Backdoor Electric Deregulation by “Political Suck-up Board”

Reprinting a comment by Traven at the Prog Blog:

CVPS wants what GMP has - “Alternative Regulation” - which may not use the deregulation word, but produces similar results. Effective earlier this year, GMP was granted permission to pass along the volatile wholesale cost of power to electric users. Under the alternative regulation scheme, GMP customers may see their electric bills change four to six times a year. No wonder CVPS wants deregulation, oops alternative regulation, too.

According to political appointee Riley Allen, director of planning for the Department of Public Service, whose mandate is to protect the interest of ratepayers, “The reality today is that wholesale (electric) markets are extremely volatile.” Certainly true, and reason enough as Californian’s found out years ago not to go there. In effect, under the new regulatory scheme, GMP will always know the wholesale prices it pays for electricity, but is protected from most of the price volatility. Electric users on the other hand will get a bill totally after the fact, when it is too late to reduce electric usage. It might not be so bad if electric users had real time price information and the ability to cut usage immediately. But we don’t. And so, those price spikes in natural gas prices and hot or cold weather will really hurt.

“Alternative Regulation” leaves GMP’s customers exposed to volatile prices. And its not just electricity use in Vermont that will drive the price GMP charges, but usage across all of New England. This is because electricity is priced and sold regionally. Think CT and Boston.

In its order allowing the alternative path to deregulation, the Public Service Board, or as renamed in Jeff Danziger’s cartoon, the “Political Suck-up Board”, stated that GMP’s new way to charge its customers for electricity would not set a precedent. Anybody want to make a bet?