To the Editors of the Democrat and Chronicle:

I felt it important to provide an alternative viewpoint to your editorial "Rethink dereg" (June 30).

Much of the concern with deregulated electric markets apparently stems from naïve comparisons of price without any real attempt to understand market realities and evaluate factors influencing the customers' demand for choice and improved service.

Customer service is about more than just price; it is just as important that products provide more convenience, higher quality, environmental choices and enhanced control.

First, your claim that electricity rates have grown by 40 percent over 10 years in deregulated states implies that rates in nonderegulated states have not grown at all, which is not the case.

Electricity rates in deregulated states rose by 35.30 percent compared with a 32.40 percent increase in regulated states, according to U.S. Energy Information Administration data from 1999 to 2007.

Typical of the Northeast, New York has a higher cost of living; problems with siting new-generation plants and transmission lines; and the need to import electricity, natural gas and coal from other states and Canada — all of which cause energy costs to be high.

Alas, New York is not oil-rich Texas or coal-rich Pennsylvania.

Second, your assertion that deregulation has failed in New York because only 15 percent of electricity consumers in the state buy their electricity from alternative providers is also misleading.

More than 70 percent of large electricity consumers who are on "time of use" rates have switched to retail choice.

The switch rate for other industrial and commercial customers was 44 percent. Only 9 percent of residential customers have switched.

Additionally, energy choice programs have excellent retention rates because customers appreciate their higher levels of choice and better service.

Third, since January, the cost of natural gas has risen from $8 per mmbtu to $9.89 per mmbtu. Crude oil has risen from $80 per barrel to roughly $123. And Northern Appalachian coal has risen from $60 to $105 per ton.

Electricity rates are dependent on the price of coal and natural gas. Deregulated states are not the cause of price increases as your editorial infers; the real culprit is the price of energy commodities.

The answer to this crisis will not be found in a monopolistic approach toward energy, which, in the '90s, was found to be unresponsive, costly and totally lacking in flexibility.

What is needed is innovation.

For example, energy marketing companies are redefining energy services with new value-added services such as energy efficiency, sustainability and purchasing programs, and even telephone service.

Competitive electricity markets encourage investment in new, cleaner technologies that offer greater efficiency and reduce pollution, as well as provide the most efficient mix of energy resources.

Just last year, North American competitive electricity markets reported more than 23,000 megawatts of power saved when consumers cut use during peak demand times, an amount equal to the capacity of more than 40 average power plants. You don't want to discourage this type of a trend.

Competitive electricity markets are also the most fertile ground for renewable energy sources, such as wind power, to grow and thrive.

In New York state in 2004, energy marketing companies provided more than 162,000 megawatt hours of green energy products to customers.

We, too, look to Gov. Paterson for leadership in the energy sector, but not to put handcuffs on the most dynamic innovators. Instead, we urge all state energy users to demand more innovation, not more regulation.

We are entering a new age of energy that requires new solutions, new business models and a new political will to do what is right for New York state.

Given the opportunity to perform, deregulated energy companies will be leading the charge for greater energy efficiency and cleaner, affordable energy for all ratepayers.

Burt is president of Power Management Co. in Rochester, which provides services to help companies procure and use power more efficiently.
 

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