "The thought was the market could perform better than three men sitting in Harrisburg."
To see more of the Reading Eagle, or to subscribe, go to http://www.readingeagle.com.
Copyright (c) 2008, Reading Eagle, Pa.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To cable.tmcnet.com's Homepage ]
|