State urged to deregulate power market

Aug 24 - McClatchy-Tribune Regional News - Thomas Content Milwaukee Journal Sentinel

Wisconsin should end monopoly regulation of electric utilities and open its power market up to competition, a national electricity choice coalition said Thursday.

The Compete Coalition filed the comments with the state Public Service Commission, urging an end to monopoly utility regulation as a response to rising utility rates in the state.

The filing resurrects an issue that dominated Wisconsin's energy community for years while the state PSC wrestled with moving Wisconsin toward deregulation. The plans were scrapped after the California energy crisis more than a decade ago and the demise of power marketer Enron Corp.

The coalition includes major employers including Johnson Controls Inc. and Kohl's Department Stores Inc., both based in the Milwaukee area. In its filing, Compete says that 41 of its 669 members have operations in Wisconsin.

Asked if the filing represented the official position of its Wisconsin members, coalition spokesman Emma Post said it did not. "These comments represent the official position of Compete, which is consistent with the mission that these companies have embraced by joining Compete," she said.

"Electricity consumers can only win if Wisconsin takes steps to reduce the adverse impact of protected monopolies and adopts laws and policies allowing competitive market forces to provide incentives for increased efficiencies, lowest available costs, and environmental improvements," the coalition said in its filing.

Wisconsin utilities had moved toward deregulation in the 1990s, and had positioned themselves for deregulation by selling off their transmission lines to a separate utility, American Transmission Co. But the move toward deregulation was opposed by a coalition of customer groups and others.

The deregulation push lost all momentum after market manipulation sent power prices soaring in California, for which Enron was later blamed.

A customer group, the Citizens' Utility Board, warned that deregulation would be a risky move for Wisconsin. On average, states that remain regulated in the Midwest have lower rates than those that have deregulated, the group said.

"Electric deregulation doesn't guarantee lower utility bills," said Kira Loehr of CUB. "Without regulation customers are left to the mercy of power price manipulation."

Customers of We Energies, the state's biggest utility, have sounded off about rate increases over the past 10 years as the utility expanded its fleet of power plants and added pollution controls. The result: utility bills have climbed at a pace that's exceeded the cost of living.

That may be the case, but "we now have in place modern pollution controls at virtually all of our power plants," We Energies spokeswoman Cathy Schulze said. "We are very well positioned to meet EPA regulations. And as other utilities are required to make environmental investments, our rates will be increasingly competitive going forward."

In states that have moved to deregulate, Schulze said, "the results have been decidedly mixed, and in some cases deregulation has been viewed as a failure."

The coalition said the PSC should urge the Walker administration and Legislature to advocate for a change in how Wisconsin's utilities are regulated. The filing said coalition members in nearby states such as Illinois and Michigan have benefited from customer choice.

Compete said its "members in states surrounding Wisconsin have realized substantial cost savings by participating in well-designed, competitive electricity markets," adding, "These savings allow companies to maintain lower prices for customers and to invest in their businesses."

Cullen Werwie, spokesman for Gov. Scott Walker, said the governor's office would "have to evaluate a specific proposal before we would provide comment."