Joseph Treshler raises an important economic issue when he encourages the state of Florida to open its electricity market to competition (ref. Florida Needs a Real Energy Policy, Aug. 11 column).
The traditional, regulated monopoly-utility model in Florida makes thestates captive customers financially responsible for generation facilitydevelopment. That means the financial risk of cost overruns or poor businessdecisions is borne by Florida electricity customers, not investors.
But in competitive electricity markets, the risks of power plant investmentdecisions are borne by investors, not customers. Customers get to choose whoprovides their energy, so plant investors who compete for your business must be sure to keep their costs low and be responsive to the type of power Floridians want to buy.
The market forces of competition in electricity provide real and tangiblebenefits to electricity consumers. In states with electricity competition,market forces reward plant operators to run their plants more efficiently,which means less pollution. Also, clean energy producers like wind powerdevelopers prefer markets when investing in new generation capacity, so moreclean wind energy has been built in states with competitive electricity markets than in states with monopoly regulation.
Further, data compiled by the U.S. Energy Information Administration show that electricity prices are rising fastest in states that have retained the traditional regulated monopoly model rather than those employing market forces to assure good economic outcomes.
Clearly, competition in electricity, by freeing customers from bearing thefinancial risk of power plant development and assuring the lowest-costoptions are developed, is the best option for ensuring job-creation inFloridas economy.
Joel Malina
Executive Director, COMPETE Coalition
Washington, D.C.
