10 Things You Didn't Know About Tom Ridge

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The long-standing love affair which a majority of Pennsylvanians have had with former Governor Tom Ridge is likely to come to a screeching halt for many of them in the next couple years
That’s when one of Ridge’s lurking gubernatorial legacies, a ticking time bomb, emerges after two decades from the shadows. A product of the law of unintended consequences, it’s the impending reversal of the deregulation of electrical rates throughout the commonwealth which Ridge sponsored and championed as governor in the mid-1990s.
The return to unregulated electricity rates will complete the triple whammy of energy consumer cost explosions and exacerbate the adverse economic impact which has followed the dramatic increases in gasoline and heating fuels over the past year.
Depending upon location within the state, electric rates are expected to jump anywhere from 12 percent to 72 percent in 2010 and 2011, with a statewide average of more than 40 percent.
That’s when the rate caps imposed by the Electricity Generation Customer Choice and Competition Act - signed into law by Ridge in 1996 after a robust campaign promoting it - will expire.
The catalyst for the concerns about a forthcoming crisis in the skyrocketing consumer cost of electricity is a study recently released by the Pennsylvania Public Utility Commission (PUC).
It found that if the rate caps were to come off today, electric rates in Pennsylvania would rise overnight by an average of 43 percent, and impose a calamitous burden on home, commercial and industry users. The spike in electric prices is expected to be highest in the western part of the state, where they look to rise by as much as 67 percent in Allegheny County, and 50 percent in northwestern Pa., according to the PUC study.
Some experts believe impending deregulation will precipitate a mass exodus of industry and commerce from Pennsylvania, cause thousands of small businesses throughout the commonwealth to fail, result in massive unemployment, and further impoverish low income residents, all which the 1996 deregulation act was designed, over-optimistically as it turns out, to forestall.
After the fall, the act will allow electricity producers to charge rates based upon their costs of production and delivery. Previously, they could not recover those costs through proportional rate increases because of the ceiling placed on rates by the 1996 act, signed by Ridge after a robust campaign hailing and promoting it.
But with the caps due to come off at staggered intervals throughout the state in 2010 and 2011, electricity producers will be able to charge rates which putatively reflect their costs of acquiring the fuels needed to generate electricity – primarily oil, natural gas and coal. Those costs have risen exponentially since the electric rate caps were first applied in 1997.
Normally, the powerful electricity-producing lobby would have been able to thwart passage of legislation in 1996 regulating and putting caps on electrical rates. But what gave deregulation its impetus in the mid-90s was a disarming Faustian bargain between the popular Ridge administration and the general assembly on one hand, and the electric industry on the other, the unintended consequences of which are only now beginning to appear.
It provided that in exchange for acquiescing to rate caps, the industry would be allowed by the state through the PUC to pass on and recover from consumers the costs of constructing new electrical generating plants, a practice previously disallowed.
Ridge’s rationale centered on the theory that lower electrical rates than those in other states would attract new industry to Pennsylvania, produce tens of thousand of new jobs, and give rank and file Pennsylvania users more affordable electricity.
In the first years following deregulation, Pennsylvania surpassed other states in electrical rate-lowering, ranking first in the nation. In a February 7, 2001 press release Ridge said: “Once again we were named the No. 1 state for electric deregulation. Why? We have plenty of juice…we’re plugged in. Customers have greater choices. And consumers and businesses have saved $3 billion. So if any companies in California are listening,” Ridge gloated, “come on over to Pennsylvania. We’ll leave the lights on for you.” Ridge said at the time deregulation “will create more than 36,000 new jobs in Pennsylvania by 2004.” That never happened.
Ridge’s theory was based on the optimistic premise that the capped rates would bring new electric-producing competitors into the state and lower rates overall through wider competition. The flaw in the theory was that it self-destructed.
Newcomers couldn’t compete in Pennsylvania with the big existing producers. Even with the rate caps, existing producers were able to generate healthy profits since deregulation went into effect 20 years ago because of the absence of new competition.
With the unshackling of the rate caps two years hence, they will make a killing of unprecedented proportions at the expense of consumers unless the legislature and the PUC enact and devise remedies to interdict them against what is expected to be a powerful lobbying effort by the industry to make sure the rate caps disappear forever.
How is retribution exacted from a former governor whose failed vision 20 years after the fact results in punitive consequences on an unprecedented scale for his onetime constituents? By elevating him, apparently, to one of the nation’s leading cabinet level positions and, possibly, to the second-highest office in the land.