State-policy turmoil reshapes utility markets.
Lori A. Burkhart is legal editor of Public Utilities Fortnightly and editor of Fortnightly’sSpark.
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.