Seven years after restructuring, challenges remain. Should the region stay the course?
For the past seven years, the New England electric power industry has been transitioning to a competitive market structure. Electric restructuring—identified in some quarters with Enron, California, and the August 2003 blackout—has brought significant, measurable benefits to us in New England.
The introduction of competition into the wholesale electricity markets has resulted in a more reliable, economical, and environmentally friendly power system. New England's wholesale electricity prices, after adjustment for fuel costs, have declined by 5.7 percent since the first full year of operation (2000) and 11 percent since 2001. New power plants are producing cheaper, cleaner electricity, and five major transmission projects are underway to enable power to flow more efficiently throughout the region. Moreover, the lights stayed on throughout most of New England during the massive 2003 Northeast Blackout.
This progress has not come without controversy. There are some who continue to question whether the promise of deregulation is being realized and whether we should reinstate some form of regulation. Others fight each new initiative without considering the immediate impact of inaction or weighing the potential long-term benefits to consumers.
Seven years after restructuring began, it's a good time to assess the challenges that remain and gauge whether to stay the course toward continued restructuring. The best way to explore this question is by considering the current state of the industry in New England. We need to look at where we started, what we've done, and where we are going.