It was a "classic" publicity event-long on vision, but short on substance. There he was, the Secretary of the Department of Energy (DOE), Spencer Abraham, standing toe-to-toe with each of the...
Midwest ISO CEO Matt Cordaro gave in Washington, D.C. at the end of May at the Edison Electric Institute's "Reliability Summit." He documented many of the problems (price spikes, distorted markets, constrained interfaces, system emergencies, etc.) that have become legion this summer. He ran down a litany of things he's got to keep his eye on, such as whether a drought in the Midwest might lower reservoir levels and leave power plants short of cooling water, forcing them to trim output:
"Although we cannot control temperature [or] ensure adequate rainfalland even an act of Congress will not alter the laws of physicswe will ... provide the infrastructure to maintain reliability and support a robust market in electricity."
Isn't that what a utility does? So if I want to be a "utility investor," how do I convert my erstwhile utility stock to new shares in the Midwest ISO?
AND THE PUCS OUGHT TO JUST FOLD UP THE TENT. Every night on your local television newscast, you can probably find a five-minute segment by a consumer reporter, telling you what to do when you get ripped off by a car body shop or a home remodeling contractor. These cases are simple. Third-year law students often volunteer at phone banks and county fairs to help consumers with these types of problems. There's not much expertise involved. And that's exactly the type of case that will eventually prevail as the norm at the state public utility commissions, after the utilities get through with selling off their power plants and delegating control over transmission assets to the system operator.
If restructuring stays true to form, then state choice laws will leave the local distribution company without customer contact (the unregulated supplier takes its place as retailer). The PUCs will lose all reason for being.
They will become consumer hand-holding agencies_charged with arbitrating disputes between consumers and energy retailers, which involves as much specialized knowledge as my examples of car repair and home fix-it scams. And though the supplier retailer may become captive to the local disco, that supplier will likely be one of only three or four nationwide energy retailers. These retailers will have lawyers. They will know how to go to court. I don't see why we would need state PUCs as an extra layer to review complaints involving the operation of the distribution grid.
BUT THAT ASSUMES THAT CONSUMERS WANT "CHOICE." And the jury is still out. Some say that electric customers are getting more than they want. Others say none at all.
Back in May in Montreal, I sat on a conference panel on the future of retail choice in energy. Also on the panel was Sharon Darcy, representing the Consumers Association, the British equivalent of our Consumers Union, publisher of Consumer Reports. Darcy suggested that electric customers in Great Britain are fed up with choice. They have too much of it. Or at least they lack the kind of choice in energy markets that would prove meaningful to their lives.
NiSource CEO Gary Neale sat on our panel as well. He also serves