Ohio Should Focus on EWPC

First Energy Corp. entered into a contradiction by handing a letter signed by prominent economists to show they believe in competitive markets. The contradiction is that the economists recommended focusing on the necessary improvements in market design, while the utility identified a “number of legal problems that won’t easily or quickly be resolved.” Ohio House of Representative should focus closely on EWPC.

Ohio Should Focus on EWPC

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Speaking before the Ohio House of Representative, Leila L. Vespoli, senior vice president and general counsel for FirstEnergy Corp., testify on November 28 on the proposed energy policy.

Stating three reason for a continue believe in competitive markets, Ms. Vespoli provided a copy of the June 26, 2006, Open Letter to Policymakers, signed by the prominent economists Paul L. Joskow, Alfred E. Kahn, William W. Hogan, Peter Cramtom, Howard J. Axelrod and Vernon L. Smith.

The conclusion of the letter states: “… despite the recent increases in electricity prices, policymakers should stay the course and continue to support restructuring and the evolution of competitive wholesale and retail markets for power. Competition is the very foundation of our nation’s economy. Competitive electricity markets are relatively new and will continue to evolve. We urge policymakers to focus on making the necessary improvements in market design and resist the temptation to reject competition for a return to heavy-handed regulation. We are persuaded that competition in electricity markets will stand the test of time and continue to provide visible customer benefits.”

It is important to highlight the suggestion to “… focus on making the necessary improvement in market design and resist the temptation to reject competition for a return to heavy-handed regulation,” since EWPC market architecture and design emerged as the key to such improvements.

In the statement, Ms. Vespoli also stated “… if we fail to preserve the market-based option for utilities and customers, we create a number of legal problems that won’t easily or quickly be resolved.” Such argument, however, contradicts the conclusion of the prominent economists, since the utilities grid and enterprise need to be separated to make the necessary improvements to allow competition to emerge in the enterprise without incumbent retailer.