Re-regulating Electricity

The Tribune-Review has an article breaking down the latest energy bill (HB2200). The bill seeks to regulate the “deregulation” process by:

  • Mandating the installation of smart meters over a 15 year period. Specifically, utilities must install smart meters at the consumers request and in any new construction.
  • Enacting new laws to limit the way utilities acquire power- specifically requiring each utility to purchase a minimum amount of power through long term contracts.
  • And establishing arbitrary conservations goals including a 4.5% reduction in the 100 hours of highest demand by May 2013.

Each of these mandates will increase the cost of doing business for utility companies, therefore raising the cost of electricity instead of lowering rates- the actual purpose of the legislation.

State Consumer Advocate Sonny Popowski, noted that, “Duquesne proposed a six-year rate plan (long-term contract) in 2004 that, if the state Public Utility Commission hadn’t rejected it as anti-competitive, might have saved customers millions of dollars.”

You mean the government actually prevented a utility from making a wise decision that would have saved consumers money? Such ironies only bolster the argument against more regulation. Regulators are simply unable to predict which regulations will save customers money. Deregulation only works if lawmakers can resist the temptation to “design” the competitive marketplace.