Commentary

Pa. once had a near-miss with Texas-sized deregulation. We have to remember our history and be on guard | Ray E. Landis

February 25, 2021 6:30 am

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The horror stories about the impact of the deep freeze on Texas are frightening. Millions without power for days. Water pipes freezing, then bursting, then flowing with contaminated water unfit to drink. Astronomical energy bills for those lucky enough to have electricity in their homes.

Everyone is impacted by this chaos, but such a catastrophe can be a death sentence for older individuals. The elderly, particularly those with debilitating health conditions, are more susceptible to these freezing temperatures.

Seniors living on fixed incomes who stretch every dollar are particularly at risk. They are the first to lower the thermostat and wear extra layers of clothes when it gets cold. But another sweater cannot alleviate the danger of this kind of weather event – or the danger of having power cut off in the weeks ahead because of skyrocketing electric bills.

Those of us living in Pennsylvania who are observing this catastrophe from afar may assert this is a result of the wild fluctuations in weather because of climate change, wonder how a state known for its energy production could get in such a situation, or blame the situation on lax regulation of the electric industry. All of those conclusions are accurate.

But most Pennsylvanians don’t know the background of how Texas’ electricity nightmare happened, which is detailed in this New York Times article. And fewer Pennsylvanians know about a push made in the past decade to bring the Texas model of energy deregulation to Pennsylvania – and the critical work that took place to prevent this from happening.

Electric deregulation occurred in Pennsylvania in the late 1990s when legislation was approved by the General Assembly.

The electric choice program was hailed by many as giving consumers the freedom to shop for their electricity provider. Proponents touted the flexibility it would give consumers to get lower prices as different companies competed for their business.

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The reality has been a lot different. Electric choice has been great for large consumers of electricity, such as manufacturers. But for individuals, the electric choice program has been an annoyance at best and a financial burden at worst.

Anyone with a telephone in Pennsylvania can tell stories of the calls that have flooded their household for years from electricity providers attempting to get them to switch their service. Great savings were promised, but in the end those savings often proved to be just a few dollars a month. These initial savings usually came in the form of a variable rate plan – which left some people with astronomical electric bills when the Commonwealth suffered its own deep freeze in 2014 and prices skyrocketed.

Fortunately for Pennsylvanians, a provision of the original law deregulating electricity assigned each household a default electric provider – the company that maintains the electricity infrastructure in an area.

Customers have the option of exploring the marketplace or staying with their default service and can switch back and forth at any time. Critically, the default providers must sell electricity to consumers “at cost” while using a “prudent mix” of electricity sources. This means while the default provider might not have the cheapest rates, price fluctuations because of weather or other events which could drive electricity prices up are not as dramatic as with most marketplace companies.

This is not how it is done in Texas, where every customer is forced to choose a provider or have one randomly assigned to them.

Beginning in 2013, a strong effort was made to bring this system to Pennsylvania. Most of the big energy companies were on board, the chairman of the Pennsylvania Public Utility Commission at the time, Robert Powelson, was a big supporter, and legislative sponsors had been recruited.

But consumers in Pennsylvania have a hidden gem not enough of us know about. Pennsylvania’s Office of the Consumer Advocate (OCA) represents consumer interests in utility matters. It was the OCA which pushed for the default service provision in the original deregulation law. And it was the OCA which led a coalition of consumer groups to successfully defend the provision when it was threatened.

We will continue to face challenges about energy use and affordability in the coming years. But electricity and water are not conveniences for consumers. They are necessities. Texans are more aware of that reality today than they were a month ago.

Pennsylvanians must remember our history and ensure we do not let those who envision bigger profits be the drivers of how we heat our homes and run our appliances. We need to support and bolster the efforts of our Consumer Advocate in protecting Pennsylvanians from the excesses of the energy industry.

Opinion contributor Ray E. Landis writes about the issues important to older Pennsylvanians. His work appears biweekly on the Capital-Star’s Commentary Page. Readers may follow him on Twitter @RELandis.

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