Regulators Forum: Restructuring Rollback

Deck: 

State-policy turmoil reshapes utility markets.

Fortnightly Magazine - November 2007
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The regulatory landscape is shifting in America, with monumental results in some states.

As deregulation-era rate caps and rate-freeze periods are ending, prices are rising in many restructured markets. As a result, policy-makers in some states are jumping in to re-regulate. Noteworthy examples include Maryland, Illinois, and Virginia. Ohio’s Supreme Court overturned two post-restructuring rate plans aimed at helping utility consumers cope with rising market-based electric rates. Pennsylvania utilities are preparing consumers for similar increases. And the Michigan Legislature is debating a return to a more traditional, monopolistic regulatory structure.

At the federal level, the Electric Energy Market Competition Task Force in April 2007 released a report to Congress, mandated by the Energy Policy Act of 2005 (EPAct), in which it found competition lacking at the retail level.

But the trend toward re-regulation is no guarantee against energy-price sticker shock. Many states are looking toward demand-side energy management to rein in costs for ratepayers. Smart metering and time-of-use pricing, in part spurred by EPAct, are gaining interest, as is rate decoupling. Traditional rate-making, however, never really went away.

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