Municipal Power Aggregation: Power to the People or Revenue Ruse?

(Image: SecretDisc via Wikimedia Commons)

“After all, what fun is there to hold a political office if people are allowed to largely manage their own lives?”

Since the deregulation of electric and natural gas markets, the number of electric and gas suppliers has mushroomed giving consumers a competitive marketplace to shop for the lowest power rates available. The result has been that savvy consumers have saved hundreds of dollars annually on their power bills.

It would seem the next logical step is for consumers to band together and buy their power in bulk; further reducing their power bills. A natural mechanism for this to happen is through a local government entity.

In Ohio, many communities have already authorized, if not actually implemented, aggregation plans. In 2003, citizens of my hometown of Beavercreek, Ohio, voted for the city to look into aggregation. However, like many other cities, there has not been an active effort to finalize and implement a plan. Meanwhile, Greene County is looking into its own county wide aggregation program and attempting to solicit support from county communities, including Beavercreek.

Proponents of aggregation from Ohio and other states claim many communities have saved their citizens hundreds of dollars annually when power was bought in bulk. So what is there not to like about this approach? Plenty.

Interested consumers can look here or search other websites for details. In summary, the main reasons to oppose municipal power aggregation are:

1. Negotiations for power aggregation are usually through highly-paid energy brokers who earn big commissions getting their clients to enter complex, multi-year contracts with companies often owned by the utilities themselves. The end result is that out of the hundreds of energy distribution companies, only a handful are usually chosen. This destroys the whole reason for deregulation in the first place; that is, to create a large pool of competitors. One can view aggregation as a roundabout way for larger energy companies to bypass deregulation competition.

2. With less competition, smaller energy companies suffer and when small businesses suffer, we all suffer.

3. Rates are not always the lowest available. A large number of communities end up paying higher rates then before aggregation.

4. In aggregated communities, your personal energy usage can be accessible by government agencies. This sets the stage for further regulation, higher prices, and penalties for usage not deemed “appropriate” by oversight agencies; for example a user who might consume energy above some community standard.  In fact, when aggregated rates rise, you can bet that robust, “creative efficiency measures” will be implemented to try to lower rates.

5. You must actively “opt out” if you do not want to participate in the program, instead of making people who want to participate “opt in.” Since your elected officials would want as many people under their control, this process will probably entail bureaucratic forms and red tape and a burden on your freedom of choice.

6. Finally, and this may be the real reason why politicians are so eager to help us save money, many local governments hide management fees in the energy costs, using these fees as a hidden revenue source that will also eventually be wasted. This is just another hidden tax. If governments need money, let them justify it and use standard tax methods to collect revenues based on voter approval; such as levies. Don’t be fooled by the guise of “good intentions” as a cover story; with politicians, you have to follow the money.

Power aggregation is another excuse for governments to go beyond their basic and legitimate infrastructure responsibilities. In the case of Beavercreek, our city government was convinced by golf consultants to finance a municipal golf course that would bring in revenue and generate business. Instead, the course has cost taxpayers over $1M per year since its opening in the late 90s and will continue to do so for the long term.

[RELATED on OCR: “Golf and Taxes”]

The nearby city of Huber Heights, Ohio, is learning the hard way that the road to high taxation is paved with good intentions when their city government financed several ill-advised business ventures meant to bring in revenue and enhance the quality of life of the community.

[RELATED on OCR: “Parks and Wreck: Memory Thieves Strike Again in SW Ohio”]

These cities are not unique, but there are too many other examples to include here; especially cities that have spent tremendous amounts of taxpayer dollars to back failed private sporting and entertainment enterprises. However, sometimes these government ventures are quite bizarre. The Cannabis Corner in North Bonneville, Washington, became the first government-owned marijuana shop in an attempt to increase city revenues.

Taxpayers cannot continue to give elected officials the “get out of jail for good intentions” card.  We expect doctors, lawyers, teachers, and other professionals to know their proper limits, so why don’t we expect that from our elected officials?

In a few areas, we accept government inefficiencies as a necessary evil. But in the end, it comes down to elected officials understanding the proper functions of government at the local, state, and federal levels. But it’s also up to us to limit government, because we can’t always expect elected officials to limit themselves. After all, what fun is there to hold a political office if people are allowed to largely manage their own lives?

It is the nature of government that promises made to convince you to support a specific plan will be broken in the future. Cost reduction goals made to fool you into thinking a scheme will save you money will not be achieved. And campaign slogans created to persuade you to forget the past and look to the future are just trying to hide the fact that the past is a pretty good indicator of the future.

Finally, I’ll leave you with this. Deregulation is one of the few times power shifts from government back to you. Why would you surrender that power back so quickly for promises that will be broken and savings paid in fool’s gold?

tony-corvo-FC

Tony Corvo is a retired Air Force Lieutenant Colonel with a Ph.D. in physics. He is active in local Beavercreek, Ohio politics and is the author of All Politics is Loco: Musings from the Conservative Next Door. He and his wife have two grown daughters. He writes extensively on local issues. Many of his recent articles can be found at taxbusters.wordpress.com/author/phdmc2.

Permission to reprint or otherwise distribute, in whole or in part, with express attribution to Ohio Conservative Review or OhioConservativeReview.com is granted.

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