Electric deregulation was supposed to benefit consumers — that was the promise during the 1990s when several states adopted the market system. But according to a new report, some of the biggest winners last year were the major generation companies.
Released by the American Public Power Association, the May 2010 study finds that generation companies operating under deregulation in the Northeast earned healthy profits in 2009 — despite facing the nation’s worst economic crisis since the Great Depression.
The APPA report also concluded that generation companies under deregulation made much more money than generation companies still subject to regulation. Given the relatively high earnings, it”s not surprising that deregulated generation companies oppose any return to regulation. One company warned that if “market deregulation is reversed or discontinued, our business prospects and financial condition could be materially adversely affected.”
Texas implemented electric retail competition in 2002 after authorizing electric deregulation in 1999. Since 2002, rates have remained consistently above the national average Prior to adoption of the deregulation law, rates in Texas were consistently below the national average. Rates in Texas also have increased by a far greater extent than they have in neighboring regulated states such as Louisiana and Oklahoma.
The APPA is a trade group associated with public electric companies such as municipally owned utilities.
Is a policy analyst for TCAP, a coalition of cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.