Virginia Report: Restructuring Has "No Discernible Benefit" for Customers

The Virginia legislature passed an electric utility restructuring act in 1999. In broad outline the Virginia restructuring law is similar to New York’s administrative restructuring, which was engineered by the New York PSC through agreements with each of the investor-owned electric utilities beginning in 1997, rather than by legislation.

A Virginia statute requires the Virginia State Corporations Commission (SCC), which regulates the state’s retail utilities, to report annually on the status of wholesale and retail competition. The 2006 Performance Review of Electric Power Markets states:

“The evidence suggests that, at least so far, no discernible benefit can be seen for customers in restructured states once the rate caps have expired. Increasingly the evidence is now beginning to suggest that prices for customers in restructured states may actually be increasing faster than for customers in states that did not restructure.”

The survey was conducted for the Virginia SCC by Dr. Kenneth Rose, Consultant and Senior Fellow at the Institute of Public Utilities at Michigan State University and Carl Meeusen, a Graduate Research Associate from Ohio State University. Their report sets out detailed comparisons of electricity prices in restructured and unrestructured states, based on publicly available data.

In addition to New York and Virginia, fourteen other states and the District of Columbia attempted to implement full wholesale and retail restructuring. No state has passed restructuring legislation since 2000, when major flaws began to become apparent. Six states that had passed restructuring laws have now either repealed them or delayed their implementation.

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