New Legislation Lays Out Blueprint for Utility Deregulation; Requires Safeguards for Consumers and Environment

Oct. 12, 1998

New Legislation Lays Out Blueprint for Utility Deregulation; Requires Safeguards for Consumers and Environment

Consumer Advocates Applaud Bill Filed by Rep. Kucinich

WASHINGTON, D.C. — Legislation filed on Saturday by U.S. Rep. Dennis Kucinich (D-Ohio) establishes a federal blueprint for states that choose to deregulate electric utilities in the coming years. The bill, H.R. 4798, protects consumers against price-gouging, cost-shifting, increased pollution levels and interruptions in service, according to consumer and environmental advocates.

The bill is endorsed by Ratepayers for Affordable Green Electricity (RAGE), a nationwide coalition of 140 organizations, coordinated by Public Citizen, which earlier this year kicked off a grassroots campaign to counter the utility-dominated debate over deregulation.

“This legislation represents a giant step that Congress can take to ensure that consumers are not ripped off by the massive investor-owned utilities that are trying to shed government regulation but at the same time maintain their monopolistic hold on markets and consumers,” said Public Citizen President Joan Claybrook.

U.S. Sen. Paul Wellstone (D-Minn.) is expected to introduce companion legislation in the Senate sometime next year, when Congress will begin serious discussion on a range of complex issues raised by deregulation laws being passed by states across the country.

The legislation filed by Kucinich prohibits the ratepayer bailout of utilities that made unwise investments in nuclear power plants, many of which can?t compete with cheaper power sources in a deregulated electricity market.

“I look forward to working with Senator Wellstone, Ralph Nader, the hundreds of consumer and environmental groups working together in this task, and my colleagues in the House of Representatives,” Kucinich said.

The nuclear bailout has become a hallmark of most of the deregulation bills that have been approved and are being debated in states, and has sparked a grassroots rebellion as consumers realize the impact on their electric bills. In California, for example, opponents have successfully petitioned to put Proposition 9 on the November ballot to stop a state-mandated $10 billion bailout. Despite a massive industry campaign to defeat Proposition 9, polls show it is likely to be approved.

“The bailout is a huge financial windfall for investor-owned utilities that allows them to continue operating uneconomic plants, squeeze out competition from cleaner energy sources, purchase dirty coal-fired plants in the United States and the developing world, and create monster, unaccountable energy conglomerates,” said Wenonah Hauter, director of Public Citizen’s Critical Mass Energy Project and a founding member of RAGE.

In addition to stopping the anti-consumer nuclear industry bailout, the Kucinich bill saves consumers money by reducing regulation, facilitating community choice in electricity markets, improving the effectiveness of wholesale markets and eliminating holding company abuses.

Unlike some other proposed deregulation bills, Kucinich?s legislation does not require states to deregulate electricity markets. But where states do deregulate, the bill provides a safety net for consumers. Among other things, the legislation:

  • creates standards for high-quality, affordable electricity service;
  • provides funds for universal service, low-income, energy efficiency, renewable energy and worker retention/retraining programs;
  • enables consumers to use local governments to aggregate into more powerful buying groups;
  • requires all power plants to meet the same standards for pollution;
  • separates regulated companies and competitive companies, eliminating cross-subsidies, self-dealing and other abuses of holding companies;
  • limits market share of power plant owners;
  • protects consumer privacy.

“Utilities want to have their cake and eat it too, and they?re paying big bucks in campaign contributions to state legislators and congressmen to get their way,” Hauter said. “For consumers, the stakes are enormous. The average ratepayer is getting sold out by state legislatures across the country and this bill is the only vehicle for stopping this massive giveaway to utilities and their investors.”