Deregulation

Feb. 6 would have been Ronald Reagan’s 100th birthday. To honor him, this column celebrates that great champion of deregulation, that reinvigorator of the American economy, that believer in Adam Smith’s invisible hand: Jimmy Carter. Yes, Carter. It was the peanut farmer from Georgia who pushed the United States toward a market economy, not the one-time actor from California. Reagan certainly shared Carter’s vision on deregulation, embracing with bravado policies that Carter launched with grim solemnity.

By LAURA ERNDE Staff Writer Maryland consumers could miss out on savings expected to come with the deregulation of the electric utility business, state utility experts said Friday. Consumers must join together and have their voices heard if they want to benefit from the process, expected to begin in July 2000, said Frederick H. Hoover Jr., director of the Maryland Energy Administration. "This is going to happen with you or to you," he told a group of about 60 people attending a conference on rural Maryland at the Hagerstown Venice Inn. Businesses, which stand to gain or lose the most from the way Maryland implements deregulation, already are lobbying, said Public Service Commission Chairman Glenn F. Ivey.

It seemed like a good idea to many members of the Maryland General Assembly back in 1999. Electricity customers would be able to choose their own suppliers, just as the break-up of the Bell System had allowed citizens to choose their own long-distance carriers. Yes, just as with phone service, you would have to do a bit of research to get the best deal. But just as phone customers who wanted to hang on to their old familiar service were allowed to do so, power customers could opt to stay with their traditional suppliers.

By KERRY LYNN FRALEY Staff Writer Allegheny Power has formed an unregulated subsidiary to compete for retail customers' energy supply business in the coming era of deregulation, according to a company spokesman. The new company - Allegheny Energy Solutions Inc. - will find its first group of prospective customers among Pennsylvanians who will get to choose their electric supplier under a pilot program beginning Nov. 1, said spokesman John Vincze. The company is poised to start selling electrical power to the program's approximately 278,000 initial participants, including about 30,000 of Allegheny Power's current customers, he said.

Back in 1999, when the General Assembly passed legislation opening the way for deregulation, the experience with deregulating phone service was fresh in everyone's mind. I doubt there are any critics of phone deregulation, as we have all benefited from these changes. Unfortunately, it appears this experience will not carry over into energy markets, at least in the short run. The benefits afforded by deregulating phone service were attained due to the cost structures inherent in providing long-distance service.

Allegheny Power opposes bill ANNAPOLIS - Allegheny Power, which has been a vocal supporter of electrical deregulation, is opposing legislation in the Maryland General Assembly that would accelerate competition in the state. Company officials said that while they support the concept of competition, they oppose the way some lawmakers are trying to achieve it, in an amendment that could be added to an existing piece of legislation. "The biggest problem is there has never been a public discussion," said Carolyn Shaw, state government affairs manager for Allegheny Power, a Hagerstown-based utility that has 1.4 million customers in five states.

Experts say California-style energy shortage is unlikely here By ANDREW SCHOTZ andrews@herald-mail.com The state of California's debilitating power shortage has virtually no chance of happening in Maryland, energy experts said Thursday. Both states have deregulated their electricity industries - California in 1996, Maryland last year - but the similarities end there. "We don't have the same problems with generation," said Robert Harris, assistant manager of external relations for the Maryland Public Service Commission, which regulates the state's power industry.

Residents of Hagerstown, Williamsport and Thurmont will apparently get a pass from whatever sort of electric-supply deregulation legislation is produced by the Maryland General Assembly this year. Folks outside those municipal boundaries, however, should pay close attention to what comes out of Annapolis in the next few weeks. The municipalities exempted from the legislation are three of five Maryland cities that own their own utilities. Though two of those, in Berlin and Easton, still generate some power, most purchase the bulk of it from larger suppliers, and are now using their customer base to negotiate for lower prices.

CHAMBERSBURG, Pa. - In choosing a company to supply electricity to a home or business, Dr. Dennis E. Buffington advises: Buyer beware. Because of deregulation of electricity generation, most Pennsylvanians may now choose from whom they wish to buy their power. The sales pitches, however, may be as confusing as those for long-distance companies, according to Buffington, a professor of agricultural and biological engineering at Penn State University. Tuesday night he explained deregulation to about 75 people at the Penn State Cooperative Extension Office.

daniels@herald-mail.com FREDERICK, MD. - Pittsburgh-based Alcoa intends to follow through with projected layoffs and cutbacks at its Eastalco aluminum smelter in Frederick starting Dec. 19 because it was unable to secure a more competitive, long-term electricity contract within Maryland's deregulated electricity market, the company said in a statement Wednesday. The company, which employs more than 600 workers at the plant according to company information, expects to retain about 100 workers while it gears down and will maintain a skeleton crew of about 25 workers after the transition.

In the summer of 2007, house prices in the United States began falling, ending a 15-year-long climb. Prices fell 5 percent by the end of the year and 15 percent by the summer of 2010. That decline continues today; this spring, house prices fell to 20 percent below their 2007 peak. Millions of Americans who once believed “there's no better investment than owning your home” now owe more on their mortgages than what their houses are worth. The collapse was a calamity for homeowners.

In his column, “ Do We Want Good Laws or Laws That Seem Good ?” (Jan. 25), Tom Firey writes, “Regardless of the reason, the empirical evidence indicates that, at best, cellphone bans do not improve roadway safety and, at worst, they produce more accidents. Policy makers who want to help the public should oppose the laws and work to repeal ones already in place.” Since this line of thought seemed counterintuitive (and indeed dangerous), I called several officials in law enforcement to get their reactions to the claim.

On Oct. 15, 1982, President Reagan beamed as his audience of 200 guests happily chatted in anticipation in the Rose Garden. The president was about to sign the Garn-St. Germain Act that deregulated the savings and loan banks. At the conclusion of the ceremonies, Reagan unwittingly made a profound utterance: “All in all, I think we hit the jackpot.” This gambling term is a symbolically accurate characterization of what followed. The savings and loan debacle ended in the ruin of more than 500 federally insured S&Ls and the near death of another 500. In 1989, the elder President Bush presented a plan to close all insolvent S&L firms at an estimated cost of $206 billion.

Feb. 6 would have been Ronald Reagan’s 100th birthday. To honor him, this column celebrates that great champion of deregulation, that reinvigorator of the American economy, that believer in Adam Smith’s invisible hand: Jimmy Carter. Yes, Carter. It was the peanut farmer from Georgia who pushed the United States toward a market economy, not the one-time actor from California. Reagan certainly shared Carter’s vision on deregulation, embracing with bravado policies that Carter launched with grim solemnity.

"The last check box on the presidential election ballot should be 'None of the above. Start over.'" "Remember President Ronald Reagan, who first promised to 'deregulate' and 'get government off our backs'? Reagan pushed for deregulation of airlines, and now most of them are going bankrupt. The deregulation and crash of savings and loans, with ensuing taxpayer bailout, happened on his watch. President Bush appointed the chairman of the Securities and Exchange Commission, who ignored most of the shenanigans on Wall Street.

CHAMBERSBURG, Pa. - Energy professionals will present a seminar called "Electric Deregulation: What it Means to Your Business" Tuesday, May 20, from 8 a.m. to 2 p.m. in Wilson College's Laird Hall, 1015 Philadelphia Ave. The seminar will explain how businesses can prepare for increased electric rates. It is co-sponsored by Schaedler Yesco, which has an office at 409 Grant St., the Greater Chambersburg Chamber of Commerce and Wilson College. The program will include information about electric deregulation and its impact on rates, energy legislation, sustainable lighting, smart metering and possible tax savings if improvements are made by the end of this year.

Today is April Fool's Day and it occurred to me it might be amusing to have some fun at local and state newsmakers' expense by imagining them saying things that they might never ordinarily say. To make sure all readers understand, the following quotes are made up, by me, just for laughs. Washington County Commissioner William Wivell: "Well, it's not in the budget, but let's approve it anyway because every now and then you've got to splurge, right?" Washington County Commissioner James Kercheval: "You know, I think you've got me convinced it is unfair to keep subsidizing county residents' sewer rates with tax money we've collected from Hagerstown residents.

Many of the 40 people who gathered last week at South Hagers-town High School to hear Allegheny Energy's rate hike proposal were nervous, as if they were deciding whether to take a ride on an amusement park's scary new roller-coaster. The bad news is that, barring some unlikely intervention from the Maryland General Assembly, everybody will have to ride. Only instead of holding on for dear life as the coaster dips and turns, riders' most frightening moment could come when they open their power bills a year from now. That's when the cap on Allegheny's residential rates comes off and the utility begins charging "market rates" for electricity.

Memo to Allegheny Energy: If you want people to show up at your public hearing, jack up the price of electricity first and THEN ask for public comment. Only about 20 customers wandered in last week during a two-hour open house to discuss pending electricity rate hikes, a surprisingly small number when you consider how much rates are likely to escalate in 2008 under deregulation law. I know you don't live here anymore, but you see, Allegheny, we're kind of an out-of-sight, out-of-mind bunch.

Back in 1999, when the General Assembly passed legislation opening the way for deregulation, the experience with deregulating phone service was fresh in everyone's mind. I doubt there are any critics of phone deregulation, as we have all benefited from these changes. Unfortunately, it appears this experience will not carry over into energy markets, at least in the short run. The benefits afforded by deregulating phone service were attained due to the cost structures inherent in providing long-distance service.