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Watch For Fallout: Driven By Broken Wholesale Market, Maine Gov. Says End Electric Deregulation
April 21,2015 Calling deregulation a failure, Maine Governor Paul LePage has called for a major overhaul of the state's electricity policy, including allowing the state's regulated electric utilities to build and own power plants, Maine Public Broadcasting reports "It's the worst thing we could have done," LePage told Maine Public Broadcasting about deregulation. "I look at what's happened to our costs: They go up rapidly; they go up by huge amounts every year." Retail suppliers can again "thank" so-called "merchant" generators and their lapdog FERC for the potential eradication of their business in Maine -- which as noted by EnergyChoiceMatters.com follows new clear and present threats in Massachusetts and New Hampshire, and latent threats in Connecticut and Rhode Island -- all because FERC, in its history, has never created a working wholesale market for LSEs and consumers. Instead it's been one mandated regulated charge on top of another designed to support "competitive" generation -- capacity payments, uplift, winter "reliability" costs, RMR charges, etc. All these payments, and generators still did not adequately perform in the 2013-14 winter, sending prices skyrocketing, despite the ostensible purposes for billions in "capacity" and "reliability" to prevent that very scenario and "protect" customers from volatility. And it was not a temporary anomaly; LSEs know that costs and pricing in the wholesale market are broken and therefore charged huge premiums for load following contracts this winter, doubling retail rates. And it doesn't help that incumbent owners of formerly regulated assets have opposed measures to provide rate relief that wouldn't have impacted choice or competitive asset ownership -- such as expansion of natural gas pipeline capacity, or transmission to import additional Quebec power. We stress here we do not necessarily support either initiative, but we observe that they were targeted programs which would not have altered the underlying market structure of competition, yet still ran into opposition from merchant players because they would reduce prices -- something that should be happening in a free market but which incumbent asset owners resist under the cloak of market interference. Are these policies any more of an interference in the market than administratively determined capacity payments, reliability charges, and uplift? And when you start opposing every effort to moderate prices -- including those that only nibble at the edge of the current market -- what choice do you leave policymakers? In opposing a Connecticut bill for gas pipeline expansion funded by utilities, the New England Power Generators Association said that government should, "resist[] the temptation to step in and pick winners and losers." FERC's generator-friendly "market" design has already picked a "winner" in restructuring -- the winner is formerly incumbent asset owners, which is readily apparent to state policymakers. We've said for years that state policymakers weren't going to take it, and that retail choice would be the inevitable casualty. It looks like the chickens are coming home to roost See more: Maine Public Broadcasting: LePage Administration Moves to Reverse 15 Years of Electricity Deregulation Policy Bangor Daily News: LePage questions merits of electricity deregulation
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