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Electricity Deregulation Legislation Principles Fall Short

April 6, 2000

Electricity Deregulation Legislation Principles Fall Short

Statement of Charlie Higley, Research Director, Public Citizen’s Critical Mass Energy Project

Although the principles for?electricity deregulation?legislation released today by a coalition of utilities, power marketers and consumer groups are an improvement over the pending anti-consumer electricity deregulation bills (H.R. 2944 and S. 2098), they would not provide enough protection for electricity consumers, competitors, workers and the environment.

The principles fall short of separating companies that generate and sell electricity from those that own and control regulated transmission systems. As long as utility holding companies are permitted to own transmission systems and power plants and power marketing firms and non-utility businesses (such as appliance sale and repair shops), new competitors will not be able to enter wholesale or retail electricity markets, consumers will never see lower electricity prices, and non-utility businesses will continue facing unfair competition from companies that harvest profits from captive ratepayers.

The principles ignore the plight of utility workers. Federal legislation must keep electricity flowing and protect workplace safety by ensuring that utility workers receive appropriate training. Legislation should also ensure that workers will not lose their jobs or benefits as utilities engage in a frenzy of mergers and power plant sales.

Further, the principles fail to endorse policies embraced by most public interest organizations: a renewable portfolio standard (requiring a minimum amount of electricity sold to be from renewable sources); a public benefit fund; and mandatory reductions in air, land and water pollution from the electric power industry, the largest industrial polluter in the nation.

The need for effective legislation is growing. Despite electricity deregulation laws in about two dozen states, very few residential consumers are seeing lower electricity prices. Utilities have become unregulated monopolies that stifle competition and enter into new, non-utility businesses. Since 1990, more than 30 percent of the utility workforce has been laid off, which has led to more service interruptions because fewer workers are available to do needed maintenance and repairs. More pollution is spewing from the nation?s coal and nuclear power plants. We need a solid law, but if we follow these principles, we will not fully solve our problems.