Editorial

Let's Not Gamble with Protecting Consumers
by Richard G. Johnstone Jr., Editor

Richard Johnstone
Richard Johnstone

In “The Gambler,” country-pop singer Kenny Rogers’ mega-hit from a few years ago (actually, in checking, “a few years” translates to 26, as the song was released in 1978), he sang lines that ring as true for policy-

makers as for serious card players. “You got to know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run … .”

Those lines could well be applied to Virginia’s General Assembly, as our delegates and senators consider what to do with the well-intentioned but ultimately unsuccessful 1999 law that deregulated electricity supply in the Commonwealth. This law was intended to give Virginia’s citizens, from urban business owners to rural residential dwellers, from Arlington to Zuni, the ability to choose their electricity supplier. The hope of legislators was that existing and new competitive suppliers would want to do business in Virginia, making offers to both residential consumers and businesses, and that most if not all consumers would be able to save money through the resulting competition. (As we’ve been careful to point out, deregulation only applies to the electricity itself; existing utilities would continue to deliver that electricity to their customers, as always.)

But an unexpected thing happened on the way to competition and choice. In three words, there is none. No competition, and thus no choice. As outlined in last month’s editorial on this page (“On Deregulation, It’s Time for a Direction Correction”), Virginia’s retail choice law has become an oxymoron: There is effectively no retail choice. And we do not believe there is likely to be any choice for years to come, if ever.

Because there are no competitive suppliers, there have been no savings to Virginia’s consumers resulting from deregulation.

And while we certainly don’t have to flee, running, from the deregulation table (to extend “The Gambler” theme here), Virginia’s electric cooperatives believe that it’s time for the Commonwealth to fold its cards, and walk away from the table, while we still can.

In other words, we believe that it’s time to suspend the 1999 deregulation law. We’re supporting legislation in this session of the General Assembly that would do exactly that.

This legislation would involve several

elements. It would protect consumers by returning all utilities to full rate regulation under the Virginia State Corporation Commission, which for almost a century has done a good job balancing the interests of utilities and consumers. It would allow the competitive wholesale market to continue to develop, offering benefits to utilities that could be passed on to consumers. It would allow retail pilot programs to continue, in order to gauge what may work down the road. And it would ask the General Assembly to revisit the issue in the future if it appears that deregulation of electricity offers any benefits to our citizens.

It’s not just electric cooperatives calling for the deregulation law to be suspended. In addition to Virginia’s 13 locally owned electric cooperatives, the state’s second-largest utility, American Electric Power, is supporting the effort, along with a wide array of groups representing electricity consumers, from large industrial users to small residential accounts. This coalition wants to protect the best interests of  Virginia’s consumers by stopping an effort that is clearly not working, and returning to a system that has worked very well for decades.

Only 16 states, including Virginia, still have an electricity deregulation law on their books. Virginia has the lowest average retail electric rates among these 16 states. Virginia is also the only state in the Southeast to have such a law. There is not a single success story among these 16 states, most of which are in the Northeast or Midwest, where electric rates for years have been higher than the national average. Our rates are lower than the national average. They have little to lose by proceeding with deregulation, figuring their rates can only go down. We have much to lose.

Three generations ago, rural people formed electric cooperatives to provide electricity to areas where other utilities were not willing to serve. Thus, from our founding, our incentive has always been to protect consumers. And that’s our incentive now.

If cooperative members speak out with a clear, unified voice on this issue, this legislative effort can succeed. And if you speak out, you’ll be striking a blow for consumers as powerful as that delivered by the residents of your area in the 1930s and ’40s, as they built a consumer-owned, cooperative utility that is still delivering reliable, affordable electricity today to you and your neighbors.

Speak Out!

Last month’s edition of Cooperative Living included a copy of our 2004 Virginia State Legislative Guide. If you misplaced your copy, or need another one, you may download one at our magazine’s Web site, www.co-opliving.com. Or you may call us at (804) 346-3344. Then, use the guide to get the contact information for your delegate and senator. If you agree with what you’ve read here, then please call them and simply tell them or their staff members: “I support the electric cooperative position on deregulation.”

You’ll be striking a blow for consumers across the Commonwealth. We’ll let you know the outcome of our legislative effort in an edition of the magazine in the near future. Thanks for making a difference.  

 

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