Letters and Opinion

Think twice before deregulating utilities

March 15, 2014

For decades, our state has enjoyed low, stable electricity prices due in large measure to using Indiana’s abundant natural resource—coal. However, federal environmental mandates have eroded that advantage as our electric utilities have had to make expensive investments to comply with stricter rules.

Some believe Indiana should deregulate electric utilities with the goal of reducing prices. But eliminating price regulation and the obligation of utilities to provide electricity 24/7 is risky to electric customers and our economy.

Consider the recent problems with propane. This winter Midwest customers were desperate for supply and were hammered with price spikes. We can ill afford that kind of impact in our electric industry.

Consider these facts:

• Five states have halted or slowed deregulation because they did not produce the desired results. California led the way with electricity deregulation in the 1990s, but, following price spikes and blackouts, suspended retail access.

• Fifteen states and the District of Columbia are deregulated, but nearly two-thirds of these states have average electric rates higher than Indiana’s.

• States such as New Jersey and Maryland have restructured their electricity markets and have exposed consumers to reliability issues and price spikes, as well as concerns about running short of power.

The typical pattern of states which have deregulated are early benefits for some very large industrial users but not the same benefits for homeowners and businesses. Often there is just confusion.

When the new system does not produce desired results, states halt their efforts or turn to “re-regulation,” which can be difficult after ceding state control.

These concerns are real. Some experts already forecast potential Midwest power shortfalls.

Indiana’s regulatory structure requires electric utilities to plan and meet power needs with strong oversight of the rates they charge. Trading this system for short-term rate benefits for a small segment of large power customers is not wise. It would undermine the planning structure that assures our customers’ future needs will be met and the regulatory review process that assures customer rates are reasonable based on constant oversight by regulators who are objective parties charged with considering the best interests of consumers.

Carl Chapman; chairman, Vectren Corp.
Paul Chodak III; president, Indiana Michigan Power
Doug Esamann; president, Duke Energy Indiana
Kelly Huntington; president, Indianapolis Power & Light Co.
Jim Stanley; CEO, NIPSCO

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