By Kerwin Olson | Posted: Sunday, March 27, 2011 12:00 am
Businesses, consumers and local governments, be warned! There is a piece of legislation at the Indiana Statehouse that will cause you to lose sleep at night.
Senate Bill 251, which passed the Senate, is nothing more than a money grab by the Indiana Energy Association and the monopoly utilities they represent. Indeed, this piece of legislation promises to lead to confiscatory utility rates, to the detriment of Indiana's economy, and will flip the regulatory construct on its head.
Let's not forget, Indiana's electric utilities are state-franchised monopolies. They are protected from competition and insulated from risk. In exchange, they agree to government regulation. The primary function of that regulation is to serve as competition in the absence thereof.
SB 251 essentially turns the Indiana Utility Regulatory Commission into a rubber stamp and hands the utilities the proverbial blank check, ultimately stifling competition with the intent of protecting and even enhancing the profits of monopolies.
As a result, the ability of Hoosier small businesses and large industries to remain competitive will be jeopardized as significant increases in the cost of energy will have to be passed through the price of their products and services or, worse yet, through reductions in payroll or even relocation of their business.
In addition, already struggling school corporations and municipalities will be forced to make even deeper cuts to education, essential infrastructure needs and public safety just to ensure these monopolies satisfy their insatiable appetite for ratepayer dollars, regardless of the cost to society.
SB 251 also defies market economics. A free market is defined at its core by having a willing buyer and a willing seller. Ratepayers held captive by design are anything but willing and deserve the protections guaranteed them by law.
The market also teaches us that profit is the reward for risk. SB 251 not only shifts all business risk onto captive ratepayers but also instructs the IURC to reward these monopolies extra profit to carry out their high-risk, excessively expensive business plans. Those assuming the risk should reap the benefit and not get saddled with exorbitant and unjust rate increases to pad the pockets of monopolies.
Let's hope Speaker Brian Bosma and the House of Representatives recognize SB 251 for what it is and instead work on energy policy and regulatory reform that will invite competition and protect Hoosier households and businesses from the greed of monopolies.
Kerwin Olson is program director of the Citizens Action Coalition. The opinion expressed in this column is the writer's and not necessarily that of The Times.