Retail Energy in 2002: A Regulatory About-face

 

 

State regulators redouble their deregulation efforts-or abandon them altogether.

The past year was a phenomenal one for state public utility regulators.

A historical confluence of events, including the catastrophic failure of the move to deregulate California electric markets and a nationwide epidemic of corporate financial scandals, led in large part by energy trading firms, helps to explain the developments.

The cry for help by consumers faced with uncertain supply and prices was directed primarily at state public utility commissions (PUCs), which have a legal duty to ensure reliability and fair prices for essential services like electricity.

The PUC responses ranged from full retreat back to traditional regulation in the West, to a dogged attempt to find a way to make the market work in states where the crisis was not as severe, such as Pennsylvania.

Nevertheless, a review of the most important decisions issued by state regulators leaves one with the impression that there now exists a general consensus, albeit a begrudging one in some cases, that electricity may not be the type of product best delivered in an unregulated environment. Further, traditional topics not often mentioned during the heyday of deregulation, such as return on equity, cost of service, and allocation of affiliate debt costs, are once again of the utmost importance to consumers and the public welfare.