The Louisiana Public Service Commission, the state agency which oversees the electric utilities operating in Louisiana such as Entergy, Southwestern Electric Power Company (SWEPCO) and Cleco Power, has publicly discussed the possibility of deregulating the state’s electric services. This summer, the regulatory agency will begin Phase One of this process and is seeking comments from the public.
Deregulation would mean that rather than limiting which companies can operate in the state and closely regulating their operations, additional power companies would be allowed to enter the state and sell electricity to businesses and residents.
As an organization speaking out for the interests of the Black business communities in Louisiana, and around the nation, my inclination is to be supportive of deregulation. After all, competition in a free market economy typically results in the best outcomes for customers. Competition drives innovation, price cuts and the incentive to offer better service.
But a closer examination of deregulation makes it clear that it does not create real competition for customers, but rather, offers customers a variety of bad options and more expensive electricity. For the many small black-owned and operated businesses in Louisiana, this would mean more expensive monthly electric bills.
In my mind, the most convincing piece of evidence for the business community that deregulation in Louisiana would be a mistake, is a recent Wall Street Journal article that found that customers in the United States that used these so-called competitive suppliers in deregulated states, paid $19.2 billion dollars more for electricity between the years 2010 and 2019, than if they had stuck with their regulated utilities.
My opposition to deregulation is not theoretical but comes from experience. Where my organization is located in Washington, DC, we have implemented deregulation. For most DC residents, hardly a week goes by without getting a letter from a competitive energy supplier urging us to switch to clean energy for a few dollars more. But, according to a recent filing with the Federal Trade Commission, these claims are nothing more than “greenwashing,” or suggesting environmental benefits that are misleading. So, some DC residents want clean energy, but instead get snookered.
DC’s neighbor to the north, Maryland, implemented deregulation in 1999, with the promise that competition would bring lower rates and better services. But that has not been the case by any stretch of the imagination. Data from a prominent ratepayer advocacy organization in Maryland, found that in 2021, families that signed up with competitive suppliers, often paid hundreds of dollars more for electricity than if they had purchased electricity from the local power company.
Deregulation supporters also have suggested only allowing the states’ largest industrial customers to participate in an open market. These deregulation advocates say this would protect ratepayers, both individuals and small- and medium-sized businesses from the risks associated with competitive supply. But this is a false promise.
Understand, the state’s largest industrial customers account for about half of all energy used in Louisiana. Using deregulation to let these corporations secure power on the energy markets would only result in them hiring sophisticated energy traders that would corner the market on the cheapest power, leaving the most expensive energy for average customers. Again, this would mean higher power bills for everyone in Louisiana, while allowing only the largest industrial customers to reduce their electricity costs.
In the Black community, where many families are supported by small businesses, a few hundred dollars more a year for power could cause real harm. I don’t see how in good conscience; anyone could be in favor of deregulation if protecting ratepayers and small businesses is a priority for the community.
If you’re business-minded, read the Wall Street Journal article about the impacts of deregulation and ask yourself if paying more for electricity is a good idea. In Louisiana, a state prone to hurricanes, every extra energy dollar should go toward better maintaining the power grid, so homes and companies can recover quicker from storms. But wasting money with competitive suppliers arising from the false promise of deregulation, is bad business.
Charles H. DeBow III is the President & CEO of the National Black Chamber of Commerce.
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