Green Issues

 Fix the WV Electric Deregulation Plan

Electric utility deregulation has become one of the most controversial issues in the nation. The Deregulation Plan being advocated by the WV Public Service Commission was prepared before any of the adverse consequences from California and other states became apparent.

Before any plan is implemented here, the WV Legislature should direct the PSC to correct basic flaws in the Plan to better protect consumers and the environment.

 Changes to the Plan should address three goals:

---Promotion of clean renewable energy sources.

---Telling consumers The Whole Truth about the electricity they buy.

---Prohibiting price gouging and unfair marketing practices.

 Specific changes should include:

1. Providing renewable sources of electricity for those customers who want them.

Experience from Ohio shows that "green" energy simply is not available for customers who want it, in spite of assurances that deregulation would open the market to renewable energy providers. West Virginia's Plan needs a minimum renewable energy standard mandating that at least a proportion (5-10%) of electricity will come from renewable sources. This kind of Renewables Portfolio Standard has been adopted in other states. It would help assure that adequate renewable energy sources in West Virginia would be developed.

2. Expand "Net-metering" to encourage distributed generation and renewables.

Net-metering means that customers can install their own solar panels or wind mills to generate part or all of their electricity. Since these sources do not generate electricity all of the time, "Net-metering" allows customers to get part of their electricity from local power lines and part from their own generators. (Net metering makes renewable energy sources practical because they are intermittent.) When a home owner generates more electricity than they are using, they can feed it back into the grid and "run the meter backwards".

The current WV Plan has a very limited net-metering program and proposed rules would require net-generators to give excess electricity back to the utility for free, thereby eliminating part of the economic incentive needed to make renewable sources cost-effective.

West Virginia has great supplies of renewable resources that could be developed to benefit our economy, but needs to overcome artificial barriers in the proposed rules for marketing it. West Virginia's Plan should eliminate barriers to net-metering and provide the full benefits of their resource to those customers that install net-metering generation. Net-metering programs work well in many other states, why not West Virginia?

3. Disclose environmental emission and fuel source information to customers.

The current WV Plan extremely limits environmental disclosure information. Most customers will only get pricing information in customer bills. A free market works best when "informed customers make informed choices." West Virginia's Plan should require environmental disclosure every time a customer hears a sales pitch or gets a bill from electricity suppliers. If customers only hear about price, they will only select the lowest cost provider and a competitive renewable energy market will not develop. If a customer hears about price, energy sources and environmental emissions, then they can choose the mix that best suits their needs. This way a variety of companies can find a niche in the market place. Customers get environmental information every time they buy a refrigerator or a car, why not electricity? Customers in other states get this information, why not West Virginia?

4. Level the playing field for new power plants.

Old power plants are exempted from many air pollution control requirements, making it difficult for new power plant to compete, not to mention polluting the air we breathe. West Virginia's Plan should mandate the same pollution controls on old plants as are required for new power plants. This would remove price inequities that distort the market against new technologies and would help clean up our polluted air.

5. Promote energy conservation.

The best way to save money for consumers and help the environment would be to stop wasting so much energy. The proposed deregulation Plan has already cost customers in West Virginia millions of dollars because utilities have abandoned energy conservation programs. West Virginia's Plan should provide funding and incentives for energy conservation. Energy conservation could cut costs for consumers and create new jobs for small businesses in marketing and installation. This would help shift the emphasis in the current Plan from helping a few utilities and big businesses to helping all West Virginia consumers.

6. Prohibit price gouging.

Some electricity marketers lure customers with "deals" that offer a low rate for basic service, but then charge ten times more for service during periods of peak demand. This kind of price gouging resulted in the huge bills facing customers in other states. The current WV Plan has not protection for consumers against these practices. West Virginia's Plan should make price gouging illegal. Electricity marketers deserve a fair profit but should not be making huge windfalls by ripping off the consumer with unethical pricing schemes.

7. Prohibit unfair marketing practices by existing monopolies.

Existing electric utility monopolies want to retain unfair advantages by marketing to customers through their existing distribution companies. This gives those energy generators a huge advantage in name recognition among consumers and restricts the ability of other companies to gain an adequate market share to be competitive. Under the current Plan, few new companies would enter the West Virginia market and little competition would ever develop. West Virginia's Plan should prohibit these unfair marketing practices so that all electric generators compete on a level playing field.

8. Encourage consumer aggregation to balance the market power of large users.

Small residential customers do not use enough electricity to get the best deals from bulk power suppliers. Generation companies will offer low rates to large users to gain their business, then make up the lost profits by charging higher rates to residential consumers who will have no choices. Although customer aggregation is allowed under the current Plan, cities, counties or other local governments need additional legislative authority to form purchasing pools for their citizens. West Virginia's Plan should authorize local governments to form purchasing pools so that they combine into large enough demand to compete with large industrial users. This system is working well in some other states, why not in West Virginia.

9. Eliminate mandatory rate cuts for industrial customers and mandatory rate increases for residential customers.

The current Plan requires utilities to shift more of the cost burden from big businesses to small customers. West Virginia's Plan should benefit all West Virginia consumers, not a few big businesses.

10. End subsidies for certain power plants.

The current plan retains subsidies for a few higher-cost power plants in West Virginia. These "PURPA" plants generally have lower environmental emissions and would be able to draw higher rates on the open market, but instead have insulated themselves from competition and will continue to be subsidized by rate payers. West Virginia's Plan should phase out subsidies for "PURPA" plants so that they have to compete and make a profit on the open market like all other generators.

11. Provide a public education campaign.

The current Plan ignores public education and assumes that consumers will become informed, knowledgeable customers overnight. But customers do not learn good about electricity markets that quickly and can get trapped into bad decisions. West Virginia's Plan should require an extensive consumer education campaign to alert customers about their options and how to get good deals from electricity generators.

12. Evaluate whether a competitive market exists.

Deregulation will only benefit consumers if true competition develops. But many generators have indicated they would not compete in West Virginia, and the trend in the electric utility industry is for mergers to consolidate generation into a few big monopolies. West Virginia's Plan should have specific criteria to evaluate whether true competition exists, before abandoning customers to unregulated monopolies. The Plan should extend the regulation process until customers in every part of the state have a true choice.