Difficult to manipulate deregulation’s impact

September 13, 2008 02:59 am

— A push by Gov. Ed Rendell to extend rate caps on electricity is a wise move in the current economic climate. Many Pennsylvanians already are reeling from increased costs on all forms of energy.
The problem for many Central Susquehanna Valley residents, however, is that deregulation has already hit them where it hurts.
Customers of Citizens’ Electric in Union County have been paying more for electricity after their caps came off last year. State Rep. Russ Fairchild is concerned they will be left out of any cap considerations.
As state Sen. John Gordner points out, deregulation is a complicated issue. In some areas, customers benefit by being able to choose their electricity provider. He said PPL rates, which once were above the national average, are now below the average.
But if the experience of previously deregulated markets holds true, most of the state’s electricity consumers will see about a 30 percent increase in the electric bills once unregulated and uncapped power starts flowing freely.
It is hard to argue against a free electricity market in a nation ostensibly based on a free-market economy. But the transition from a regulated market to a free market is bound to hurt — and it will hurt some people more than others.
That is why smoothing that transition — as extending rate caps would do — is a good idea.
Deregulation may be inevitable, but the full impact of deregulation does not need to happen in an economic crisis characterized by soaring oil prices.
But any remedies the state applies to some customers should apply to all. If the state extends rate caps for some customers, it should also re-impose them on markets — like Union County — that already are paying more.