Big news out of Louisiana: Hyundai has announced plans to build a $5 billion steel plant in the state. One key reason cited for the move stands out: Louisiana’s low-cost natural gas and electricity. 

This isn’t a fluke—it’s part of a broader trend.

In case you were under the impression that the failure of electricity deregulation is an exclusively American phenomena, you need look no further than to our northern neighbors.  Alberta is the one Canadian province that most fully adopted Texas-style electricity deregulation, and like Texas, its electricity prices are surging - up 128%.  Customer bills have spiked dramatically.  Alberta now has by far the highest electricity prices of any province in Canada.

While some may continue to proselytize their preferred, though struggling, market model; it is properly regulated utilities that will be the ones most likely to plan, finance and construct new energy resources in a way that consumers and voters will accept.  No amount of glossing over the problems of our power markets will change that fact.

Nothing to see here…the E-mail below from ERCOT’s Emergency Alert system is merely ERCOT behaving the way it was designed to operate. Scarcity of supply drives up prices, and when that doesn’t work, we send out emails begging people to conserve.  Just like a real market….wait.

The trend in New England power rates was predictable, just as it has been predictable everywhere else across the country for the past 25 years. Electricity deregulation harms average customers. Volatile wholesale electricity market pricing quickly translates into volatile retail electricity prices paid by customers in deregulated states. It’s been this way since the advent of restructured utilities more than two decades ago, and it won’t change anytime soon. It’s not a random mistake. It’s how utility deregulation is designed.

It’s been a tough run for supporters of retail utility deregulation. Few states in the last 15 years have shown enthusiasm for adopting the model, and the handful of states that did restructure their utilities in the 1990s and early-2000s have been retreating from it in various ways. It’s not hard to see why.  When it comes to electricity, customers care most about reliability, affordability, and consumer protection. Unfortunately, retail deregulation has failed to deliver in these areas.

Against that backdrop, retail deregulation supporters havereleased a new paperthat purports to show the benefits of deregulation. But it is a swing—and a miss.

Power for Tomorrow wishes all participants in this month’s NARUC Summer Policy Summit an enjoyable visit to Austin.  But with ERCOT setting a new demand record of 80,828 MW in June amid 19,000 MW of unplanned firm and renewable outages, and with Texas policy makers yet to address the fundamental  flaws in deregulation that have led to the state’s recent electricity woes, we also want to make sure all attendees have the tools they need to stay safe.

Two years after Winter Storm Uri caused blackouts and hundreds of deaths across Texas, it is becoming harder to figure out whether anyone will truly be held accountable for the near-collapse of the power grid—and whether anyone will fix the problems before the next crisis.

For years, energy policy wonks have asked when RTOs will expand.  Perhaps just as pertinent a question at this point is, “why would a state willingly subject itself to this chaos?”

If you’re looking for a well-researched report that puts a human face on many of the pitfalls of electricity deregulation, you’d do well to review the recent series from Miriam Wasser of WBUR, the NPR station in Boston.  It highlights several major concerns such as customer cost, consumer protection and a lack of transparency by marketers regarding the power they are selling.

Too often, debates about wholesale “markets” are driven by superficial discussions about competition being preferable to regulation.  Of course, that is true, but how do we compare an increasingly dysfunctional “competition” construct to generally functioning and well-understood regulation of an essential public service? 

Among the alphabet soup of acronyms known by RTO-watchers is one that is cropping up with increased frequency: the RMR (or for the uninitiated, the “reliability-must-run” contract). These cost-of-service based contracts are last-ditch measures that throw lifelines to plants needed for reliability, but that would otherwise close based on the revenues they derive from the market. Practically, the result of RMRs is that generation units are insulated from the outcomes of markets and paid instead based on their cost to operate.

The list of challenges within PJM is growing, and quick fixes are not readily apparent.  PJM, FERC and the states will need to avoid the missteps that have imperiled other RTOs, as in Texas and California, where the threat of blackouts and volatile prices are a year-round concern.