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Electricity Provision of Energy Bill Would Hurt Consumers, Economy

July 29, 2003

Electricity Provision of Energy Bill Would Hurt Consumers, Economy


WASHINGTON, D.C. – If lawmakers approve a portion of the Senate energy bill dealing with electricity, consumers and the economy both will suffer from higher electricity costs and even less accountability from energy corporations and federal energy regulators, according to a Public Citizen analysis of the electricity language (click here to view) which the Senate debates this week.

As it stands, the electricity title proposed by Sen. Pete Domenici (R-N.M.) empowers many of the same energy companies that stole billions of dollars from American consumers to repeat the same games played during the West Coast energy crisis. Moreover, the push for further deregulation almost certainly would encourage a wave of mergers that would benefit energy superpowers like Southern Company, Entergy and American Electric Power (AEP).

“Senate lawmakers face a crucial decision: Do they listen to the voters and take the health of the economy into account? Or will $21 million worth of campaign contributions from corporate utilities do the talking?” said Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and Environment Program. “This bill is a compromise between energy corporations and city-run utilities. Consumers were left out.”

Central to Domenici’s electricity amendment is the repeal of the Public Utility Holding Company Act (PUHCA), which was designed to protect consumers by preventing multistate electricity companies from investing ratepayer money in risky schemes that do not contribute to the delivery of affordable and reliable energy. It also was intended to prevent a single company from controlling electricity, telecommunications, water and other essential services. Convergence stifles competition and consumer choice, and can lead to poor service and higher bills.

Repealing PUHCA’s strong rules will encourage these same utilities to replicate Enron’s complex corporate structure, making it easier for companies to hide debt from shareholders and raise prices for consumers. Repealing PUHCA therefore would result in the dominance of U.S. electricity markets by just a handful of mega-utilities that could use their market dominance to raise prices across the board. In repealing PUHCA, the amendment’s sponsors try to appease opponents by giving the government access to energy companies’ books and records and providing the Federal Energy Regulatory Commission (FERC) with merger review authority. However, this is a smokescreen.

“Consumers cannot wait years for government regulators to pour through the often-opaque accounting files of energy corporations,” Hauter said. “PUHCA’s tough rules prevent fraud from occurring in the first place. Giving access to records is a weak remedy after fraud has occurred.”