Phil Kent warns about phony “energy deregulation”

JUST AS THE phony “campaign finance reform” that passed Congress seemed appealing so, too, does the sound of “electricity deregulation” sound welcome to the unsuspecting.

That’s why Americans shouldn’t be misled as the U.S. Senate grapples with passing wide-ranging energy legislation designed to provide reliable electrical service to consumers in all 50 states.

Senators must understand they are facing two uniquely distinct kinds of energy companies today. There is the one you grew up with, and the one that wants you to think it is just like the one you grew up with.

THE TRADITIONAL hometown energy provider generated electricity, transmitted it across the grid and delivered it to customers in their franchise territory. The business was regulated by a state agency to ensure fairness in price to consumers while offering reasonable rates of return to investors. Up until about a decade ago, this model was basically working well across America.

However, that model is threatened by some desperate companies at bankruptcy’s door – the independent power producers, or IPPs. Those are the companies that built half-billion dollar power plants that sit idle because there is no market for their glut of oversupplied power.

They trade electricity like investment brokers trade stocks. They are the ones that want the country’s transmission grid socialized – companies with little or no interest in the consumers’ interests.

THEY DON’T want you to know that the country’s grid was not built to transport huge blocks of power from, say, Ohio or Georgia to the Northeast.

So as the House-passed energy legislation is being debated, let’s be clear about some simple truths:

In all things, price matters. Our nation’s economy is driven by everything from the price of gasoline, electricity and natural gas. State-by-state deregulation schemes aimed at driving down electricity prices have been unsuccessful – California and Georgia being glaring examples.

Customers want to know the lights are going to stay on. Electricity is the lifeblood of our globalized, computerized economy. So reliable electricity is more important than ever. The grid is more reliable when power plants are located close to load centers like large cities. (That’s why New York City ought to go ahead with the proposed power plant on the Brooklyn waterfront.) Conversely, the grid is inherently unreliable if you try to move electricity from Texas to New York City.

Customers want to know who is responsible when the lights go out. Just as the governor of Michigan recently testified before Congress, accountability is not clear once your hometown utility is broken up.

Deregulation is a misnomer. Last summer the federal regulator of electricity – the socialistic Federal Energy Regulatory Commission – announced it wanted to create a more “competitive” market for electric utilities. In so doing, it issued a 560-page report outlining a whole new set of onerous regulations on market participants.

SO WHAT happens now? That is in the hands of 100 senators. They ought to reflect on a resolution unanimously adopted by the Southern Governors Association: “Focus on those issues that will actually solve problems where they exist and not penalize Southern ratepayers.”

Most other governors feel the same way.

Influential Democrats like Rep. John Dingell of Michigan and Republicans like Sen. Richard Shelby of Alabama are rightly skeptical of FERC’s “standard market design” which would result in state regulators and power companies losing their authority over electric generation.

A “ONE SIZE fits all” approach forced on states from the federal level – especially touted under the name “deregulation” that many conservatives like to hear – is not the answer.

The Senate must focus on conserving the traditional utility model that keeps rates low.

(The writer, Phil Kent, is the author of The Dark Side of Liberalism: Unchaining the Truth.).