An article in the Asheville Citizen-Times a couple of weeks ago reported on the current status of deregulation of the electric utility industry.  The Associated Press analyzed the Department of Energy’s annual data and found some alarming trends in the states which voted to deregulate electric utilities.  For instance in Maryland electric rates have risen as much as 72% and as much as 50% in Illinois.  Overall, not even one of the states which enacted legislation to deregulate can truthfully claim any success.  On average, those customers pay 30 percent more for electricity than those who live in regulated states. 

We have all seen energy prices rise in the last few years due to the increasingly high costs of fuel.  But why did deregulation add such dramatic increases in addition to fuel costs?  In some states, energy suppliers only wanted to serve the large industrial customers, leaving the rest behind with the incumbent supplier as their only choice.  Also, when legislation was passed in these states, the legislators implemented temporary rate caps so it would appear deregulation lowered what customers were paying and would also stimulate competition.  However, this idea backfired on them.   By freezing electric rates, other energy companies could not make a suitable profit and left the market or did not participate in the first place.  This often left the incumbent electric utility as the only supplier in the area. 

Once the temporary rate caps expired, guess what happened?  With only one energy supplier to choose from in a deregulated market, you now have an unregulated monopoly that can charge whatever it wants.  To be fair, these utilities had been capped at below market rates and lost money for the past few years, so they needed to recover their losses.  Unfortunately, without regulation, they can do it in dramatic fashion and can continue to charge inflated rates until new legislation stops them.

Fortunately, our N.C. legislators understood the pitfalls of deregulation and delayed their decisions long enough to observe the failures in other states.  Your board of directors and former general manager, Charles Tolley, spent a lot of time educating them on the problems deregulation would cause our customers as well as customers throughout the region.  I vividly remember Mr. Tolley describing how a deregulated market would not stimulate competition and how energy companies would only be interested in large industrial loads, leaving the residential and small commercial customers paying much higher rates in a deregulated market.

Times like this make me wonder what he did with his crystal ball!

Thank You,
Jeff Loven
Email: jeff.loven@frenchbroademc.com

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