by John Hanger, former Pennsylvania state utility regulator and former Secretary of the PA Dept. of Environmental Protection
The Virginia General Assembly soon will consider vital proposed legislation – Senate Bill 837 and House Bill 1528 – that would increase choices for electricity consumers, boost renewable energy that has been stunted by electricity monopolies, and provide opportunities for energy savings for consumers. Standing in determined opposition to these improvements for Virginia and its consumers is principally Dominion Energy, which is using all its lobbying might to block needed energy reforms.
It is time for Virginia to adopt three specific reforms to its laws governing the generation and sale of electricity. First, all Virginia consumers must be allowed to buy electricity generated from renewable energy sources and offered by competitive electricity suppliers. Second, the power of Virginia’s existing electricity monopolies to block renewable energy products from reaching Virginia’s electricity consumers by enacting a so-called 100% renewable energy tariff must be repealed. Third, Virginia’s larger employers and groups of smaller businesses aggregated together must be allowed to shop for cheaper electricity when it is available from competitive electricity suppliers.
These are important reforms that would increase choice, competition and environmental performance, while maintaining regulatory protections and oversight of the electricity marketplace. Utilities will continue to have a full responsibility on the delivery of power to homes and businesses but would lose their ability to block cleaner and cheaper power from reaching millions of Virginians.
Cheaper and cleaner power is now readily available to Virginia consumers. Indeed, the price of energy within the PJM power pool that serves Virginia has declined as much as 55% since 2008. Huge cost reductions in solar and wind power also mean that attractively priced renewable energy products are available to consumers outside of Virginia.
Twenty years ago, Pennsylvania’s electricity consumers also were captured by their monopoly utilities and were paying the price for their captivity. Residential consumers in our two most populous regions—Pittsburgh and Philadelphia—paid electric rates that frequently were among the 10 highest in the nation. Small business consumers also typically suffered from high rates to power their restaurants, stores, and small manufacturing shops. In 1996, Pennsylvania’s electricity rates for the whole state and all consumers were about 15% above the national average.
For those high rates, Pennsylvania’s consumers got electricity from monopoly-owned generation plants that put enormous amounts of pollution in the air, sickening and even shortening the lives of hundreds of thousands of people. Mercury, sulfur, soot, nitrogen, carbon poured from coal plants, which guzzled huge amounts of fuel and converted it inefficiently into power. And those consumers who wanted to generate power for themselves faced a bureaucratic nightmare that made it difficult, if not quite impossible, so very few could.
Now, after twenty years of allowing all consumers to choose their generation supplier within a competitive power market structured with appropriate oversight, consumers in the Pittsburgh and Philadelphia regions are paying much less for generation than they were in 1996. In inflation adjusted dollars, those residential consumers are paying about 50% less.
Consumers now can buy renewable energy products for their homes, as I do. My electricity generation supplier provides me with 100% wind power that is generated from wind farms in Pennsylvania. Thousands of other consumers are installing solar and using other technologies to generate their own power.
Consumers now can buy multi-year contracts of fixed priced power to insure long-term price stability. They can also get innovative energy efficiency services customized for their homes and businesses to reduce usage and cut power bills.
Policies implementing competition are not the same as “deregulation,” where there is no public oversight of corporate behavior. Market rules, and the means to enforce them, are vital to insure competition is real and beneficial to the economy and environment.
Pennsylvania’s residential consumers are saving approximately $900 million per year thanks to well-designed and implemented competitive wholesale and retail electricity markets. Pennsylvania’s economy and environment are better today, because Pennsylvania allowed consumers to choose their electricity supplier. Allowing Virginians to buy renewable energy and to choose lower cost competitive suppliers can benefit Virginia, too.
The data cited throughout this article is sourced chiefly from this paper: https://kleinmanenergy.upenn.edu/paper/electricity-competition