Stable Energy Prices, Greater Reliability, Lower Risks Drive Energy Policy Consensus
Regulators, Lawmakers, Utility Experts and Marketers
Identify Benefits of Best Practices and New Market-Based Energy Policies
Washington, DC – "The National Energy Marketers Association's (NEM's) Seventh Annual Restructuring Conference was its best yet. Leaders from the utility industry, the regulatory community, Congress and the international diplomatic community met with NEM executives and policy chairs to discuss strategies that unlock the significant benefits of a price competitive marketplace for energy and related services and technologies. It appears that strategies, incentives and best practices are emerging that can benefit both consumers and utilities, as well as maintain both U.S. leadership and homeland security during the global transition to a digital economy," said Craig Goodman, President of NEM.
"In many states, utility regulations prevent meaningful price and technology competition for the smallest retail energy consumers. Until homeowners receive the full benefits of such competition, the job of restructuring utilities and utility regulations will not be finished," said Goodman, a former high-level energy policy official in the Reagan and first Bush Administrations.
Two of the highlights of the event were the keynote panel of Commissioners and the keynote panel of utility executives who shared their motivations for shedding the risks of the commodity business in favor of greater reliability and infrastructure upgrades. The New York Public Service Commission and its Staff together with executives from progressive utilities such as O&R, Central Hudson and National Grid outlined their proposals for cutting edge accelerated migration strategies. "Our members were pleased to have New York's Commissioner Leonard Weiss and its Director of Retail Market Development, Ron Cerniglia, to report on the progress and economic benefits that are flowing from the recently announced Policy Statement and implementation of best practices by the utilities on the panel. Given the number of new businesses that have moved into the New York market, I expect more states will implement similar migration strategies, incentives and best practices," said Goodman.
"The best practices being implemented in New York are the first step toward making millions of customers economic to serve. The second step, is to ensure consumers receive proper credits on their utility bills and market-based price signals to realize the savings that restructuring was intended to provide," said Goodman.
NEM members have long supported Dominion East Ohio's path cutting application to exit the merchant function. "NEM applauds the vision and leadership of DEO. We anticipate many more utilities will realize that the current costs and risks of the commodity function are a poor use of shareholder resources," said Goodman.
"It is very rewarding to see a growing number of progressive, well-run utilities turning to our members and the marketplace to manage the risks of commodity acquisition and long-term pricing. I am hopeful that utility shareholders will find it increasingly more profitable to reallocate their capital into infrastructure investments and enhanced reliability," said Goodman.
"When utilities exit the merchant function it necessarily increases the resources they can reallocate to reliability investments. It maximizes the specialty skill sets and capital structures of both the regulated (no risk) and unregulated (at risk) energy sectors. Importantly, if tax, regulatory and performance-based incentive rates are tied directly to consumer migration, it would maximize true price competition and simultaneously maximize the resources utilities can reinvest in reliability. This reliability-based business model could provide a clear growth path for both the modern 21st Century Utility and the new Energy Services and Technology Industry," said Goodman.
Similarly, FERC Chairman Pat Wood also illustrated how competitive wholesale markets promote reliability and yield enormous cost savings, citing MISO as an example. "Our members were pleased to be addressed by Chairman Wood at our Annual Conference again this year. During his tour of duty, first as Chair of the Texas Commission and then FERC Chair, significant benefits have been realized by consumers, nationwide," said Goodman.
CFTC Chair Sharon Brown-Hruska started the conference by explaining that the role of government in markets is to ensure market integrity, promote competition and stay neutral with respect to prices. Brown-Hruska said, "Efficient resource allocation breaks down when regulators get involved."
NEM is a national, non-profit trade association representing wholesale and retail marketers of natural gas, electricity, as well as energy and financial related products, services, information and advanced technologies throughout the United States, Canada and the European Union. NEM members also include inventors, patent holders, systems integrators, and developers of advanced power line surveillance and grid reliability technology with advanced uses in Broadband over Power Line (BPL), Power Line Communications (PLC) and Hybrid-PLC technologies as well as new and innovative applications for Smart Electricity.TM For additional information, contact NEM's Washington, DC headquarters at (202) 333-3288 or www.energymarketers.com.
Source: NEM