Competition Helps NYS Meet Energy Goals
by Jay L. Kooper

Some people in Albany are floating the idea of re-regulating New York’s electric industry. Given the longstanding global and historical recognition of the benefits of competitive markets, it might seem like a strange idea to return New York to the days of a monopoly-based electric industry. This concept is, however, getting some attention because utility bills are rising.

As this issue receives renewed attention, it is important for state policymakers to obtain the information necessary to make a detailed, critical assessment of electric competition and the benefits it has provided to consumers in the 11 years since its enactment in New York.

First, electric competition has helped hold the line on electricity prices. Indeed, a November 2007 study released by the Albany-based Capitol Hill Research Center shows that when adjusted for inflation, prices have been constant over the last decade in New York.

Second, electric competition has provided New York consumers with a choice of who supplies their electric power. Since restructuring began, more than 70 new energy service companies have opened in New York, offering a range of energy services, including green power, for residential, commercial and industrial customers. These thriving companies, several of which are Fortune 500 companies, provide more than 42 percent of the electric energy that fuels New York, have created well over a thousand new jobs within their first years of participation in New York’s retail electric industry and are making millions of dollars in investments in our state each day.

Third, electric competition has helped New York to become a leader in the development of renewable, non-polluting energy, including wind, solar and biomass, with dozens of energy service companies marketing unique renewable energy, energy efficiency and demand response product offerings to consumers of all sizes. This dramatic growth of the clean energy business in New York is being driven by demand from environmentally-conscious consumers, which is good news for New York’s economy and the environment.

Given all of these benefits of electric competition in New York, re-regulation of the electric industry not only isn’t the answer, but will ultimately harm New York’s consumers by removing their energy choices and imposing billions of dollars in additional costs in the process under a reinvigorated monopoly system. It is well worth remembering that under the old monopoly electric industry electric utilities were able to recover from customers billions of dollars in stranded costs incurred from inefficient investment decisions. This was a hallmark of the old regulated system that would hold true if re-regulation policies were implemented.

Any return to re-regulation will expose customers to these risks at a time when the competitive electric industry is booming and competitive suppliers are just hitting their stride in providing numerous green power and energy efficiency product offerings that will help New York to meet its ambitious 15 percent electric demand reduction by 2015 policy goal.

Finally, re-regulation will not solve the issue of high utility bills because of utility bills did not increase because of deregulation in the first place, but due to exploding worldwide demand for electric power, rising fuel costs for generating plants and tighter regulations.

While it is true that some states have cheaper utility rates, this comes at a significant cost to the environment. In this regard, the states with the cheapest utility bills generate virtually all of their electric power from dirty coal. New York could do the same thing, but our state made a decision to move away from coal-fired generation to a fuel that has less environmental impact.

Competition has held down rates while opening doors to new businesses providing more energy choices. Anyone who supports clean energy, customer choice and lower rates should support competition in the electric industry rather than return to New York’s failed experiment with a monopoly-based electric industry.

Jay L. Kooper is Vice President and New York Chairman for the Retail Energy Supply Association. He can be reached at jkooper@hess.com.