Note: While I mention CMP, Maine's largest electric utility, the subject is relevant across the U.S.
The news is full of reports about
skyrocketing electric bills across the country and numerous outages
in the Northeast. Maine gets it share of both.
Something is wrong when the complaints
occur as often and as loudly as they do now. Utilities and their
friends have come up with ready responses that squarely place the
blame on somebody else.
Customers are faulted for not
recognizing their power consumption increases as they run electric
heaters or oil burners. And frequent nor'easters get the blame for
what seems to be an unusually high number of outages.
Of course, electric consumption
increases in cold, dark winters. And, this year, the cost of fuel to
run utility generation may also have increased. So it is not
surprising that as usage increases, bills are higher. And some
customers look only at the bottom line and ignore the number of
kilowatt-hours.
But this is not the most severe winter
ever, so some huge increases seem to be caused by more than usage.
CMP, for example, has removed the prior year's monthly usage from the
bill, making ready comparisons impossible. That deletion makes it
more difficult to accept the explanation that it's all a matter of
usage.
One obvious culprit is the meter.
Utilities have installed so-called “smart” meters, supposedly
because they will allow customers to manage their usage better,
obtaining greater efficiency and lower costs. While that promise
mostly goes unfulfilled, it has worked well for utilities that can
eliminate meter reader jobs.
During a major, recent nor'easter,
smart meters turned out to be dumb. They could not highlight outage
locations very well, nor did they provide good data to the central
office, which would help it efficiently assign repair crews. Despite
their shortcomings, a big part of the meter’s cost is recovered in
a customer's rates and will be for many years.
Given these known defects, it just
might be possible that bills, way out of line with past experience,
may be caused by defective meter information. To relieve customer
worries while the cause is being investigated, the regulators should
announce that their payment obligation will be limited to the
previous year's level.
Without such action, customers bear all
the risk when their bills shoot up. And when a utility falsely warns
them they may be cut off if they don't pay the bill, they can rightly
feel they are victims, not customers. CMP and others should not only
withdraw such bills, but be fined for issuing them.
While customers, utilities and
regulators scramble to figure out what went wrong, they will miss the
big picture that can reveal underlying problems. It began with
industry restructuring. Electric power supply was separated from
wires. Many utilities ended up as wires companies.
The utilities’ monopoly position as
wires companies was an opportunity to coin money. With a limited
commitment to maintenance plus government incentives to build more
transmission lines at customer expense, their outlook brightened.
The cost of power was reduced by competition, but the cost of wires
in the customers' bill zoomed up.
Federal utility regulators allow higher
rates to encourage more transmission. State regulators mostly stay
on the sidelines until problems arise.
Regulators depend on technical input
from utilities rather than having staff capable of conducting
continuous, independent review. While they may hire outside
consultants when a problem arises, this approach does nothing to
prevent problems.
To top this situation off, as Congress
and state legislatures restructured the industry, they levied new
burdens on ratepayers. They imposed public policy mandates on
customers' bills, ranging from low-income assistance to promoting
renewables. It was a lot easier to load these costs on electric
customers than to increase taxes.
The failure of regulators to be more
aggressive contributes to both the frequency of weather-caused
outages and billing alarms such as are now occurring. Studies to find
the causes of these problems are no substitute for continuing
surveillance to prevent them.
Beefed-up regulation would undoubtedly
cost more. But electric rates increase to cover utilities' costs of
dealing with storm outages or fixing meter problems. Adequate
regulation should reduce some of these cost increases.
The bills add up. Customers struggle
with outages. Regulators belatedly investigate. Customers subsidize
the very meters that may be causing their problems. Utilities
maximize profits by cutting field personnel. Customers foot the bill
for the utility lawyers who defend company practices.
Instead of viewing the current problems
as likely to be soon forgotten, now is the time for legislators to
take a new look at the electric industry and how it is regulated.