5.4. ERMUSR 05-20-2014 - Laserfiche WebLink

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Regulated Utilities and Unregulated Third Parties 2 Whether regulated locally or by the state, every electric utility in Minnesota is required to serve every customer in ' its service area and provide a quality level of service set _ through state standards. This means Minnesota is a"regu- _ lated" state regarding retail electric service. In the 1990s, w j many states, including Minnesota, debated whether to"de- #; .,,►�_,( 1, P - regulate," allowing electric customers to elect to purchase ; ` ? their retail energy from third-party providers, even though `'fir they would remain connected to their local utilities'power `; lines. Sixteen states chose to allow this, while seven others started down the deregulation path and stopped when they saw what was happening in other states (particularly Cali- fornia)-namely rate spikes,brown-outs and market manipulation by pseudo-utility financial speculators. This is why Minnesota, after a serious debate, wisely resisted efforts to allow unregulated third-party retail electricity sales. In recent years advocates for a range of energy businesses have .— Fes;• been pushing to allow unregulated �, " third-party entities to sell electric- ��` - nii, k ity to end-users and circumvent ; 6 `'� . \r ,; °'% the public interest protections i5I' ,� `�' ' '-/" . I r Ii i -1 inherent in our regulatory system. 1 1 X17' a M IE- Some would take payment for elec- '�!' P y PRO-COliN LLC i I 1 iii 1 til(,4 . f tricity that they would generate on .Uu. _ 'R'g - ;'' r'.:41 a customer's property—when they - ` r -','� ,- „• , r v .» - - �+ �.;It can generate it—while relying on °"` ITT ^ ' , if 'V il-' . the power lines, substations, gen- -! \ ''``\ -- ` V l.. • r r ' '�"' ib- eration purchases and operational 4- --- --. . 1 nt ,I�3 j �4 ,email and administrative expenditures -ry. . I I 1,9e I -i ,11:',,,i,' ra f l$ '=1 of the local utility in order to have - ,- , .4 .,2 the utility provide electric service whenever they,the third party, cannot. Other third parties seek to force utilities to"wheel"power across their power lines from distant sites for sale by the third party to the utility's own customers. In both cases, the unregulated third party makes use of investments made by and on behalf of utility customers, leading to reduced revenues for the utility even though it must still bear the cost of operating and maintaining the system for the customer to use when necessary.This places an additional financial burden on those customers who rely on the utility for all of their energy needs—and in a small municipal utility those cost shifts become very real. All of Minnesota's electric utilities have the responsibility to provide EE ` "° '" :::- customers with the amount and quality of electric service they need, , 4 . when they need it, at the most reasonable possible price. Utilities were given the exclusive right to serve in order to accomplish this v It enormous duty. The persistent pressure by non-regulated third-party A , business interests to sell electricity directly to Minnesotans poses a ! serious threat to Minnesota's energy regulatory framework and its --�' / ' energy future. It is important for legislators to recognize that the --� F_ ' `1 -jr ` growing number of proposals in favor of even such "small-scale" de- s ,�- regulation raises a specter from the past that ought to remain dead. - '•a 104