The most dangerous declaration in public policy might well be: This time is different. So, our skepticism was piqued when such a claim came from proponents of electric utility deregulation in a recent story in The Times-Dispatch.
Former Virginia Attorney General Ken Cuccinelli and hedge fund manager Michael Bills are reintroducing the prospect of deregulation, hoping our legislators have forgotten the nearly decadelong debate that ended in our state’s rejection of the proposal. For those who might need it, we offer this brief refresher.
Nationwide, electric deregulation was in fashion during the 1990s. It promised lower prices and more choices for customers. What really happened was something quite different. In fact, electric rates in deregulated states are more than one-third higher today than rates in states that have retained regulation.
To the commonwealth’s north and west, in states attempting to deregulate, prices soared. In nearby Delaware, the price of electricity for residential customers climbed by more than 50%; in Maryland, more than 40%. Additionally, electric competition, especially for smaller customers, simply failed to materialize. These examples helped bring to an abrupt halt Virginia’s own deregulation experiment, launched in 1999. Eight years later, the General Assembly reversed course and reregulated the state’s electric system with then-state Senator Cuccinelli casting nine separate votes in 2007 in favor of the Hogan (HB 3068) and Norment (SB 1416) bills to abandon deregulation efforts in Virginia.
Back in the 1990s, deregulation was focused on large central power plants. It changed nothing for the electric grid itself, which remained under utility control. And it did nothing to make the grid stronger, more secure and more resilient — pressing needs today in the face of threats such as cyberattacks from hostile nation-states.
Not much has been heard about deregulation in recent years, with good reason. Uniformly, its results have been poor. Look no further than Enron, an enthusiastic proponent of deregulation, for evidence of that. In New England, consistently high prices and fuel security challenges led to disappointment. In Maryland, price spikes raised alarms, strained customers’ finances and led to repeated efforts to re-regulate the system. In California, the outcome was disastrous: rolling blackouts, the recall of a governor and widespread economic chaos.
What renewed interest has arisen in deregulation has been focused on how to unwind it. In just the past year, Massachusetts’ attorney general called for a return to regulation in her state, charging that, for residential customers, deregulation has brought little except “aggressive sales tactics, false promises of cheaper electric bills and the targeting of low-income, elderly and minority residents,” with customers losing almost $177 million in just two years from “predatory companies.”
Could this time be different in Virginia, as proponents of deregulation claim? A clear look at the facts produces a clear answer: no.
Let’s look first at the claim by deregulation advocates that things will be better this time, due to the fact that Virginia utilities now belong to a regional transmission organization, PJM. Experience shows that PJM membership does not immunize a state from deregulation’s pitfalls. The “M” in PJM is for Maryland, a founding member and one of the case studies in the challenges of moving ahead with deregulation. Plus, Dominion Energy Virginia was a member of PJM for almost two years before the General Assembly chose to re-regulate our state’s electric industry. Belonging to PJM is not a shield against the consumer protection and price volatility challenges of deregulation.
The alliance of far left and far right backing a return to deregulation in Virginia might be unusual, but the idea they present is an old one, bad for consumers and increasingly outdated.
Virginia has chosen a better way. We have low, stable prices for customers. We have a rapidly growing portfolio of renewable energy. And we are transforming the grid itself to accommodate renewable energy and to further improve service. We also are strengthening the grid at a time when threats come from both natural disasters and foreign aggressors.
This is not the time to go back a generation in energy policy. It is time to move forward with transforming and securing the grid rather than reverting to the failed proposals of the past.