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Running Nowhere

There’s this prank where a car full of people stops at a red light and everyone jumps out, runs around the car, and hops back in before the light turns green.

This stunt comes to mind with the 10th anniversary of electric utility deregulation. That is, lots of people seem to be running around making
a lot of noise about electricity restructuring, but we end up in about the same place.

In 1992 Congress passed a law allowing competition among electric utilities selling wholesale electricity to each other. The next logical step seemed to be to end the traditional monopoly status of utilities, and allow them to compete for consumers.

California became one of the first states to give electric utility restructuring a try. It was going to be great. Customers could choose who they wanted to generate their electricity. Competition would surely cause rates to fall.
Some companies drooled at the prospect of huge growth and profits. Others feared being driven out of business. Congress debated what steps to take. Lobbyists lobbied. Nearly half the states adopted some form of restructuring.

In those restructured states, a fairly small share of the people actually changed their electric suppliers. Rates just didn’t change all that much…except in California, where electric rates skyrocketed, spent several weeks in the headlines, then returned to earth a few months later. In an even more spectacular rise and fall, Enron became one of the largest corporations in the country by buying and selling energy contracts in this newly restructured world. Then it collapsed in a heap of scandals and broken promises.

Two years ago the Kentucky Legislature decided that instead of restructuring utilities here, we should wait and see how it works out in other states. Since then, Kentucky’s electric rates became the lowest in the nation, partly because the crisis in California boosted rates in the Pacific Northwest, which used to be the lowest.

Seems to me that puts us in the position of sitting in our car, watching those people in front of us running around in circles before the light turns green.

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