State gets good electric grade

David Krechevsky
Republican American
Feb 12, 2007

Florida firm ignored rates in giving B–

While many consumers, state legislators and government officials would probably give the state´s deregulated electricity market an F, a company that hopes to sell electricity in Connecticut gives the state´s market a B–minus.

Liberty Power, a Fort Lauderdale, Fla.–based energy retailer that sells electricity in four states and has applied for licenses in six others, including Connecticut, today released its “2007 Electric Choice Report Card” for small and mid–sized businesses. The report card grades the 20 states and the District of Columbia that offer competition to supply electricity.

The report graded four areas: the ability to compare prices; restrictions on shopping around; protection from cost overruns, and the regulatory climate. Electric rates — a volatile issue in Connecticut — were not graded.

“We tried to be very disciplined by looking at this from the small business perspective,” said Nelson Reyneri, vice president of governmental affairs and corporate communications for Liberty Power. “Not to discount prices, but they will fluctuate. We were more concerned about the ability to compare price and the restrictions on shopping.”

New York and Texas each received overall grades of A–minus to lead the report. Maine and Massachusetts were next with overall grades of B–plus. Montana and Nevada each received the lowest ratings, with overall grades of F.

Connecticut received a B–plus for its ability to compare prices, and A´s for its lack of restrictions on shopping and protection from cost overruns. But it received a D for its regulatory climate. That grade reflects the current discussion in the legislature on ways to help reduce soaring electric rates, which have risen nearly 30 percent over the past two years for customers of Connecticut Light & Power Co. and will rise about 50 percent this year for customers of United Illuminating.

“Connecticut has made good progress,” Reyneri said. “There are a lot of good elements of the market structure which small businesses would find favorable. But we are concerned about the regulatory climate.”

Reyneri said competitive retail electricity markets take time to develop. “We are concerned that legislators will make decisions that will impede progress,” he said.

Paul Ring, a governmental affairs analyst for Liberty Power, said uncertainty exists because there is no clear consensus at the state capitol.

“There are so many proposals,” Ring said. “There´s at least 50 bills dealing with electricity in some way.”

One idea being floated is to allow utilities to once again own power generating facilities, which they were forced to divest when the deregulation law took effect in 2000. Ring said that idea “exposes ratepayers to the risk of building new power plants, rather than having private investors assume the risk.

“From the legislative perspective, that would be the most damaging thing,” he said.

Reyneri said Liberty Power´s report card is intended to help small and mid–sized businesses better understand the marketplace so they can make informed decisions. Energy costs, he notes, amount to about 50 percent of what small and mid–sized businesses pay in rent.

“There is a need for education and transparency,” he said. “Many people running small businesses are unaware of or too busy to break down the cost to see what they´re paying for.”

Liberty Power serves more than 20,000 small and mid–sized businesses. It currently is licensed to operate in New York, Texas, Maryland and the District of Columbia, and is seeking licenses in Connecticut, Delaware, Massachusetts, California, New Jersey and Illinois.

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