Power prices draw criticism
HARRISBURG — Pennsylvania's utility consumer advocate told state regulators Thursday that the region's wholesale electricity market overpays power plant owners, but ratepayers get no guarantee that anyone will build new, cleaner plants to meet demand.
Sonny Popowsky, speaking to the Pennsylvania Public Utility Commission, compared the market's distribution of dollars from ratepayers to a person trying to fill a glass by turning on a room's overhead fire-suppression sprinklers. The glass will be full, but so will the room, he said.
"We have to overpay everybody just to get somebody to build the generation we need," Popowsky said.
The cost to ratepayers in the region is billions of dollars, while power plant owners whose maintenance and fuel costs are relatively low are paid at the same rate as operators of plants that are much more expensive to run, he said.
Power plant owners across more than a dozen states in the mid-Atlantic market disagreed with Popowsky's assertions, as did PJM Interconnection, the company that operates the market. They say a new pricing system will deliver more generation sources if given time to work.
"Our interest is making sure there's enough power for everybody and there's a cost to doing that," PJM spokesman Ray Dotter said.
Popowsky's sentiments are echoed by consumer advocates, regulators and officials in various deregulated states, while businesses and major manufacturers are divided over whether they think the market is operating well.
Pennsylvania's state regulators have no authority under state law to force the construction of power plants — a course that some other deregulated states have pursued. But a new state law that allows the purchase of electricity through contracts — instead of in the wholesale market — by utilities and big businesses will hopefully encourage the construction of new power sources that can bring down prices, Popowsky said.
As a result of deregulation, the utility commission regulates the distribution of electricity to customers, but not the price of electricity that is supplied by wholesale power markets.
The Federal Energy Regulatory Commission regulates the wholesale power market, and the mid-Atlantic market is managed by PJM Interconnection, headquartered in suburban Philadelphia.
