The Palmetto Insider

Does the South Carolina electricity market need privatizing?  The last time South Carolina approved electricity deregulation was in 1997 with House bill 3414.  Yet consider what Texas has accomplished in recent years through privatization.

According to information released by the Texas Public Policy Foundation, privatizing the electricity market has lowered consumer prices, increased reliability, and fostered consumer choice through competition.

• Data gathered from the U.S. Energy Information Administration (EIA) reveals a reduction in prices for Texas residents under a competition-based electricity market.  The report shows, “Today, the average competitive price is 8.71% below the national average.”  The national average refers to the national regulated average.

• Competition has also increased reliability.  For example, private electric companies trying to turn a profit build new generators as their customer base increases.  More generators mean more capacity for stored/reserved electricity.  Reserved electricity is quite valuable during unexpected heat waves that often occur in summer months, especially in Texas. The same would be the case in South Carolina.

• The competition-based market in Texas is far more popular than the regulated electricity market.  In fact, “Almost 82% of consumers have actively chosen competitive rate plans.”

If South Carolina were to follow Texas’s lead, privatizing could lower consumer prices by encouraging competition and increasing reliability/power reserves.

Moreover, by monopolizing the electricity market, the state is directly competing with would-be private entrepreneurs. If state leaders are serious about growing the economy and stimulating free enterprise, they might start by deregulating the electricity industry.

The Kerry-Boxer bill currently in the U.S. Senate calls for reductions by 2050 to 17 percent of the quantity of United States greenhouse gas emissions in 2005.

Interesting. But what does that really mean? What exactly is 17 percent of 2005 emissions levels?

Turns out that figure is about 2.4 tons of CO₂ per person.

The last time the U.S. greenhouse gas emissions were 2.4 tons of CO₂ per person was more than 100 years ago.

1875, to be precise.

Think of what the technology was like in 1875 to have 2.4 tons of CO₂ per person. No cars. No televisions. No air conditioning. And a life expectancy of 49.

In 1875, the per capita income in the U.S. was $3,180.

Is this what Congress wants? To sacrifice all of the economic advancements of the past 125 years?

Any cap and trade tax legislation that goes through Congress will be extremely damaging to the economy.

Read here, here, and here to see how cap and trade will hurt South Carolina

The Policy Council’s Best & Worst examines environmental legislation to anticipate in the 2010 session. Taxpayers need to be vigilant for initiatives that will have little or no impact on global climate change or local environmental protections – but will drive up costs for South Carolina homeowners and consumers.

At the same time, be on the lookout for the good ideas we hope will resurface in the coming year – measures that let local communities guide environmental decision-making, and returning control over the energy market in the state to the private sector.

For the full analysis, visit the Policy Council’s report on the Best & Worst ideas in state environmental policy.

Here’s a quick look at the good and the bad:

Best Ideas for 2010

1)       Empower Localities. Whenever possible the General Assembly should defer to localities regarding environmental concerns.

2)       Privatize the Energy Market. The state’s monopoly power over energy distorts the market, reducing competition and increasing costs to consumers.

3)       Energy Deregulation. Legislation creating energy regulatory bodies is 40 years old, and its original mission to bring energy to rural areas is obsolete. It’s time to loosen state regulations on energy providers.

Worst Ideas for 2010

1)       Mandating a Renewable Energy Portfolio. Legislation requiring electric utilities to expand the use of renewable energy resources threatens to cost jobs and raise consumer utility bills.

2)       Cap and Trade. This sweeping legislation now in Congress would create a system that caps CO₂ emissions at a politically acceptable level and creates a global marketplace to buy and sell allotted emissions levels. We estimate that the bill would cost South Carolina 18,965 jobs by 2020.

3)       More Subsidies for Hydrogen. Federal and state lawmakers persist in pushing hydrogen technology that experts agree is “one of the least efficient, most expensive ways to reduce greenhouse gases.”

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation. Copyright 2009. South Carolina Policy Council Education Foundation, 1323 Pendleton Street, Columbia, South Carolina 29201.