The nuclear fiasco

The sale of taxpayer-owned Santee Cooper provides state lawmakers with a unique opportunity to consider competition to protect customers. In fact, the success and failure of competition in other states provide examples to legislators.

The following is by Jerry Ellig, a George Washington University research professor.

“Texas is widely regarded as the state with the most extensive retail competition for residential customers. The Texas Public Utility Commission concluded that average fixed prices available from competing electricity suppliers are 10% to 24% below the last regulated rates in 2001,” he wrote.

“Customers can choose prepaid plans, time-of-use pricing, free electricity on weekends, power from 100% renewable sources, and contracts ranging from 1 month to 60 months. 92% of residential customers in the parts of Texas where competition exists have chosen a competitive supplier.

“California’s restructuring, on the other hand, created skyrocketing rates and bankrupted a major utility due to policy mistakes that allowed generating companies which sell the electricity that utilities distribute to jack up the wholesale price.

“Texas succeeded where California failed because Texas avoided the temptation to mandate large price cuts for customers who do not shop for a better deal, allowed competitive energy marketers to offer consumers a wide variety of contract terms, and left marketers free to negotiate whatever kinds of supply contracts they believe prudent.

“Closer to home, new industrial customers in Georgia enjoy robust competition for their business because co-ops and municipal utilities negotiated access to Georgia Power’s transmission lines in the 1970s.

“The utility granted this access in exchange for investments by co-ops and municipal electric companies to help cover cost overruns at 2 nuclear plants. Even a small electric company distant from a new industrial plant can compete to serve the plant.

“A study from the Palmetto Promise Institute even suggests that competition between local electric companies with their own wires could be feasible.

“A map of the state shows a patchwork of adjoining service territories served by investor-owned utilities, co-ops, municipal electric companies and Santee Cooper.

“Towns served by 2 electric companies with competing wires have 11% to 16% lower costs and prices 20% to 33% lower than those without competition.”

Regardless of whether you are for or against selling Santee Cooper, there are numerous things that need to be corrected. Problems rarely get resolved by ignoring them. Competition should be seriously considered to help customers.

Funderburk and Clarkson are energy experts at Resource Supply Management in Columbia.

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