Regulate This!

Surprise Surprise, our electricity rates are going up again. Hey O’Gov weren’t you supposed to do something about this? Oh right you did you made the original increase even higher.

Progressives love to regulate big business in the name of protecting “the people” from the greedy clutches of corporate fat cats. As I mentioned before, big business welcomes regulation because it helps them corner the market by making competition too costly.

Case in point, the FERC regulations fueling the new increase:

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The PSC staff blame new wholesale market rules that reward power producers in areas where electricity supplies are dangerously tight. PJM Interconnection, which operates the region’s power grid and wholesale energy market, implemented the regulations in the spring with approval by the Federal Energy Regulatory Commission.

These “capacity” charges are designed to entice power companies to build new power plants and transmission lines to meet rising demand. After the new rules took effect in June, capacity charges paid to generators soared about 2000 percent overnight, Trimble said. The problem is most acute in Central Maryland, which is home to BGE’s 1.1 million customers.

The capacity charges are controversial within the industry because they put more money in the pockets of power companies regardless of whether they use the added profits to build new power plants. BGE’s corporate parent, Constellation Energy Group, is the state’s largest producer of electricity and, consequently, a primary beneficiary of the regulations.

In the Sun article, reporter Paul Adams notes that state regulators are handicapped because such decisions are made in Washington, with little input from the PSC. However, the PSC is just as guilty of regulating in favor the utility at the expense of ratepayers. Governor O’Malley’s handpicked PSC approved the policy of decoupling. Decoupling allows utilities to separate the rate they charge from the amount of electricity consumed. So no matter how much you electricity you conserve you still pay as if you were not conserving. Where is the incentive to conserve?

All the talk of “re-regulating” electricity markets is tinged with rhetoric of concern for ratepayers. But we know that regulation is just a tool for big business to get from government what it can’t get on the free market–and a means for government to get its own taste.

Here is a novel idea. Why don’t we try actual, real, deregulation. I’m all for some minimum standards of behavior, but the more you regulate–and progressives from time immemorial have not learned this–the more you encourage business to get into politics in order to buy politicians and write legislation. Let companies sink or swim on their own efforts in a market of free and fair competition.

crossposted on The Main Adversary

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