Some Things Never Change

by Richard G. Johnstone Jr., Exec. Editor

As an anonymous student of life once noted, �I like progress. I just hate change.� Yet progress never seems to happen without it. And, unfortunately, sometimes progress doesn�t happen with it, either. Such was the conclusion reached earlier this year by the Virginia General Assembly, when it passed legislation basically undoing the law it had passed in 1999 deregulating the Commonwealth�s electricity supply.

The intent of the �99 legislation was simple, and admirable: to save money for Virginia ratepayers. Proponents believed that the deregulation law would help create a viable free market, in which competitive suppliers would vie for the business of Virginia �s electricity consu�mers, from small residential to large industrial users. The hope was that the benefits of this competition would be enjoyed across the Commonwealth, from the Cumberland Gap to the Eastern Shore, and from Southside Virginia to the D.C. suburbs.

Virginia was hardly alone in pursuing this free-market approach, in which the actual electricity would be available from an array of suppliers, while the delivery of that electricity would continue to be provided by the incumbent utility. In all, about a dozen-and-a-half states decided to give electric deregulation a chance, with the warmest of intentions that it would benefit consumers. However, warm intentions met cold reality, and ultimately few to no alternative sup�pliers showed up to market power to Virginia �s consumers. In fact, few suppliers showed up in any of the deregulated states, and most that did offered higher, not lower, prices.

Virginia is well-known as a state that prides itself, with good reason, on having a business-friendly climate. Trying to lower electric rates for all was a good-faith effort to further burnish that reputation.

So the law passed by the 2007 General Assembly may therefore be seen as a pragmatic, sensible acknowledgement that electric deregulation simply did not work. This year�s law, which became effective on July 1, returns Virginia to a model more like (but not identical to) that followed for almost 100 years, with the State Corporation Commission involved in all aspects of the electric-utility business, from the generation of power, to its delivery to the Commonwealth�s homes and farms and businesses.

This �hybrid reregulation� legislation encourages several positive elements, including more electric-generating capacity, more conservation, and more utilization of renewable, or �green,� energy resources, all of which will likely be needed to meet Virginia �s rapidly growing demand for power.

Will this legislation result in lower electric bills for consumers? In all likelihood, no. Will it result in smaller increases than would have been experienced had Virginia continued on the former (deregulation) course? Yes, probably.

Have rising costs for virtually all fuels, both here and elsewhere around the world, already increased the cost of electricity? And will rising concerns in Congress about greenhouse gases, and likely legislation to limit them, also result in higher electricity costs, no matter what Virginia�s (or any other state�s) legislature did, or does? Yes, and almost definitely, yes again.

But in the midst of all these dizzying changes, please remember there�s one thing that will NOT change: that is, your electric cooperative will continue to provide you and your family with electric service AT COST, just as it�s done for three generations. That�s been the cooperative business model since our founding in the 1930s. The consumers are also the owners of the business; the business provides service at cost to these consumer-owners; and the business, being a cooperative, returns to them any funds left over, in the form of patronage capital.

This business model is what allowed Virginia �s 13 local cooperatives to electrify most of the Commonwealth�s countryside, and to build the infrastructure powering the growth of emerging suburbs across the state. This same business model has been faithfully followed since our beginnings, through changes large and small.