Keeping the Power On, Rain or Shine

Quinn Beeson Oct 04, 2017

In the wake of several devastating natural disasters has come a greater appreciation for our ability to plug in wherever and whenever. As our focus is on those in need and without power in the wake of the recent hurricanes, as well as their families and countless volunteers, we can’t help but also think of our own families and communities here in Ohio. Although not faced with any major natural disasters recently, many Ohioans still worry about keeping the power on, as we face uncertain price hikes due to subsidies meant to ‘save’ several failing coal and nuclear power plants.

To ensure low electricity prices, Ohio must create a competitive power market by restructuring the state’s utility industry. This can happen if Ohio does two things. First, the major, regulated utilities need to sell their power plants to independent companies so that they don’t control the production and distribution of electricity. Second, Ohio needs to eliminate government subsidies to energy companies and rely on market-based pricing.

A wholly competitive energy market does not work when regulated utilities receive government handouts. Healthy competition keeps prices low and encourages innovation, meaning wider services and more choices for Ohioans. In addition, a functioning competitive market makes sure that companies suffer the consequences of their poor decisions, rather than making hardworking Ohioans foot the bill.

Bailing out energy companies that make bad business decisions by making us, the taxpayer, cover their costs would be no different than the government making you eat at a restaurant that had terrible service and was going out of business just to keep it open.

Subsidies are essentially bailouts for failing power plants, paid for by Ohioans rather than the companies themselves. Subsidies for various coal and nuclear power plants will lead to a rise in your utility bills and will increase the burden on struggling families and businesses in Ohio.

The good news is, Ohio doesn’t need these subsidies to succeed, just the opposite in fact. Our state is seeing new power plants being built that will generate power from natural gas, solar, and wind energy. The outlook for energy production in Ohio is increasingly sunny and politicians need to refrain from tampering with the market and endangering these new technologies.

When state or federal politicians intervene in the energy market by making tweaks such as requiring subsidies or burdensome regulation, they introduce more uncertainty and risk, which upsets the balance of the energy market, often shifting the costs into the laps of people like you.

There is large demand for power in today’s world, and the widespread power outages due to recent natural disasters remind us of that. The best way to provide enough stable, cheap electricity to meet the high demand in Ohio and elsewhere is to keep politics out of the market.

As my colleague Greg Lawson pointed out in testimony opposing subsidies and bailouts for utility companies, “As electricity rates have risen across the country, Ohio and other states with restructured wholesale markets have enjoyed cheaper electricity due to a more competitive market. The deregulation of Ohio’s market has increased competition and given consumers more choices and control over meeting their energy needs.”

If Ohio is going to continue to grow economically it needs to have cheap and reliable energy for its businesses and its citizens. To achieve this, policymakers need to deregulate the state’s energy markets, require regulated utilities to sell power plants so they don’t control the production and distribution of electricity, and they need to eliminate government subsidies and bailouts to energy companies which force Ohioans to pay for bad business decisions.

It is time for Ohio’s energy companies to compete fairly so we can keep the power on, rain or shine.

Quinn Beeson is the economic research analyst at The Buckeye Institute.