In a country attempting to embrace electricity restructuring,it’s no wonder that breakdowns like those experienced in Californiacan shake the foundation of programs 1,000 miles away. Not trueaccording to the Center for the Advancement of Energy Markets'(CAEM) latest Retail Energy Deregulation Index (RED Index) releasedlast week, which actually showed that a number of states arerecording progress.

The latest RED Index, which measures the progress states havemade in moving toward competitive deregulation, showed thatPennsylvania, New York and Maine rated highest with scores of 66,64, and 62 out of 100 respectively. The report also said six statesand the District of Columbia made significant improvements byscoring increases of more than 25 points between Jan. 1, 2000 andJan. 1, 2001. Maryland recorded a 49 point increase, the Districtof Columbia (47), Illinois (34), Texas (33), Ohio (33), Michigan(26) and Virginia (26).

On the RED Index scale, a score of 0 represents the traditionalset of utility policies or total monopoly, while a score of 100equates to complete and effective implementation of deregulation.

The average for all 50 states plus the District of Columbia grewfrom 11 in 1999 to 17 for 2000, but the median score in 2000 wassix, and the mode was zero, indicating that the national averagewas skewed by high scores from a handful of states. Pennsylvania,which has repeatedly scored the highest from 1997 to 2000, alsoposted a 40% decrease in electricity cost (revenue per kilowatthour), the largest in the nation. Surprisingly, despite its currentwoes, California came in second overall for the three-year periodwith a decrease of almost 24%.

“The California crisis has propelled energy restructuring to thenational stage,” said CAEM President Ken Malloy. “Everyone wants toknow what’s going on in the different states. The RED Index answersthat question. It’s the only tool that quantitatively comparesstates to one another on key attributes of restructuring.California shows us that energy restructuring does not begin or endwith state boundaries,” Malloy said. “This is an important messageto states not taking action on restructuring: coming soon to atheater near you will be impacts of restructuring from otherstates.”

CAEM issued its 2000 Red Carpet award in recognition of a personor organization that most furthers the cost of competition to thestate of Pennsylvania. Incidentally, the Washington, D.C.-basedthink tank awarded California Gov. Gray Davis its Red China award,for expressing the least confidence in market forces.

“In a year when California is spreading so much bad news aboutelectric deregulation, it is nice to have a good-news story likePennsylvania,” Mallory noted. “Pennsylvania shows that electriccompetition can work if done thoughtfully and carefully.”

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