Like a rotting zombie, failed energy deregulation scheme lurches back to life thanks to millions in special interest money

by | Feb 8, 2019

Special interest groups have finally figured out that the easiest path to fleecing taxpayers is to bypass the watchful eyes of state lawmakers and take their case straight to voters who don’t have the time or the inclination to study certain complex issues. The formula is simple: take any controversial issue, wrap it in consumer-friendly language, spend a few million bucks promoting it, and hope voters never figure out the truth. It’s a tried-and-true formula that worked to perfection last year, where 11 of 12 statewide ballot issues easily passed by more than the required 60 percent of support from Florida voters.

Like a reanimated corpse from a zombie movie, one of the most controversial issues that failed to win enough support make onto the ballot last year is back. Less than a year after Florida’s Constitution Review Commission roundly rejected a flawed proposal to deregulate the state’s energy utilities, a special interest group is spending millions of dollars to resurrect the measure for the 2020 ballot.

The group behind the effort, Citizens for Energy Choices, submitted more than 79,000 signatures to qualify the ballot language for review by the Florida Supreme Court. And while this amendment proposal touts the benefits of “consumer choice” both in its title and its mission, it forcibly removes the most logical choice for keeping the lights on in our state: Florida’s existing investor owned utilities.

That omission alone, based solely on the fact that it misleads voters about the true consequences of the scheme, should cause the state’s supreme court justices to reject it. After all, if this measure passes, consumers won’t have any choice if they prefer to stay with the power company they’ve always been with. It’s akin to Barack Obama’s famous statement that “if you like your health care plan, you can keep it.” Just as PolitiFact awarded that whopper the 2013 “Lie of the Year,” the promise of “choice” in a deregulated utility scheme will prove equally false for Floridians.

But the misleading ballot language around “consumer choice” is only part of the problem. Other states that have tried similar deregulation schemes have experienced higher utility costs, misleading and deceptive practices toward customers, and reliability problems from the new electricity sellers who show up once the reliable utilities are forced out. Several states who deregulated their energy utilities prior to 2000 have since abandoned their deregulation schemes altogether or reworked them in an effort to salvage something for consumers after experiencing significant problems.

Two more states, Massachusetts and Illinois, are pushing to abandon their deregulation schemes due to the high level of consumer fraud, higher prices and lower reliability. And because of these widespread failures, only one state – Virginia – has even bothered to attempt deregulation in the past 17 years.

The group behind this push in Florida, “Citizens for Energy Choices,” claims that implementing a deregulation scheme in Florida could hypothetically save ratepayers millions of dollars per year in lower energy bills. Here’s an excerpt of claims from one of their recent press releases:

“Residential and business ratepayers could save as much as $7.5 billion a year by 2030…”   [emphasis added]

Deregulation supporters are willing to bet Florida’s economy on the phrase “…could save…” But Florida business leaders, some of the largest consumers of power in the state, think it would be wise to consider the failed history of deregulation in other states before sending Florida down a similarly treacherous path:

“We believe deregulation would have a detrimental impact on Florida’s businesses and citizens in the form of increased cost of electricity and market uncertainty,” said AIF President and CEO Tom Feeney. “Deregulating Florida’s electric utility industry would create inefficient and uneven services throughout the state, causing major chaos when a natural disaster strikes.”

In state after state where deregulation has been tried, energy prices have spiked and the savings have been nonexistent. All available evidence suggests that deregulation would be a disaster for Florida consumers. According to data from the U.S. Department of Energy, the average cost of electricity in states with a deregulation scheme is significantly higher than the average cost of energy in regulated states:

Note the large difference in fluctuation in electric rates for deregulated states, while the trend line for regulated states remains relatively stable. The data reveals two different threats to Florida’s economy:

1) higher rates for electricity in general
2) unpredictable energy prices that destroy consumer confidence and crush small businesses that depend on stable energy costs

Since cost is a losing argument, the primary selling point for deregulation is the idea of “energy choice,” being able to choose from which utility to purchase power. But those pushing deregulation omit the factthat ratepayers have zero protection from spiking energy rates if, say, natural gas prices go up.

In Florida, energy prices are known well in advance because they are set by the Public Service Commission, a body that reviews data and carefully sets energy prices so that businesses and individual households are shielded from unexpected spikes in the cost of oil, natural gas or other resources.

In most states that have attempted deregulation, the ensuing chaos resulting from breaking up the power-producing utility companies caused immediate rate spikes – and consumers were instantly at the whim of market-based energy prices rather than the stable and predictable prices set by regulatory boards in those states.

So what’s the point? Why would Floridians vote for “consumer choice” that doesn’t actually deliver savings, results in less reliability, less consumer satisfaction, and higher instances of fraud and deceptive practices made possible by a slew of new and relatively unknown entities clamoring for Floridian’s energy dollars?

Undoubtedly, those investing millions to put another deregulation scheme in front of voters have something to gain. But it’s not clear what Florida voters will get, beyond feel-good ballot language that tests well in focus groups.

5 Comments

  1. David Dinkins

    California demonstrated the perils of deregulated electric utilities. Consumer rates were held down by law while wholesale costs went to market rates.Several utilities went bankrupt because they could not afford to continue losing money.

    Reply
  2. Marilynne Martin

    Back in 2012 a friend asked me to look into smart meters, it led me on a journey of no return.

    I e-mailed JR Kelly, the Office of Public Council (the legislative appointed person to represent consumers in rate cases) after the former General Counsel made his good-bye speech to the FPSC where he predicted Florida would de-regulate just like the telephone companies. It was in Dec 2014. JR said it was unlikely as most who deregulated saw significant price increases.

    My research found, they (globalist) are building a Global Grid. They want power generation to be a commodity outside the usual price regulation control by the States. Once this happens, we lose all control. Name one commodity not price manipulated by the elite? They globalized the banking industry – how did that work out for us?

    They will tell you the current regulatory model (cost of service model) is broken. That is a lie. Our regulators are broken. That is what we need to fix.

    They tell you this will bring “choice’. This is also a lie. You will get a choice of “suppliers”, that’s all. That supplier will use all the current distribution plant (wires, poles, etc.) and typically your current electric company will continue to distribute – you are not free from them. But they are predicting a monthly rate of between $30-50 a month just to be connected – base charges.I have the NARUC presentations from years back to prove it.

    Expect a fight from me. But they know most people do not understand these constitutional amendments, and they will have the money to promote it.

    Read Grid 2030 and its followup report Technology Roadmap which is available on the federal Dept of Energy website and understand the true master central plan for energy.

    Reply
  3. Kyle West

    But for a single entity, much like telephone and cable was in many areas of Florida, a MONOPOLY if you will is supposed to be illegal within the United States yet we allow it because “its predictable” and we “trust” that these people arent looking out for their best interest or own bottom dollar. Makes sense to me that if a consumer had a choice the market would sort itself out by the consumer themselves.. Not being told who to buy something from because they live in a certain area. Thought this was land of the free?

    Reply
    • Marilynne Martin

      Land of free? Do you live here?
      Electric industry is a REGULATED monopoly, not a monopoly.
      It is a regulated monopoly not because of “predictability or trust” but because of reality. How many poles and wires do you want transversing your land?

      Reply
  4. Daniel Esposito

    This article has been paid for by your local monopolized utility.

    Reply

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