Public Policy Research Education and Advocacy
Statement of David Hughes, Executive Director
Pennsylvania Campaign for Clean, Affordable Energy
Harrisburg Press conference, July 15 1997
In the late 1960s to mid 1970s, a window of opportunity opened for utility and government decision makers to institute energy policies in Pennsylvania that would have reduced energy demand, be good for the environment, and lower the cost of electricity. Unfortunately, utility managers and elected officials missed this rare opportunity to address longstanding problems associated with energy use.
Instead of aggressively promoting the efficient use of energy, including research and development of renewable energy technologies, utility managers decided to promote increased consumption and to build costly and unsafe nuclear plants to meet the projected increase in demand.
The result of these unfortunate, freely made investment decisions is that: 1) nuclear utility ratepayers pay the highest rates in the nation 2) Pennsylvania is way behind in the utilization of cutting edge energy technology, and 3) nuclear utilities are saddled with over $12 billion in debt (“stranded” costs) that will make them uncompetitive in an unregulated generation market. Now these same utilities are pressuring the Governor and the Public Utility Commission for full recovery of these bad investments.
The Governor and the PUC dare not repeat the mistakes of the past. The enactment of the Electric Generation and Customer Choice Act affords yet another opportunity to actually lower electric rates while improving the environment, by making energy-efficiency and renewable energy equal players in the competitive market. For this to happen, Governor Ridge and the PUC commissioners will have to be different than their predecessors. They will have to be strong, visionary leaders who can stand up to the powerful utility interests.
The nuclear utilities demand for full recovery of their “stranded” costs threatens to sabotage the possibility of real competition. Simply put, “stranded” cost recovery means continued high rates and gives nuclear utilities a huge windfall that can be used to keep alternative suppliers out of the market. Despite their claims, in Pennsylvania, regulated utilities do not have a guaranteed return on an investment. The law only guaranteed “an opportunity” to earn a fair return on an investment. For too long, utility shareholders, at the expense of captive ratepayers, have done very well in getting back their nuclear investment, plus a profit. Where else have investors been able to profit from bad management decisions? Where else have consumers had to pay for excessive construction cost overruns?
There is no “regulatory compact” that requires ratepayers to pay for uneconomic investments. Accordingly, there is no justification for granting recovery of what remains of utility investments in costly nuclear generators. It is time for ratepayers to get the relief the Governor has promised retail competition will bring.
Should the Governor and the PUC fail to do what is right and fair, and grant substantial recovery of these bad investments, real competition will not occur and Pennsylvanians will see their chance for clean, affordable energy “stranded” once again. Failure to finally end this unjust burden will send a clear message that this Governor is more concerned about maintaining the corporate welfare system than bringing Pennsylvania energy policy into the 21st century.
We call upon Governor Ridge to do what is necessary to earn the “energy efficiency” award recently given to him by the U.S. Energy Association. We urge the Governor to seize the opportunity to give ratepayers long overdue rate relief and to ensure that all Pennsylvanians have the chance to choose a clean and affordable energy future.