Guest commentary: Take government out of utility cost equation

Guest commentary: Take government out of utility cost equation

Record-Journal
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It is well known that electricity rates in New England are much higher than the national average. Elected officials talk about the problem and raise their voices even higher when manufacturers and major employers announce they are either expanding their operations in other states or leaving the region entirely, taking thousands of jobs with them.

Instead of taking the time to really understand the problem, all too often legislators undertake knee jerk reactions. They add more mandates, subsidies, handouts, payouts, credits, tax relief or some other form of government intervention in a useless attempt to artificially cut electricity costs. These actions are just making matters worse.

Much of the region’s relatively inexpensive baseload power has been shutting down. In recent years, several thousand megawatts of capacity has been shuttered or slated for closure. This is capacity that can run day and night, in cold weather and during heat waves. It’s the kind of capacity that can keep electricity prices from spiking five to ten times higher than normal, as well as keep our capacity costs down.

Several nuclear plants have been included in these closures. With the imminent closing of Pilgrim, New England will have only three nuclear units remaining — Seabrook Station in New Hampshire and two units at Millstone in Connecticut. It now appears that Dominion, the owner of Millstone, is seeking government support under the premise that without it they may consider shutting down.

Why do elected officials keep trying to inject more funding and policy solutions into the electricity markets when the past 15 years shows that the more they get involved the worse our electricity prices get? Maybe these same officials should realize that tax handouts to renewables, Renewable Portfolio Standards, grants, the local and state tax abatements and the myriad government interventions have resulted in a discriminatory and terribly inefficient electricity market.

By picking winners (and driving the “losers” out of the market) the government has grotesquely distorted wholesale energy markets. We have false price signals driven by massive government support, allowing favored intermittent power sources to suppress wholesale prices. This impairs the viability of our vital baseload generators — the ones that save our lives on those freezing cold winter afternoons when intermittent generators don’t produce any power and the large natural gas generators can’t get enough fuel due to a lack of pipeline capacity. It becomes inevitable that the economics of Brayton Point, or Vermont Yankee, or Pilgrim, or Millstone, or Seabrook get skewed to the point where they can’t economically function. The result of these producers leaving the market shifts the costs of electricity from the wholesale market to the capacity market to the tune of BILLIONS of dollars a year.

This impact on wholesale prices doesn’t make the overall costs of electricity lower for the end users. It simply masks the rapid cost escalations — costs that the end users still see and drive them out of the region.

So, what do elected officials do? Instead of trying to understand (or acknowledge) that the policies they have enacted failed, they try to find another band aid, another scheme, another policy change they can bolt onto the Rube Goldberg-esque electricity market in New England.

The latest example of this irrationality comes from Connecticut, where they are trying to figure out what taxpayer or ratepayer support they can throw at Millstone. They seem determined to throw millions of dollars at a preferred “winner” and further twist an already insanely skewed energy market. Providing this support does not result in a single new MW of electricity for Connecticut or the region nor does it help anyone achieve the goals of reducing emissions. All it will do is provide more revenue for what is likely a profitable plant.

It is time to stop the madness.

It is time for elected officials to take actions that will fix the problem instead of denying that the machinations of the past 15 years aren’t working. It is time they stop picking winners deserving of handouts and losers deserving elimination. Let more efficient, effective and inexpensive generators get paid, and the most expensive and inefficient go away. Stop layering on your policy preferences, stop subsidizing preferred power solutions, stop mandating who generates our power.

If we roll back these mandates, we will not have to spend millions to subsidize what should be a very important, inexpensive and profitable generation facility. Whether its taxpayer or ratepayer money, there is no good reason to prop up Millstone or any other “preferred” generator. If you are determined to hide your ineffective policies to date and raise taxes or electricity prices, you should realize those bills are paid by big companies you aren’t really helping. If we don’t choose to stop the madness, we will keep waving goodbye as jobs leave the state.

Marc Brown is the executive director of the New England Ratepayers Association, the nonprofit dedicated to protecting ratepayers in New England.




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