03-12-2006
Letter in Response to Electricity Deregulation: High Cost, Unmet Promises
Jamie Wimberly, Letter to the Editor, The Washington Post

Dear Editors of The Washington Post:

The Washington Post article on electricity price increases, "Electricity Deregulation: High Cost, Unmet Promises," was almost Orwellian with false comparisons and twisted analysis.

Undergraduate students studying Economics 101 would be able to tell you that imposing a price cap is not competition. In fact, price caps are an extreme example of government intervention for political ends, and as long as they are in place, no competition can truly exist. For competition, analyze the success of natural gas competition or truly competitive electricity markets like the United Kingdom, and the billions of savings accrued to consumers from those competitive marketplaces. Moreover, the article refers to "deregulation" when, in fact, more layers of regulation, government and quasi-government, e.g., the power pools now in existence, were actually created.

Perhaps more troubling, the article leaves the impression that cost-based regulation somehow was the golden era and that we should return to it. Cost-based regulation directly led to needlessly high costs through gold-plating, hidden taxes and welfare via the utility, expensive mistakes like nuclear plants, and the biggest source of stationary pollution in the country. Cost-based regulation throttled innovation and new technology applications, leaving the country with a reliability problem and contributing to our dependence on fossil fuels.

Turning the clock back to cost-based regulation would be a disaster. If anything, we should truly allow for competition to exist. The first step would be to take off the price caps.

Jamie Wimberly

CEO
Distributed Energy Financial Group, LLC
www.defgllc.com
(202) 255-2860

Board of Directors
Center for the Advancement of Energy Markets (CAEM)
www.caem.org