INDIANAPOLIS (AP) -
Rising electricity costs have put deregulation on the table in Indiana as
Gov. Mike Pence crafts an energy policy that’s due this summer.
the idea is only a topic of discussion right now, but the fact that the
state is even considering allowing consumers to choose their energy supplier
signals just how concerned Indiana leaders are about losing their edge when
"The willingness to
have even the level of conversation we’ve had so far . really speaks to the
understanding of how serious of an issue it is that our industrial
electricity rates are going up,” Dan Schmidt, Gov. Mike Pence’s energy
policy director, told the Indianapolis Business Journal.
Illinois approved deregulation in the 1990s, but blackouts in California in
2000 and 2001 caused by energy traders gaming the system slowed momentum.
Michigan are now considering opening their electricity markets in an effort
to remain competitive.
Phil O’Connor, a
former chairman of the Illinois Commerce Commission, noted that Indiana’s
industrial electric rates have risen even while demand is flat.
customers in Indiana paid an average 6.59 cents per kilowatt hour through
the first 11 months of 2013. Their counterparts in deregulated Illinois paid
5.75 cents per kilowatt hour, a nearly 15 percent difference.
Indiana had the
sixth-lowest industrial electric rate in 2003, but that has dropped to 27th
“There’s no way to
regain that price advantage with traditional regulation,” O’Connor said.
Tate & Lyle, which has two corn-refining plants in Lafayette, say
electricity prices are a concern as they weigh expansion plans.
Tate & Lyle’s
annual electric bill in Lafayette is in the tens of millions. Chris Olsen,
vice president of community and government affairs, said the company is
considering a big expansion but would face $2 million more in electricity
costs in Indiana compared with other locations.
“As we look at
projects, in virtually every economic-development factor except electricity
prices, Indiana is outstanding,” Olsen said.
Kerwin Olson of the
Citizens Action Coalition said deregulation might help increase the use of
wind and solar power. But he questioned whether it would benefit residents
and small businesses as much as it would industrial users, whose business
would be highly sought by energy suppliers.
president of the Indiana Energy Association, argued that Indiana’s rates are
still reasonable and that there’s no reason to rush to the open market
because electricity prices are rising nationwide.
“For the time
being, there’s a lot of pressure on states that are mostly coal-fired, but
that will abate,” he said. “We think that, over time, Indiana will look good
in the comparative analysis with other states.”
Even if Pence
includes deregulation in his energy plan, no changes can occur without
action by the General Assembly.