For almost two years we’ve been routinely writing to warn policymakers and consumers about the consequences of imposing electric utility deregulation or, as it’s otherwise known, “retail choice.”
Last year, as Nevada voters were about to go the polls, we warned about the negative cost effect that deregulation could have in the Silver State. During its first decade of implementation, Nevada consumers would be on the hook for hundreds of millions, if not billions of dollars, of stranded asset liabilities and costs for reassembling the state’s power supply system. More recently, Dave Lock of the Grand Canyon Electric Cooperative Association noted the increased costs that retail choice would thrust upon Arizona for the same reasons.
Deregulation proponents continue to set their sights on Florida with a 2020 ballot initiative. The simple fact is that deregulating the electric utility sector in Florida by constitutional amendment would be TOO COSTLY and TOO COMPLICATED and threaten the affordability and reliability of energy in the Sunshine State as it tackles the enormous infrastructure task of absorbing an additional five million residents by 2030.
Florida already has a well-regulated, affordable electricity system in place. Despite the flashy promises of deregulation supporters, the truth is Florida consumers pay rates 39% lower on average than in deregulated states.
Deregulation would also jeopardize critical services for Florida families. That’s because it would eliminate $750 million in revenue to local governments collected in franchise fees paid by investor owned electric utilities. The loss of revenue would undoubtedly mean less funding for schools and infrastructure for the state’s rapidly growing population.
To pour salt in the wound, taxpayers would be on the hook for the creation of a Regional Transmission Organization (RTO) to manage the newly deregulated market. In Nevada, a state with a population of just over three million, the startup costs alone for an RTO were estimated to have been $100 million with estimated annual operation costs of $45 million. Imagine what the cost would be for a peninsula state with seven-times the population.
Besides being costly the establishment of an RTO would also be incredibly complicated. Consider, Neil Armstrong recognized his enormous achievement of landing and walking on the moon as the 12th greatest engineering feat. The first – well it was the creation and continued development of the electric grid.
Not to mention, the state Public Service Commission filed a briefing with the Florida Supreme Court in opposition to deregulation, citing cataclysmic changes for consumers, including a dangerous diminution in storm hardening preparation and hurricane recovery.
Florida’s current regulated utility system works pretty well, providing families with affordable and reliable power. There’s no need to fix a system that isn’t broken. Deregulation is a costly, complicated, and potentially cataclysmic bet Florida can’t afford.