Deregulation Gets A Bad Rap
The New England Power Generators Association disagrees with Thomas Josie’s recent op-ed in the July 21 Worcester Business Journal claiming that the restructuring of the electricity markets has been a disappointment.
The truth is that the competitive wholesale market for power in New England has delivered cost savings, greater reliability and dramatic environmental enhancements to customers that would have been impossible under the regulated structure that Mr. Josie advocates. Our claim is not one of hubris, but of pride, and it is supported by the facts.
Rising Tide
Mr. Josie takes great liberties in deflecting blame for high energy prices, but rising electricity costs have not been a signal of failure of the regional competitive markets, nor are they attributable to the independent system operator. Rather, rising costs are a direct result of rising fuel and other commodity costs, dependence on relatively expensive natural gas as a fuel source, and lack of indigenous energy resources.
The truth is that generating efficiencies procured through the competitive market have actually led to a decrease in fuel-adjusted electricity prices of approximately 7 percent from 2000 to 2006.
Consumers have demanded more than mere cost-effectiveness because of the environmental challenges that society faces. Again, we’ve delivered. From 1999 to 2003, as a result of consumer demand for cleaner energy facilities, the competitive market has delivered 10,000 megawatts of privately financed energy facilities that have decreased regional carbon dioxide emissions by 7.5 percent, nitrogen oxide emissions by 44 percent, and sulfur dioxide emissions by 65 percent. Better yet, we’ve done it more efficiently. Since electricity restructuring power plant availability has increased from 81 to 89 percent.
Despite these tremendous gains, New England still needs 400 megawatts of new energy resources every year to maintain our economic competitiveness and standard of living. How we get there should be driven by consumer choices, not the lack of economic competition for electricity that Mr. Josie so fondly remembers and that ultimately led to unavoidable cost overruns and stranded costs.
Mr. Josie insinuates that the New England electricity market is conducted in secrecy. Nothing can be further from the truth. While the complexity of the market cannot be denied, the restructuring of the New England market is the product of ongoing negotiations and discussions among a wide range stakeholder groups, including consumers. To suggest that consumers are better represented in a complex and inaccessible rate proceeding than they are through their own purchasing decisions is merely self-serving.
The truth is that the antiquated methodologies that Mr. Josie is proposing have never delivered the innovation that consumers demand. Rather, it is the competitive market principles being employed in New England’s wholesale electricity markets that have proven capable of providing what consumers want. Any suggestion that consumers don’t have a choice is likely coming from the perspective of an organization that has suffered greatly from the choices that consumers have made to abandon a regime that created higher costs and limited consumer choices.
But all is not lost for Mr. Josie. The beauty of the new electricity market is that the consumers can always switch to a better product that better meets evolving demands. We encourage Mr. Josie to pick himself up, dust himself off and deliver that product. That kind of competition is what will ultimately benefit customers.
Angela M. O’Connor is president of the Boston-based New England Power Generators Association Inc.
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