ENERGY DEREGULATION IS NOT GOOD FOR PA

POINT
by Preston Roberts,
Manager, Energy Management Institute
NCC

With the rate caps in place since 1996, total electric cost savings to electricity consumers has totaled over $6 billion or about $1250 per Pennsylvania household. Since rate caps don't expire for most utilities until 2010, those savings are going to increase. In fact, residential customers of Duquesne Light in Pittsburgh have seen savings of $200 to $400 per year from 2002 to 2004. In 1996, Pennsylvania's electricity prices were nearly 15% above the national average. Today Pennsylvania prices are competitive with the rest of the country, providing an additional incentive for companies to expand in Pennsylvania and create new jobs. In the long-term, even with the removal of rate caps, deregulation of electricity prices will make Pennsylvania a more economical place to live, work, and manufacture products .

COUNTERPOINT
by Mike Vasilik, Ph.D.
Director, Electro-Technology Applications Center
NCC

Most of the savings realized in the past 10+ years have been by commercial and industrial customers, while residential costs have stayed about the same. The idea of deregulation makes economic sense by letting market forces dictate what the rates should be, and several states have successfully contained energy costs with deregulation. However, in PA the energy industry was immediately re-regulated by imposing rate caps. Utility companies were allowed to recoup past “stranded” costs in exchange for not raising their rates. When the caps come off completely by 2010, it is estimated that electric rates may jump as much as 100%, and this will clobber many users. For the same amount of energy to provide the same amount of heat or do the same amount of work, you will pay twice as much. Many companies in energy intensive industries, or on a tight budget, may not survive. For many residential customers, we will have to turn down the thermostats even lower and bundle up even more while we're inside our homes. If this is not enough, perhaps we could become accustomed to not showering so often (less hot water), wearing wrinkled clothes (no ironing), or eating cold meals (less cooking).

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