Legislature failing to protect consumers

The legislative response in the [Feb. 17] IBJ article about possible deregulation of retail electric rates leaves a lot to be desired.

Specifically, caution has not been exercised at all by the General Assembly when it comes to utility electric rate policies. Why the caution now?

The caution now stems from the fact that the state’s electric monopolies don’t want any competition. They’re happy with their current captive ratepayer-based gravy train handed to them by the General Assembly over the last 20 years.

First, there was the alternative regulation statute. It allows utilities to propose and secure different rate designs outside of historic norms. It does not allow anyone else to do so.

Then came the amendment to statute in the early 2000s to allow (pay-as-you-go) CWIP (construction work in progress) for coal-fired power plants. Next came the open-ended tax credit for what was to become the Edwardsport coal gasification scandal and financial debacle.

After that, the General Assembly eliminated all consumer protections in statute to force construction of Leucadia Corp.’s coal gasification plant in Rockport. Fortunately, legislators finally came to their senses. The main change: The Indiana Utility Regulatory Commission will now have to take into account the market rate of natural gas. Imagine that, the General Assembly actually adhering to its free-market mantra when it comes to a power plant.

But regulated utilities were then handed the ultimate ATM card by the Legislature when, recently, it allowed monopolies automatic rate adjustment mechanisms for nearly all of their costs, including CWIP for the upgrade to Indiana Michigan Power’s nuclear plant in Michigan.

Now the General Assembly is eviscerating the state’s energy-efficiency program—one of the few ratepayer-friendly policies adopted by state regulators.

The General Assembly passed all of this legislation without any knowledge of or concern for the rate impacts. It’s left the state’s monopoly electrics with no market risk at all. Who bears the risk? We, the ratepayers, do.
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Grant Smith, senior energy policy analyst
Civil Society Institute; legislative chairman, Indiana Chapter Sierra Club