Proponents of electric power deregulation used to promise lower prices and much more. But, instead of lower prices, the deregulation experiment in California has led to severe price hikes for millions of customers, and recently, to several days of rolling blackouts. As New Hampshire readies itself for the next phase of its electric deregulation in April, some customers fear the California experience will be repeated here. NHPR?s David Darman has more.
The news from California has caused several key officials in New Hampshire to double check the deregulation agreement between the state and Public Service of New Hampshire, the state?s largest utility. One of the key architects of that deal, Representative Jeb Bradley of Wolfeboro, said recently on ?The Exchange?, that he too, has wondered if the California situation could happen here.
02 919 I?m certainly a lot more concerned than I would have been a couple of months ago. I think California has shown some critical things any state?s that?s deregulating needs to worry about. And I think that the experience in ca has suggested that we in nh need to think about a couple of mid course corrections before we get started to make sure stability of transition service is guaranteed as best we can, and that we?re not creating deferred costs as ca is doing.
Bradley and other state officials say they will be careful in the future not to make the mistakes that California lawmakers made when they hammered out a deregulation deal. Peter Bradford, a consultant and teacher on electric energy matters in Vermont, says one reason costs got out of hand in California is that the deregulation law forced electric delivery companies to buy power on the spot market after generating plants were sold off. This caused the companies to buy power as needed, rather than buying under long term contracts. Bradford says this policy proved disastrous when high prices hit the energy markets, because companies could not pass those costs through to customers.
05 211 California, as part of the political bargain to sweeten the stranded cost recovery that the utilities obtained, put in a firm cap, which they thought would be well above what the utilities would be buying power for. But that?s created the situation where the ca utilities are buying power for 3 and 4 times what theyr?e permitted to sell it for. ?..05 246
Bradford and New Hampshire officials say transition service in this state, which is scheduled to begin in April, also caps what customers will pay, but those caps should not prove as restrictive as in California, because the state relies on power generated using a variety of fuels, not just high priced natural gas. State officials also say electric providers will be allowed to enter long term contracts to buy power.
Deborah Shachter, director of the Governor?s Office of Energy and Community Service, says timing is also on New Hampshire?s side, since unlike California, two new gas plants are already under construction in the Granite state, and officials here can learn from California?s misfortune.
7 300 we?re on a different time frame, as you say, and I think we?re much better positioned to better protect customers while, as I said, more capacity, more plants come on line and while we smooth out the rules of the road if you will for the wholesale market to ensure that the market is functioning well. 7 319
Schachter also says the state will be urging people to conserve electricity, to lower demand during peak periods, when most power is used. Some experienced hands inside the electric industry say conservation can become profitable for companies, as they institutionalize methods to use less electricity. Richard Cowart(d), the executive director of the National Council on Competition in the Electric Industry, says businesses could easily reduce power usage at office buildings, shopping plazas, and other places, without major disruptions. Cowart says consider what could be done on a typically hot day in August.
5 27 the generators are sitting there thinking, gee, they really need me. I?m going to charge a high price. But what if, in fact, we didn?t need them so much, because, we had a dial we could turn that would adjust the operation of air conditioners in a thousand office buildings and for the duration of that afternoon, just change the thermostat setting in those office buildings, or cycle the air conditioning off for 17 minutes each hour. And, we have the technology to do that. That?s the equivalent of bringing a new power plant on line. 5 110
Most experts agree that under deregulation, New Hampshire will not experience the great surges in demand and lack of available power that have plagued California. And there?s even a school of thought that New England?s reliable power supply could act as a kind of magnet for businesses in other states that have experienced disruptions in service.
Stuart Arnett, New Hampshire?s Director of the Division of Economic Development, says many businesses need to decide about expansion or relocation, and the reliability of power supply is no small consideration.
As they make those decisions, its my conjecture that perhaps they might make the decision to move here sooner than they would have otherwise, or as they expand, maybe the expansion here would be larger than it otherwise would have been, if they had a choice of expanding here or in California, especially if the power uncertainty continues. 14 131
If Arnett is correct, California?s troubles may score New Hampshire new or expanding businesses, but most state officials and energy experts are very much aware that something could go wrong with deregulation, when the next phase starts on April 1st, or when generating assets are sold off in the next few years. While officials like to stress the good news about the state?s energy situation, its clear they are watching the news from California very closely.
Delicious
Digg
Reddit
Facebook
Google
Yahoo