Deregulation in the U.S. continues to be questioned


David Kolata,
Executive Director,
Chicago, IL, U.S.A. — (METERING.COM) — March 22, 2007 – 24 states and the District of Columbia have either enacted enabling legislation or issued a regulatory order to implement retail access since deregulation first started in the U.S. in the mid 1990s, according to a report by the Department of Energy, but several states are busy reviewing the situation.

In Illinois, for example, the Citizens Utility Board (CUB), a nonprofit statewide utility watchdog organization created by the state legislature to represent the interests of residential and small-business utility customers, has praised the Illinois house for approving a bill to extend the current freeze on electric rates and to roll back massive rate hikes that have caused bills of some ComEd and Ameren customers to double and even triple. The bill will extend the freeze for another three years, or until at least 33 per cent of the utilities’ customers are served by alternative electric providers. The bill must now go to the Senate for consideration.

"We applaud the Illinois House for doing the right thing and standing up to ComEd and Ameren’s scare tactics," CUB Executive Director David Kolata said. "Today’s large, bi-partisan vote shows that the momentum to roll back these excessive rate hikes is growing.” ComEd rates jumped an average 26 percent Jan. 1, while Ameren rates soared an average 40 to 55 percent. However, because of the rate structure, some consumers have seen their bills increase as much as 300 percent.

ComEd and Ameren claim extending the freeze would cause financial distress that could disrupt service or force them into bankruptcy, but Kolata noted that both utilities have been extremely profitable under the rate freeze.

In addition to blocking the increases, extending the rate freeze will give lawmakers time to develop a statewide energy plan that would recognize the lack of competition in the Illinois electric market and promote energy efficiency and new technologies to lower energy costs for consumers.

"We can’t continue to pretend we have a competitive electricity market in Illinois when we don’t," Kolata said. "We need to face facts, go back to the drawing board and come up with a comprehensive energy policy that protects consumers."

In Texas the Senate has unanimously approved three bills to give regulators more power to curb electricity rates and encourage retail power competition. And legislators in Virginia have passed a bill to end electricity deregulation, leaving consumers with no alternative supplier to choose from. Those against the bill hold that the state’s largest utility, Dominion Virginia Power, will effectively be free to hike rates, without the constraint of competition. Those in favor say that the laws introduce further protection for consumers, as well as state control of the rates charged by the utility.