Still Waiting … Waiting … Waiting for Electricity Choice

Yesterday, “New Mexico’s largest electric utility asked state regulators … for an average system rate increase of 14 percent — two months after the most recent increase showed up on consumer bills.”

The request is hardly good news for a state with a crumbling economy. But the good news, especially in an era of endless deficits, is that a no-cost solution is available. Deregulation, when implemented properly, remains a powerful tool for power affordability.

That’s what a large majority of Nevada’s voters decided one month ago today. More than seven in ten favored Question 3, which requires the “Legislature to provide by law for the establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.”

In a pro-Question 3 op-ed in the Las Vegas Sun, John Hanger, former head of the Pennsylvania Department of Environmental Protection and a onetime member of the Keystone State’s public utility commission, described the benefits:

After 20 years of allowing customers to choose their generation supplier and competitive power markets with appropriate oversight, customers in the Philadelphia and Pittsburgh regions are paying much less for power generation than they were in 1996. In real or inflation-adjusted dollars, those residential customers are paying about 50 percent less. And Pennsylvania’s statewide average electricity price is at the national average as opposed to well above it.

Thanks to competition for customers, power plants don’t earn revenues for their owners unless they operate, unlike during the monopoly era, when ratepayers typically paid for power plants even when they did not operate. As a result, power plants today are much more efficient and burn much less fuel to produce the same amount of power. The pressure to run more efficiently means they pollute less.

Errors of Enchantment has argued before that it’s time for New Mexico to revisit the Electric Utility Restructuring Act, which was passed in 1999 but repealed four years later.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 retreat from competition portended “nothing but high prices in the long run.”) As the charts below indicate, the price of juice in the Land of Enchantment is somewhat competitive for industrial customers, but is second-worst for commercial enterprises and most expensive for homeowners.

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.