Deregulation: The Road Not Taken

Liberal activists are wailing about PNM’s request to hike its rates. As the Albuquerque Journal reported: “The utility wants … approval for $123.5 million in additional annual revenue, mostly to pay for about $655 million in investments it’s made in the electric system since 2010, the last time it received a rate increase. Among other things, the company also wants to raise the fixed monthly charge on customers’ bills by about 160 percent, from about $5 to $13, to better cover fixed costs as the rate of growth in electric consumption declines in New Mexico through energy efficiency programs and conservation.”

But concerns about the price of electricity shouldn’t lie solely with the left. The price of power can be a significant cost for many industries, and New Mexicans working to foster a vibrant private sector here should support reforms to make electricity more affordable.

It’s disappointing that in all the debate over PNM’s rates, deregulation is never mentioned. Many states have “restructured” their electricity markets over the last two decades. Some efforts have yielded dismal results, due to poorly designed plans that imposed as many — or more — mandates as were lifted. (California’s high-profile debacle is the best example.)

Yet several states adopted true deregulation, and customers of all kinds — residential, industrial, and commercial — benefited. Texas stands out, as does Pennsylvania. (The Keystone State has the lowest electric rates in the Northeast.)

In the words of the COMPETE Coalition’s William Massey: “Markets are working when regulators and policymakers give competition a chance. It drives prices to their lowest available levels.”

Power in four of our five neighbors is cheaper than it is in the Land of Enchantment. It’s time to revisit the Electric Utility Restructuring Act, which was passed in 1999 but repealed four years later. (In 2003, the Foundation presciently warned that the repeal portended “nothing but high prices in the long run.”)

Competition offers the best path forward for electricity in New Mexico. Why are elected officials AWOL on deregulation?