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Florida Energy Deregulation

August 21, 2011 - 6:00pm

The joke in Orlando goes like this: Everyone in Orlando has a second mortgage, it's called OUC (Orlando Utilities).

Some consumer electric bills now approach their mortgage payments. There are people in mobile homes paying $350 a month in electric and small homes paying $600 a month. I know of an ice cream store that pays $1,500 a month for its electric bill.

The high cost of energy has an adverse effect on the Florida economy. These high utility rates are reducing the disposable income of consumers. Utility costs are a large expense for small businesses struggling to survive. There are ways to reduce utility rates through free market competition.

The two examples in the United States to look at are California and Pennsylvania. The California deregulation resulted in supply problems and brownouts. In California, utilities were prohibited from procuring long-term contracts for energy, forcing them to buy power through expensive real-time markets. In Pennsylvania utilities are required to diversify. California re-regulated their market while the goal is to deregulate the market to increase competition.

Texas fully deregulated its electric market in 2002. In Texas, customers have the option of staying with the local utility provider or switching to a competitive retail electric provider. Texas deregulation still allows quasi-government power providers (like OUC) to keep their monopoly. A true deregulated market should be modeled after the phone companies.

Electric service is broken into three categories: power generation, distribution (wires), and customer billing. If energy is properly deregulated in Florida, any company can buy power from any producer, use any distribution line for a fee, and sell to any customer. The competition will result in more efficient administration of energy and lower prices.

If deregulation can reduce energy costs just 5 percent a year for four years, it will reduce the annual energy cost to Florida taxpayers by $3 billion a year. That $3 billion will flow into the pockets of consumers who will spend the money in our small-business economy. Those small businesses will hire more people as sales improve and our economy will grow back to prosperity.

Energy deregulation in Florida is good for our economy, good for small business, and good for Florida taxpayers.

This is a guest column by Matthew Falconer, an Orlando-based commercial real-estate owner who ran for Orange County mayor in 2010. He was appointed by Florida House Speaker Dean Cannon to the Government Efficiency Task Force.


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