In a bipartisan fashion, two members of the Virginia House of Delegates introduced legislation that would essentially end the regulated electric utility industry in the Commonwealth. The introduction continues a developing trend of pushing deregulation policies with a clear history of failure, including the dark days of Enron.
Over the past two years, we’ve written about attempts in Florida, Arizona, and Nevada to deregulate the electric power sector. We’ve also discussed the long-term growing pains that states like Texas have faced in recalibrating its marketplace more than 20 years after Governor George W. Bush signed it into law. Some of those pains include going from having the best reserve margin (adequate power supply to meet greatest power demand on any given day) to the worst margin in the country today, as well as massive price spikes on July 2, 2019, that drove retail prices up 25 fold to $920.48/Mwh.
Unfortunately, Virginia House Delegates Mark Keam (D) and Lee Ware (R) apparently failed to note the troubled history of deregulation that has been publicized by us and others, as last week they jointly introduced the so-called Virginia Energy Reform Act. If passed and signed into law, this legislation would force regulated electric utilities to completely exit the wholesale generation and retail electricity delivery markets. That could mean terrible news for customers.
Last week’s introduction of Delegates Keam’s and Ware’s legislation isn’t the first time the specter of deregulation has loomed over Virginia. Last May, when the Virginia Energy Reform Coalition (VERC) was created to push for the ultimate introduction of last week’s legislation, we warned of the peril that Virginia ratepayers could face in a deregulated marketplace. We said the time, “The record is clear…Electricity deregulation not only raises electric rates and threatens power supply reliability, but also exposes consumers to deceptive, predatory sales and marketing practices.”
Nothing has changed in the five plus months since we were quoted in VirginiaBusiness.com, meaning that warning still stands. What is also still true is that proponents of this legislation can’t refute the fact that customers in deregulated states pay – on average – rates that are 40% higher than customers in the regulated marketplace.
Virginia borders Kentucky, West Virginia, Maryland, the District of Columbia, Tennessee, and North Carolina. As the graph below clearly illustrates, all the of the states bordering Virginia in a regulated market (KY, TN, WV, NC) have lower rates and all the states with fully restructured markets (DC and MD) have higher rates.
Since Virginia has very limited retail choice at the commercial and industrial level and since the state’s rates are higher than all of its regulated neighbors, lawmakers should think twice about pushing failed policies that ultimately hurt customers. The Virginia General Assembly made that mistake during the Enron Era in 1999, but thankfully fixed its mistake in 2007.
And, outside Virginia, the Florida Supreme Court struck down a proposed “retail choice” constitutional amendment last week because it blatantly misleads the Florida voter on the perceived benefits of a deregulated electricity marketplace.
The evidence is clear. Delegates Keam and Ware should heed the General Assembly’s wisdom of 2007 and yesterday’s definitive action by the Florida Supreme Court. Doing otherwise would be a mistake the people of Virginia can’t afford and just can’t let happen.