Journalist Bob Woodward reported that George Tenet, when he was director of the Central Intelligence Agency, told President Bush that it was a "slam dunk" that Saddam Hussein possessed biological or chemical weapons of mass destruction. Will Rogers summed up this problem years before, saying, "It ain't what he doesn't know that scares me; it's what he knows for sure that just isn't so!"

		John Hanger is president and chief executive officer of Citizens for Pennsylvania's Future (PennFuture) and former member of the Pennsylvania Public Utility Commission.

The same could be said for the reporting and discussion of electricity restructuring. Due to terrible reporting by The New York Times, The Wall Street Journal and others, supposedly skyrocketing electric prices since the federal government passed deregulation in 1992 and Pennsylvania followed four years later is another example of something that many know for sure that just isn't so.

Instead of skyrocketing, residential electric prices actually are down by 13 to 47 percent in constant dollars from 1991 to 2006 for more than 5 million Pennsylvania customers in the seven-largest electric service territories in the commonwealth.

In the Duquesne Light territory, the average residential customer who was paying $93.48 per month for electricity in 1991 is now paying $54.30, a stunning 42 percent decrease. This bargain exists even though rate caps ended at Duquesne Light in 2004. Even after a transmission and distribution rate increase takes effect in 2007, Duquesne customers will be paying 32 percent less than in 1991.

The downward trend in Pennsylvania's electric prices is not just benefiting residential customers. In July 2006, for the first time in decades, the average price of electricity in Pennsylvania paid by all customer classes -- residential, commercial and industrial -- fell below the national average price of electricity.

And electric rates in Pennsylvania are going down when every other energy product -- oil, natural gas, gasoline and coal -- has indeed skyrocketed. Oil is up 81 percent in constant dollars since 1991. Natural gas piped by a utility is up 41 percent in constant dollars. Natural gas at the wellhead is up approximately 300 percent since 1991.

So what explains Pennsylvania's declining electric rates even as the cost of fuel used to make electricity has risen sharply?

Public policy success is the explanation, the keystones of which were two laws passed by the federal and state governments. The federal Energy Policy Act of 1992 mandated that electricity generation in the wholesale market be priced by competition and that electric transmission lines be opened to competitors that wished to move electricity from their power plants to a wholesale buyer of that power.

Pennsylvania followed in 1996 with the Electricity Generation Customer Choice and Competition Act, a law ending its electric utilities' legal monopoly on the retail sale of electric generation.

The electric industry responded to the new incentives by becoming much more efficient, reflecting the shift of risks and rewards of owning generation from ratepayers to plant owners.

The forces of this new competitive era aren't found in just electric bills. Pennsylvania's first major wind farm was built in 1999 by a new entrant to the marketplace, and today Pennsylvania has six operating wind farms, two more under construction, and more than 2,500 megawatts in the new generation queue at the PJM Interconnection, which coordinates electricity transmission across a multistate area. Pennsylvania is on the way to building enough wind power to supply more than 1 million homes -- 20 percent of the residential accounts in the state.

Existing power plants, including nuclear plants, also have increased their operating time and substantially reduced the time that they were not generating power -- all because owners get revenue when plants are operating and don't when they are not operating. Under traditional regulation, ratepayers paid for them whether they operated or not.

PJM has done its job well by policing the wholesale market to deter anti-competitive market activity and by ensuring reliability through a transmission planning process that has led to about $1 billion of transmission upgrades since just 1999.

Some have argued that rate caps -- and not the billions of dollars in new investment and more efficient operation -- explain the reduced prices of electricity in Pennsylvania. They argue that when the rate caps come off, electric prices will shoot so high as to shock customers. Yet, rate shock has been more myth than reality -- Duquesne Light residential customers will pay 32 percent less next year than they did in 1991 even though rate caps were lifted in 2004.

The reason that market pricing has led to lower prices is that monopoly regulation led to colossal waste and enormously expensive nuclear plants. For decades, utilities were rewarded by Wall Street for more investment and not less, as long as it was covered by ratepayers. In the old days, Wall Street thought building a $7 billion nuclear plant and getting it into rates was much better than spending $2 billion on a natural gas plant and helping consumers reduce their consumption.

All this may strike some as strange news because so many ideological voices have said repeatedly that competition was a scheme to make small customers pay more so the largest users could pay less. In reality, many of the largest users of electricity in Pennsylvania (and many other places) received incredibly low-priced electricity from their monopoly providers.

Rates below 3 cents per kilowatt-hour for these favored customers were not rare, while commercial customers and residential customers paid 8 cents, 10 cents, 12 cents or even 14 cents. In Pennsylvania, these 3-cent rates that were put in place prior to 1996 were capped and continued until the rate cap for the particular utility ended.

Now, in some cases, these industrial customers are hopping mad that their 3-cent regulatory bargain has gone away and is being replaced by 5-cent power. They run to media and politicians, screaming about a 60 percent increase, which in constant dollars is about a 15 percent increase. In essence, they expect 3-cent power or less to continue forever.

They are much like a consumer demanding $1 gasoline, something which would strike the media and others as unreasonable. Yet much of the reporting ignores this data and gets the big picture really, really wrong.

Why? The natures of the news business and the electric business provide an answer. The electric industry is incredibly complex, its practices arcane, and its price data opaque. Add to that basic problem the long periods of time that reform has been under way, and it becomes even more difficult to gather data.

Most reporters do not even express prices in constant dollars. That's not fatal to real understanding if one is comparing prices over a short period of time. But the failure to use constant dollars when looking at price trends over five years or 10 years or 15 years leads to horribly misleading conclusions.

Media also often focus on a handful of industrial customers that are losing the almost below-cost rates that were put in place more than a decade ago and now are experiencing higher prices. Their experience is real and should be reported, but it is not by any means the whole story.

Of course, the good news that electricity has become a bargain for the overwhelming number of customers -- and the only bargain in the energy marketplace -- is not news because it is good. Instead, reporters are assigned to write a story only when rates go up.

And when they do start writing, many reporters quickly find access to ideological opponents of competitive markets and proponents of public ownership or traditional rate regulation. Few voices that are knowledgeable and empirically driven are available to balance what is often outright spin.

Clearly, challenges remain, and it will be difficult to keep electricity prices in Pennsylvania disconnected from the price trends of other energy products. That's why smart policy is needed again; so is smart reporting.