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LETTER TO THE EDITOR: Why won't we learn?

Source: 
The Messenger

On Nov. 24, the Morning News published a guest column S.C. Sen. Tom Davis titled "Energy competition is answer to high rates." I disagree with almost everything that Davis wrote.

In my letter of August 29, 2017, I asked whose side our PSC is on. It allowed the acquisition of Progress Energy by Duke Power and then immediately granted Duke three rate hikes that took my rate from 9.98 to 11.637 cents per Kw-Hr. During the 15 years I worked for Wisconsin Electric Power, the company had three stock splits and two rate decreases. This will never happen in S.C.

There is nothing wrong with the regulated monopoly system. The PSC and the legislature are the problems in S.C. In other states, the PSC must approve capital-intensive projects before the cost is passed on to the ratepayers; and before this approval is given, the necessity of the project and possible alternatives are evaluated. Even in Mississippi the PSC curtailed the coal gasification phase of the Kemper County project.

Why won't our officials learn from the disaster that occurred in California when it tried to use competition to lower rates? Power producers sold their power to the highest bidder, and rolling brownouts occurred throughout the state except in cities such as Sacramento and L.A. that owned their own facilities. The only way that there can be competition is if there is excess generating capacity; and even the interveners have given up on that argument. Excess capacity does not exist during peak periods. Even if excess capacity did exist, utilities can manipulate supply, and therefore prices, just as OPEC and the oil companies do.

I would like Davis to explain how he is going to get some buyer to absorb $15 billion of Santee Cooper's debt so that the ratepayers get off the hook. This is the whole net worth of some utilities. This is more "pass the buck" talk.

Earlier this year, Davis introduced bill S.890, purportedly to lower our electric rates by forcing utilities to buy power from independent power producers. I have a copy of this bill. Consumer welfare is not mentioned anywhere in it. The entire bill is geared to prevent utilities from using avoided cost methodologies that are favorable to themselves. This bill puts all the decision-making into the hands of the PSC, the very organization that has granted Duke unprecedented rate hikes. I wrote letters to Sens. Davis and Hugh K. Leatherman Sr. (a co-sponsor) in March 2018, asking them to reconsider this bill, but received no replies.

The Base Load Review Act (Bill 431) that started this whole debacle was supposed to protect ratepayers. I quote, "An act to protect South Carolina ratepayers by enhancing the certainty of investments in the infrastructure of electric utilities serving consumers in this state and the recovery of fuel costs." The law was poorly written unless it was intended to be another back room deal; and our PSC failed to do its job.

Artificially created competition is not the answer. The answer is for our PSC and legislature to quit the back room deals and start doing their jobs. We don't need to pay our government if it is not going to work for us.

LAWRENCE D. WEBER

Quinby

Discussions

Bob Meinetz's picture
Bob Meinetz on December 11, 2018

"There is nothing wrong with the regulated monopoly system."

Actually Lawrence, there is plenty wrong with the regulated monopoly system - and it's not limited to South Carolina. Ratepayers across the U.S. are experiencing the same rate hikes, corruption, and abuses as you.

They stem from the 2005 repeal of the Public Utility Holding Company Act of 1935, legislation signed into law by FDR in response to exactly the same abuses taking place in the 1920s. Among other safeguards, it mandated annual examination of utility finances by the Securities and Exchange Commission. It prohibited campaign donations to, and lobbying of, elected officials by energy holding companies. Most importantly, it forbade "affiliate transactions" - a profit structure where gas subsidiaries sold gas to electricity subsidiaries at a markup, then the electricity subsidiaries billed their ratepayers based on the arbitrarily-high price they were charged for gas - all under the direction of the same holding company.

The Act, or "PUHCA" as it became known, was remarkably effective. Combined gas and electricity holding companies, by 1949, ceased to exist. Utilities became famously known as a boring, low-yield investment which always made money, as portrayed by the then-new board game Monopoly.

Utilities chafed at this arrangement from the start, however, and immediately began experimenting with devious ways to get around it. By the 1980s politicians had figured out how to grant exceptions to PUHCA, and in 2005 oil and gas interests associated with the Bush Administration were able to amass the political clout to repeal it. Now, utility holding companies are back with a vengeance, along with the exactly same abuses of public interest they engaged in 80 years ago.

Santayana said those who don't remember the past are doomed to repeat it, but very few lawmakers alive today know enough history to recognize a problem that was solved before they were born. So unless someone arrives in D.C. versed in the history of regulated energy monopolies, the inevitable solution might more aptly be compared to re-inventing the wheel, and the process will be at least as arduous as the first time around.

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