On June 1, the American Public Power Association (APPA) issued yet another report that “proves” wholesale competition in the electric industry has been a bad deal for electric consumers. This newest APPA report, “The Deregulation Penalty: Losses for Consumers and Gains for Sellers,” written by Edward Bodmer,2 purports to show that competitive electric generating companies have earned “excess profits” at the expense of retail consumers. Mr. Bodmer’s study compares the earnings of competitive generating companies with those of monopoly utilities, concluding that, because the former’s earnings are greater than the latter, electric consumers have suffered. This is the supposed “deregulation penalty” the report focuses on. In fact, no such penalty exists.
Retreading many of the same arguments that have been rejected by the Federal Energy Regulatory Commission (FERC) for well over a decade, the APPA report uses incorrect and incomplete data to retell the story that competition and choice are somehow bad for American consumers and that companies are over-earning at the expense of consumers.