Read John Hanger’s Op-Ed In Las Vegas Sun, Electricity Competition Worked For Them

Las Vegas Sun, John Hanger

Nevadans on Nov. 8 will vote on an impor­tant bal­lot ques­tion about end­ing elec­tric-gen­er­a­tion monop­o­lies and allow­ing all elec­tric­i­ty cus­tomers to choose the com­pa­ny that will gen­er­ate their elec­tric­i­ty. Twen­ty years ago, Pennsylvania’s elec­tric­i­ty cus­tomers also were cap­tured by their monop­oly util­i­ties and were pay­ing the price for their cap­tiv­i­ty.

Res­i­den­tial cus­tomers in our two most pop­u­lous regions — Pitts­burgh and Philadel­phia — paid elec­tric rates that fre­quent­ly were among the 10 high­est in the nation. Small-busi­ness cus­tomers also typ­i­cal­ly suf­fered from high rates to pow­er their restau­rants, stores and small man­u­fac­tur­ing shops. In 1996, Pennsylvania’s elec­tric­i­ty rates were about 15 per­cent above the nation­al aver­age.

Pennsylvania’s elec­tric­i­ty rates sky­rock­et­ed 20 years ago because state util­i­ty reg­u­la­tors vot­ed repeat­ed­ly to make elec­tric­i­ty cus­tomers pay for nuclear plants that had costs way over bud­get and way behind sched­ule. Cus­tomers were stuck, cap­tured by their monop­oly util­i­ties.

In return for high rates, Pennsylvania’s cus­tomers got elec­tric­i­ty from monop­oly-owned gen­er­a­tion plants that spewed enor­mous amounts of pol­lu­tion, sick­en­ing and even short­en­ing the lives of hun­dreds of thou­sands of peo­ple. Mer­cury, sul­fur, soot, nitro­gen and car­bon poured into our air from coal plants, which guz­zled huge amounts of fuel and con­vert­ed it inef­fi­cient­ly into pow­er. Those cus­tomers who want­ed to gen­er­ate pow­er for them­selves faced a bureau­crat­ic night­mare that made it dif­fi­cult, if not quite impos­si­ble, so very few could.

Tired of high rates and dirty pow­er, as well as deal­ing with often arro­gant gen­er­a­tion monop­o­lies, Penn­syl­va­nia adopt­ed elec­tric­i­ty com­pe­ti­tion and cus­tomer choice in both the whole­sale and retail mar­kets. Right from the begin­ning, Penn­syl­va­nia com­mit­ted to ensur­ing real com­pe­ti­tion, installing strong mar­ket mon­i­tors to pre­vent abus­es of com­pe­ti­tion by pow­er plant own­ers as well as increas­ing pro­grams for low-income fam­i­lies and accel­er­at­ing clean ener­gy.

After 20 years of allow­ing cus­tomers to choose their gen­er­a­tion sup­pli­er and com­pet­i­tive pow­er mar­kets with appro­pri­ate over­sight, cus­tomers in the Philadel­phia and Pitts­burgh regions are pay­ing much less for pow­er gen­er­a­tion than they were in 1996. In real or infla­tion-adjust­ed dol­lars, those res­i­den­tial cus­tomers are pay­ing about 50 per­cent less. And Pennsylvania’s statewide aver­age elec­tric­i­ty price is at the nation­al aver­age as opposed to well above it.

Thanks to com­pe­ti­tion for cus­tomers, pow­er plants don’t earn rev­enues for their own­ers unless they oper­ate, unlike dur­ing the monop­oly era, when ratepay­ers typ­i­cal­ly paid for pow­er plants even when they did not oper­ate. As a result, pow­er plants today are much more effi­cient and burn much less fuel to pro­duce the same amount of pow­er. The pres­sure to run more effi­cient­ly means they pol­lute less.

Cus­tomers now can buy renew­able ener­gy prod­ucts for their homes, as I do. My elec­tric­i­ty gen­er­a­tion sup­pli­er pro­vides me with 100 per­cent wind pow­er that is gen­er­at­ed from wind farms in Penn­syl­va­nia. Thou­sands of oth­er cus­tomers are installing solar and using oth­er tech­nolo­gies to gen­er­ate their own pow­er.

Cus­tomers now can buy mul­ti­year con­tracts of fixed-priced pow­er to ensure long-term price sta­bil­i­ty. They can also get inno­v­a­tive ener­gy-effi­cien­cy ser­vices cus­tomized to their homes and busi­ness­es to reduce usage and cut pow­er bills.

Penn­syl­va­nia shows that a well-designed and imple­ment­ed pol­i­cy of whole­sale and retail elec­tric­i­ty com­pe­ti­tion and cus­tomer choice will deliv­er eco­nom­ic and envi­ron­men­tal ben­e­fits.

Good design includes strong mar­ket mon­i­tors, with author­i­ty to iden­ti­fy and pre­vent whole­sale mar­ket abus­es, such as with­hold­ing gen­er­a­tion to dri­ve up pow­er prices. Good design has strong con­sumer pro­tec­tions on mar­ket­ing of pow­er prod­ucts and pro­grams to ensure low-income cus­tomers can real­is­ti­cal­ly pay for their elec­tric bills. Last­ly, good design includes poli­cies that enable cus­tomers to gen­er­ate their own pow­er at their homes and busi­ness­es and to con­trol their demand in real-time.

Poli­cies imple­ment­ing com­pe­ti­tion are not the same as “dereg­u­la­tion,” where there is no pub­lic over­sight of cor­po­rate behav­ior. Mar­ket rules, and the means to enforce them, are vital to ensure com­pe­ti­tion is real and ben­e­fi­cial to the econ­o­my and envi­ron­ments.

Today, Pennsylvania’s res­i­den­tial cus­tomers are sav­ing approx­i­mate­ly $818 mil­lion per year thanks to well-designed and imple­ment­ed com­pet­i­tive whole­sale and retail elec­tric­i­ty mar­kets. Pennsylvania’s econ­o­my and envi­ron­ment are bet­ter today because the state end­ed gen­er­a­tion monop­o­lies and allowed cus­tomers to choose their elec­tric­i­ty sup­pli­er. Prop­er­ly designed and imple­ment­ed elec­tric­i­ty com­pe­ti­tion can ben­e­fit Neva­da too.

John Hang­er is a for­mer head of the Penn­syl­va­nia Depart­ment of Envi­ron­men­tal Pro­tec­tion, sat on the Penn­syl­va­nia Pub­lic Util­i­ty Com­mis­sion and was pres­i­dent of the envi­ron­men­tal advo­ca­cy group Pen­n­Fu­ture. More recent­ly, he served as Penn­syl­va­nia Gov. Tom Wolf’s sec­re­tary of plan­ning and pol­i­cy.

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