|
CH Chief Says Utility Deregulation Has Disappointed
By Craig Wolf - Poughkeepsie Journal, October 30, 2009
The deregulation of the electric power industry, by and large, has not achieved the goals that advocates claimed for it, says the head of CH?Energy Group, parent of Central Hudson Gas & Electric Corp.
A few benefits have been realized, but lower costs - the key piece - would be hard to prove, said Steven Lant, chairman, president and CEO of the Poughkeepsie-based utility.
Given the chance, Lant said, Central Hudson would like to go back into the generation business that the state stripped away from it in the deregulation program announced by the Public Service Commission in 1996.
If it's ever allowed to go back to building generating plants, Central Hudson would likely do it in the renewable energy areas, he said. CH's nonregulated subsidiary has done several projects like that outside of Central Hudson territory.
Lant spoke to the board of the Dutchess County Economic Development Corp. Power costs in New York state are higher than in most states, and that has been a problem in attracting employers who use a lot of power, said Gordon Rutherfurd, the agency's director of business attraction.
"The data centers right now are going elsewhere,"?he said.
Deregulation meant utilities had to sell their generating plants. Central Hudson now buys power from independent owners and the New York Independent System Operator and delivers it to customers. The deregulators' theory was that competition among generators would lead to lower prices and that giving consumers a choice of suppliers would help.
Lant said the complexities underlying the cost of power, including fluctuating commodity costs, make it hard to determine whether savings have occurred.
But overall, he said, "Energy bills have risen."
A flaw in the system is that incumbent generators have an incentive to throw out new generation, which would increase supply and competition. Tight markets mean higher prices for generators, he said.
"They benefit from scarcity, and I don't think you can get away from that," Lant said.
Since 2000, 7,650 megawatts of capacity has been built in New York, he said. A typical plant is about 500 to 1,000 megawatts.
"But it isn't enough to keep up with aging" power plants, Lant said.
Most new electric generating plants run on natural gas, which has become very volatile in price. As a result, costs for the power bought by Central Hudson and other utilities and relayed to customers has become more volatile.
Lant said the expected burst of innovation that deregulation backers foresaw hasn't happened.
He said there were a couple of good results.
One was that plant availability overall has improved and another is that the efficiency with which fuel is converted to power has gained somewhat, notably with nuclear plants.
But he added, "It's not above the rate of improvement of utilities prior to restructuring."
Many of the generating companies are in financial trouble. "That scares me," Lant said.
As to retail access and customer choice, Central Hudson has been promoting this as mandated by the Public Service Commission for 10 years, and marketers have campaigned, but with slim results.
"The customers have been bombarded with information ... but it's complicated," Lant said.
Only 5 percent of residential power customers have migrated to other suppliers and only 11 percent of nonresidential customers have.
|
