Ratepayer Transparency Act (Statewide Proposal)

The Ratepayer Transparency Act is a SMART ALEC original proposal for a recommended practice wherein states would adopt legislation to require utility companies and Electric Membership Corporations to include an insert into customers’ bills once a year that gives an update on the pay-down of major capital projects, such as nuclear power and coal plants, which are the basis for calculating the rates that customers pay for electricity.

(Model ordinance coming soon – check back for updates!) 

Here, for now, is the basic idea:

Energy consumers across the country pay an energy rate–a monetary amount per unit of electricity that they use–to their power company on their monthly bills.

But do consumers really understand what makes up their rate?   Clearly not.

Most consumers probably give little to no thought to their energy rate or even realize that there is a process called the Ratemaking Process where they are supposed to have input into their rate.

The rate is important because–whether consumers realize it or not–they and the other ratepayers are typically paying back the utility, typically over a thirty year period for each project, for every penny the utility spent on major capital projects like nuclear power plants and coal plants.

Utility companies across the country continue to ask legislatures and public service commissions for the approval of more construction of non-renewable energy producing plants, and yet we still have dirty plants on our collective credit card that is the energy rate paid by consumers

The Ratemaking Process is a stale, technical, bureaucratic process that unfolds in Public Service Commissions, where utility companies ask to be reimbursed for their capital expenses, specifically through the rate they charge customers for electricity.

The idea for the Ratepayer Transparency Act came from the Pottery Barn Credit Card with its twelve month zero percent financing option.

Let’s say you have a credit card that lets you pay off furniture items over twelve months at no interest, and you can buy several pieces of furniture at different times over the course of the year.

When you get your monthly statements, they will typically give you an update on each of your purchases, the original balance of each purchase, how much has been paid, and how much is left.

Well, that’s what we need for our energy rate!

We should be able to see, for example: we still have twelve years left on that nuclear plant, such that we could further ask, can we really afford another one?

The Ratepayer Transparency Act is about empowering consumers with information and really trying to educate them about their rate itself so that they might more effectively advocate for themselves by participating in the Ratemaking Process, perhaps bringing some humanity to the process; and so they may be more effective advocates for their energy needs and the types of public policies and private investments that will bring about increasingly renewable energy portfolios in our states.