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Wednesday, October 08, 2008

Rate Mitigation Debate Far From Over

In the past few weeks legislators have been negotiating to mitigate future electricity rate increases once rate caps expire. Here's the details:

  • The Governor and assembly leaders support a phase in plan with 25% increase every year and a consumer credit of $1 to $1.5 billion. The Senate Dems are too worried about the consumer to negotiate with utility companies that are threatening to sue legislators if they renege on the original 1996 compromise.
  • The House will consider Special Session SB 25 to expand the definition of alternative energy under the 2004 AEPS to include hydro power and mills that burn paper and wood products. Who wants to bet that in 2 more years we will need another law including new alternative energies.
  • House bill 2200 is expected to be voted on in the Senate today. Recent amendments have drastically altered the bill. Even Senator Eichelberger admits, “The energy bill is very complex, so complex that I don’t know anyone, except the chairman of the committee that is handling the bill, that understands it".
Legislators will not be able to prevent any rate increases. Perhaps the most important thing the state can do is educate consumers on why electricity choice is important. While it's unlikely any action will occur before the election the issue of raising electricity prices and the constant struggle between regulation and market stability will be waiting when the General Assembly reconvenes in January.

Here are our recommendations:
  • Allow rate caps to expire.
  • Reduce or abolish the state gross receipts tax on electricity.
  • Repeal excessive environmental regulations.
  • Support licenses for new generation capacity, including nuclear.
  • Consider deregulating electricity transmission.
  • Allow utilities to implement their own rate mitigation plans and keep legislators out of rate setting processes.

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