This is because the cost of such contracts may be passed-through to all ratepayers evenly. In effect, unless they are structured properly, long-term contracts will force small ratepayers to subsidize big industrial users of energy. The best approach would be to adopt the TURN plan for residential and small business ratepayers, and use the long term contracts to cover the needs of larger users. The D.C. deal may obligate the state to enter into the long-term contracts, purchasing electricity and selling it to the utilities. Assume that the state buys the electricity and is immediately repaid by the utilities.
Taxpayers are in effect making a short-term loan.
The utilities should be forced to pay interest for this service. However, the subsidy becomes a potentially huge bailout if the utilities are not required to repay the state immediately. The utilities could take the electricity, sell it to ratepayers, and use the proceeds to pay off their back bills, rather than repay the state. Taxpayers risk being left unpaid, especially if the utilities choose to declare bankruptcy later. Again, the details are crucial.