Recently, we posted a quiz on the myths of electric deregulation. The answers may surprise you, so we’ve recapped them here with some links to further reading so you can learn more.
1. Compared to states with regulated electricity markets, electric rates in deregulated states are on average:
a. 15% lower
b. 25% higher
c. The same
d. 5% higher
Consumers in states with deregulated electricity markets found themselves paying much higher rates with less reliability, often due to misleading claims by alternative energy providers. In some cases, consumer rates doubled under electric deregulation.
2. In the 10 years after electric deregulation in Texas, consumers paid a cumulative ______ due to higher rates.
a. $11 billion
b. $250 million
c. $17.5 billion
d. $895 million
A report from the Texas Coalition for Affordable Power shows that the average electric customer paid $3,000 in additional costs in the decade since electric deregulation. That’s a cumulative overpayment of $11 billion. Ouch!
3. Which state experienced a full-blown energy crisis after electric deregulation in the early 2000s—leading to large-scale rolling blackouts and spiking energy prices?
California experienced rolling blackouts after the state deregulated its electric market. In what became a high-profile case, Enron used artificial shortages to create a gap between supply and demand to inflate prices. These practices threated reliability and affordability and put many consumers at risk.
4. What have the results of electric deregulation been for Illinois?
a. Consumers paying double or triple their previous rates
b. Hundreds of workers losing their jobs
c. Collusion and price manipulation by energy marketers
d. All of the above
Consumers in Illinois saw their energy bills double and even triple after an initial rate freeze. Energy marketers engaged in collusion and price gouging to boost profits, and energy provider Exelon even tried to push legislation that would bail out their three nuclear plants and double rates for Illinois consumers. Exelon maintains that without this bailout, the plants would be forced to close, resulting in lost jobs and threatening reliability.
5. True or False: After electric deregulation hit Montana, the state lost control of most of its dams and the water rights of its major rivers to an out-of-state power company.
In the wake of deregulation in Montana, Montana Power Company sold off its energy holdings to invest in telecommunications. They sold their dams and water rights to a Pennsylvania company, which then held senior water rights for the state. The new company cut off water rights for irrigation in Montana during a severe drought.
Thanks to everyone who took our electric deregulation quiz! As you can see, many kinds of unintended results can occur because of electric deregulation—the majority of which hurt consumers and jeopardize energy reliability and affordability. That’s why AMP will continue to support policies that promote a well-regulated electric market to help Michigan take charge of its energy future.