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Proposed Constitutional Amendment Would Bring Competition to Florida’s Electricity Market

August 26, 2019
By Vivian Jones

A proposed 2020 ballot measure would allow residents in Florida to choose their electricity provider in a competitive market.

Today, Floridians who don’t like their electricity provider cannot do anything about it, but a proposed 2020 ballot measure could change that.

Citizens for Energy Choices (CEC), a Florida political action group, is collecting signatures to place a constitutional amendment on the November 2020 ballot directing the Florida legislature to deregulate the state’s electricity market to allow retail price competition, empowering consumers to choose their electricity provider.

If CEC gathers enough qualified signatures to get the amendment on the ballot and it is adopted, Florida would become the first state in 20 years to restructure its electric power markets.

Ending Monopoly Power

Florida’s electric power system is currently a regulated monopoly. Four large electric companies provide power by region: Central Florida is served by Duke Energy, the east coast gets electricity from Florida Power and Light, the west coast is served by Tampa Electric, and the panhandle is served by Gulf Power.

Utility monopolies are often inefficient and slow to adopt innovations, says Kenny Stein, director of policy for the Institute for Energy Research.

“Under a regulated vertical monopoly, utilities are extremely conservative in what they build or do, because they are bound to regulators who are politically scared of change, and because their business model does not reward newer processes or efficiencies,” Stein said. “They make their money by building things and charging customers for the costs of construction plus a regulator-approved rate of return.

“There are no economic incentives for them to deliver electricity more cheaply, more efficiently, or in new, forward-looking ways,” said Stein.

Forcing the Legislature’s Hand

The proposed amendment would not directly change the structure of the state’s electricity market. Instead, it would direct the state legislature to pass laws establishing an open and competitive market by June 1, 2025.

As specified in the proposed amendment, such provisions would include promoting competition, protecting against service disconnections, prohibiting monopolies and exclusive franchises, establishing an independent market monitor, and limiting investor-owned electric utilities to construction, operation, and system repair.

CEC says the goal of the amendment is to make both wholesale and retail electricity markets fully competitive, providing customers with meaningful choices among a variety of competing electricity providers.

Saving Ratepayers Money

Introduction of competition should save Floridians money, CEC’s website states.

“Florida has the second-highest electricity usage in the country, so it can be a major expense for homes and businesses alike,” says CEC on its website. “But of America’s seven largest states, Florida is the only one that doesn’t allow consumers to choose their own electricity providers.”

CEC says residents and businesses in Florida could save more than $5 billion in energy costs each year if the measure is adopted. Those cost savings will accrue over time, says Stein.

“Initially, there will probably not be much noticeable change,” said Stein. “There might be slightly higher prices at the beginning of a transition just because there are costs to reorganizing the system.

“Longer-term, though, we would expect lower prices overall than under a vertical monopoly system, due to the downward pressure of consumer demand for lower prices and incentives for innovation which can lead to cheaper or more efficient processes,” said Stein.

Economic Ripple Effects

Florida’s weather conditions make electricity a critical part of people’s living expenses, says Tim Benson, a policy analyst at The Heartland Institute, which publishes Environment & Climate News.

“Because of the climate, Floridians use a lot of electricity, so it is important electricity prices remain as cheap as possible in the Sunshine State,” said Benson. “Consumer choice could help those prices remain cheap, as competition helps keep prices lower.

“Natural-gas customers of investor-owned utilities already have had the option of choosing their suppliers since 1996, and it’s saved them billions of dollars,” said Benson. “Florida should do the same for all electricity consumers, which would save people money, not just on their electricity bills but on all goods and services, since energy is also a driver of those costs.”

Hard Slog

Proponents of the market-opening amendment face an uphill climb.

Getting the initiative placed on the ballot requires 766,200 qualified signatures. The group must submit the petition to the Florida Division of Elections with the signatures by February 1, 2020.

As of mid-July, CEC had gathered more than 300,000 signatures.

Under Florida’s constitution, once an initiative reaches the ballot, it must be approved by at least 60 percent of the votes cast statewide for it to be adopted.

Multiple Legal Challenges

Powerful opponents of the proposed amendment have filed 13 legal briefs with the Florida Supreme Court, attempting to prevent the proposal from reaching the ballot.

Among those suing to block the proposed amendment are Attorney General Ashley Moody, Florida’s Senate and House of Representatives, the Florida Chamber of Commerce, and the state’s four major electric companies.

Moody, a Republican, argues the state Supreme Court should keep the proposal off the ballot because it is so complex that voters will not be able to understand its true meaning and ramifications.

Vivian E. Jones (vivianejones@aol.com) writes from Murfreesboro, Tennessee.