Beyond blame

Two years ago this Friday, the Federal Energy Regulatory Commission issued a report on the extraordinary spike in wholesale electric rates in the Midwest earlier that summer. The causes of the tripling, even quadrupling, of electric bills were many, FERC concluded, including the inability of market information systems to provide timely and reliable price signals and inexperience among electricity producers and transmitters in the new world of deregulation.

Those same factors, plus soaring prices for the oil and natural gas needed to run power plants, are cited in the ongoing electric rate crises in San Diego, Seattle and Atlanta. Especially in California, a new element has been added to the discussion – blame-fixing. Legislators, some who were among the most fervent advocates of deregulation (actually, restructuring is the preferred term) when it passed in 1996, now say the utilities pulled a fast one. Utilities say legislators promised the public too much and downplayed the risks. The state’s public utilities commission says the question of what costs can be passed along to customers and what should be absorbed by the companies and their shareholders must be decided, just so the decision is made by somebody else.

Now it’s Maine’s turn. Bangor Hydro is seeking a 23-percent rate increase to cover higher fuel costs experienced by the generators of the power it transmits. The utility has set-rate contracts for 60 percent of the power it buys; the rate increase is for the 40 percent bought on the spot market and subject to price swings. Other transmission companies in the state, including Central Maine Power, the biggest, have 100 percent set-price contracts and so their customers are protected from rate increases driven by fuel costs for the next one to two years. Chalk it up to the inexperience and inability to gather market information cited by FERC two years ago – Bangor-Hydro took a bit of a gamble with its customers’ money and lost.

Unfortunate, but since that is pretty much what happened in San Diego, Seattle and Atlanta, somewhat understandable. What is not understandable or acceptable d is the blame-fixing now going on between Bangor Hydro and the Maine Public Utilities Commission. The utility says it’s not seeking a rate increase; it, as the designated standard-offer provider, is merely the PUC’s agent and, anyway, the PUC endorsed the plan to mix set contracts and spot purchases. The PUC says Bangor Hydro’s name is on the rate-hike request and, besides, it did not specifically tell the utility to rely on the spot market.

Californians, from Gov. Gray Davis (who was not governor when deregulation passed) on down to small-business owners and individual ratepayers are fed up with the squabbling. Some are even saying the state should not merely focus upon the getting through the current crisis, but should take steps now to prevent a recurrence.

Some ideas being promoted to that end in California include state assistance for non-fuel electricity production, such as wind, solar and tidal, and immediately doable energy conservation measures. It has been pointed out, for example, that electricity consumption in California’s low-income households could be cut in half by better insulation and new, more efficient appliances. Maine could do those things, too. First, though, Bangor Hydro and the PUC must recognize that there’s more to fix than just blame.