Proposed Florida energy choice initiative puts consumers at risk, opponents say
Leaders in business, government and the electric power industry are speaking out against the policies of activists who want energy choice on the 2020 Florida ballot, warning that customers would see their electricity costs rise under deregulation.
Citizens for Energy Choices is sponsoring the proposed constitutional amendment that would change state policy to reflect that its wholesale and retail electricity markets be fully competitive.
If enough signatures are collected for the measure to appear on the Nov. 3, 2020 ballot and is passed by voters, the group states that customers of investor-owned utilities would have the right to choose their electricity provider and to generate and sell electricity, potentially saving Floridians more than $5 billion each year.
Florida’s natural gas industry is already deregulated, and more than a dozen states have deregulated electricity markets.
The Florida Chamber of Commerce, however, opposes the Florida energy choice initiative. Edie Ousley, spokesperson for the Chamber, says that despite claiming to promote choice, the initiative would prohibit Floridians from choosing the Florida utility companies that already serve them.
Florida’s 2018 electric rates were 25 percent lower than the average rate in deregulated states, according to Chamber figures.
“This proposal is a false promise wrapped in a too-good-to-be-true wrapper that has no place in our state’s constitution,” Ousley wrote in emailed remarks to Daily Energy Insider. “Unfortunately, that buyer’s remorse would be nearly permanent if this experiment was ensconced in our foundational document rather than having the consequences – both intended and unintended – openly and deliberately debated in the sunshine by our democratically elected officials.”
Cherie Jacobs, spokesperson for Tampa Electric (TECO), an electric utility serving about 765,000 customers in west central Florida, noted the problems that restructuring has caused in other states.
“It’s risky, costly, and it hurts consumers,” Jacobs said. “Restructured states have some of the highest rates in the nation – 20 percent higher than the national average.”
Florida’s residential average electricity prices remain below the national average, but energy companies say a deregulated system puts consumers at risk and would eliminate any forum for collaboration and oversight.
“State regulation and collaborative state energy policy have positioned Florida as a leader in affordable, reliable and clean energy, said Duke Energy spokesperson Ana Gibbs. “Deregulating the energy sector would endanger that progress and potentially cost ratepayers billions.” Duke Energy Florida provides about 9,300 megawatts of owned electric capacity to approximately 1.8 million customers.
Floridians for Affordable Reliable Energy (FARE), a group of community and labor leaders that oppose electricity deregulation, provided testimony earlier this month before a Florida Financial Impact Estimating Conference workshop about the proposed constitutional amendment.
“Experiences in other states have shown clearly that electricity deregulation has negative impacts on consumers, resulting in higher electricity rates, lower reliability and increased fraud,” said FARE Board Member and former state Rep. Joe Gibbons.
In a financial impact statement released mid-month about the proposed deregulation, economists said, “Some parts of the restructured system will result in additional costs that do not exist today and will likely be significant … While most of these costs may ultimately be recovered through additional charges on customer electric bills, some may have to be paid upfront by the state or another entity established for this purpose.”
In a filing to the Florida Supreme Court earlier this month, Florida Attorney General Ashley Moody said the ballot initiative’s language is “ambiguous” and that its “unclear language fails to disclose that the proposed amendment would require enactment of laws prohibiting investor-owned utilities from owning, operating, or even leasing any facilities which generate electricity and would prevent investor-owned utilities from competing” in a new electric utility market.
Attorneys general and consumer advocates are pushing for an end to deregulated residential electricity markets in certain states, in an effort to protect vulnerable consumers, particularly low-income, minority and elderly residents.
Consumer advocates in Connecticut want to abolish third-party residential electric markets that they say economically harm consumers. U.S. Sen. Richard Blumenthal (D-CT) and the AARP oppose that state’s market, arguing that residents paid an estimated $200 million more than consumers on electric utility standard service from 2015 to 2018.
“Third-party electric suppliers are predatory players in the retail electric market – deploying deceitful, destructive and disgraceful marketing tactics and ripping off customers with exorbitant rates and fees,” Blumenthal said at a press conference in February.
In Massachusetts, Attorney General Maura Healey is supporting legislation that would ban new competitive electric supply contracts for residential customers beginning in 2020. An Act Relative to Protecting Residential Electric Customers, HD 1204/SD 880, is sponsored by Rep. Frank Moran (D-Lawrence) and Sen. James Welch (D-West Springfield).
Last year Healey issued a report stating that between July 2015 to June 2017, Massachusetts electric customers paid $176.8 million more with a competitive electric supplier than if they had stayed with their utility company.
Last year, Nevada residents overwhelmingly opposed a similar energy choice initiative to the one proposed in Florida. The Public Utilities Commission of Nevada had projected in a report that the initiative may have cost the state nearly $150 million in new start-up costs and raise electric rates for residents for at least the next 10 years.
Citizens for Energy Choices says passage of the constitutional amendment in Florida would increase renewable energy options in the state.
But investor-owned electric utility companies operating in Florida note their own commitment to advancing clean energy.
“Duke Energy Florida has modernized our generation fleet and made significant commitments to renewable energy,” Duke Energy’s Gibbs said.
Duke Energy Florida is investing an estimated $1 billion to construct or acquire a total of 700 megawatts of cost-effective solar power facilities through 2022, the company said on Monday in announcing the locations of its newest universal solar power plants. By early 2020, the company’s solar power plants will eliminate more than 1 billion pounds of carbon dioxide emissions each year.
Like Duke Energy, Tampa Electric officials also say the company is focused on its renewable energy portfolio. Seven percent of its electricity will be powered by the sun by 2021, providing energy for 100,000 homes, Jacobs said.
