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EPSA Urges Pennsylvania PUC to Support Competitive Market
The Electric Power Supply Association (EPSA) today filed comments with the Pennsylvania Public Utility Commission in response to the Commission's hearing on current trends in the wholesale electricity markets held on November 6, 2008. This was the second in a series of three hearings on this topic. EPSA strongly encouraged the Commission to allow competitive markets to continue producing benefits for consumers in Pennsylvania.
In its comments, EPSA stated that a comparison of retail electric rates between states is difficult because fuel costs are the primary driver of electric rates and dramatically different fuel sources are available and may be deemed desirable from region to region. However, EPSA pointed out that even the hearing witnesses who criticized the rates in restructured states have conceded that rates in restructured and non-restructured states generally have increased at the same rate. EPSA also cited a recent report from the U.S. Department of Justice's Antitrust Division that determined that, "in areas where electricity restructuring has been fully implemented, it is now producing tangible benefits for consumers." The report says, "calls for 'heavy-handed regulation' should be resisted."
"The claims that rates have gone up more in restructured states do not stand up to the facts," said John E. Shelk, president and CEO of EPSA. "Indeed, utilities in the non-restructured states have recently been requesting and receiving sizeable rate increases." Shelk added, "Meanwhile, restructured states are reaping rewards for consumers through increased efficiency, better power plant productivity, more transparency and more investment in renewable energy." EPSA cited many examples of recent rate increases in non-restructured states. For example, Dominion Virginia Power received approval for an 18 percent rate increase earlier this year, while Progress Energy Florida is predicting a 25 percent increase in 2009.
EPSA's comments further expressed concern with the Portland Cement Association's Alternative Market Design Proposal (AMDP) as a direct attempt to go back to the old cost-of-service system. Among other drawbacks, EPSA said the AMDP's proposed unit-specific capacity payment, "represents a full retreat to cost-based ratemaking and would result in price discrimination between existing and new capacity." It also would be counterproductive to replace the current forward capacity market construct at this early stage, according to EPSA. "In this time of rising costs and challenging economics, policymakers in restructured states should continue to work toward market improvements that will provide the regulatory certainty necessary for investment in infrastructure in concert with other mechanisms, such as demand response and energy efficiency, which will ensure continued consumer benefits over the long-term," EPSA stated. "Such a move would result in unnecessary regulatory and investment uncertainty, thus threatening the ability to assure continued system reliability in PJM and other markets."
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.