Ohio: No Rush on Re-Regulation

Article published on Tuesday, August 28, 2007 as an Editorial of the Toledo Blade

GOV. Ted Strickland has set a high bar for what should be his next major legislative initiative: re-regulating the electric business in Ohio.

We use the term “re-regulating” because it is glaringly obvious that the state’s nearly decade-long experiment with electric deregulation has been a colossal failure and must be corrected.

To his everlasting credit, Mr. Strickland is expected to tackle not only the ever-thorny subject of electric rates but to do so in a context that includes clean-coal, nuclear, and other technologies and also alternative, noncarbon forms of energy, like wind and solar power.

This is a tall order but one that must be addressed in a comprehensive, reasoned, and deliberate manner if Ohio is to get on a track that makes it an attractive location for the big energy users of business and industry without placing an undue cost burden on residential ratepayers.

Aides to the governor have indicated that Mr. Strickland wants the General Assembly to adopt an energy package by the end of this year to give the Public Utilities Commission of Ohio time to implement new law before the rate freezes set for FirstEnergy Corp. and other utilities expire at the end of 2008.

While we see the need for urgency, lawmakers will only meet with regret if they push through regulatory reform in haste and without time to consider the consequences.

That’s what happened in 1999, when the Republican-dominated legislature ram-med through a deregulation law, heavily endowed with wishful ideology, which promised lower electric rates through competition among energy suppliers attracted by a new free market.

It didn’t work; competition never materialized, as many critics had warned. Industrial users got lower rates, while residential electric customers found themselves locked in rate schemes that were essentially frozen to avoid a public outcry over unrestrained prices.

All this came against the backdrop of what were then among the highest electric rates in the nation, especially for customers of FirstEnergy’s Toledo Edison subsidiary.

Where electric rates will go as 2009 dawns is a question the governor and legislature must answer and they will have a lot of help. Lobbying forces arrayed on the issue include at least two groups representing industrial customers, plus the electric utilities trade group, and the Ohio Office of Consumers’ Counsel, representing residential ratepayers.

So far, the legislative playing field appears to be heavily tilted in favor of industry, a factor Governor Strickland should feel compelled to counteract when he comes out with his energy plan next month.

Simply put, the legislature should not be stampeded into a plan favoring business and industry at the expense of residential customers. Like water, electricity is a commodity that virtually all Ohioans need to survive, and its price must kept reasonable.

That is the challenge Ohio faces with electric re-regulation.