Can the FERC Overcome Special Interest Politics?Jim Rossi

Fortnightly Magazine - October 15 1995
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The competitive transformations of the natural gas and telecommunications industries are over a decade in the making. By contrast, competition in the electricity industry is still emerging. Special interests have defeated many proposed competitive reforms. For example, in 1988 the FERC failed in its attempt to adopt regulations to encourage competitive bidding and independent power producers (IPPs).1 Similarly, decades of forceful industry opposition delayed open access in bulk-power markets. In 1992, Congress was able temporarily to transcend special interest politics in EPAct, adding enforceable open-access provisions to federal law.

Often, however, the benevolent hand of "competition" or "the market" becomes rhetoric motivated by special interest politics. Many large industrial users of electricity, for example, would support "competition" (em as long as smaller captive customers pay the costs of the generation facilities stranded by industrial shopping for low-cost power. IPPs favor "the market" (em as long as they can sell their power to whomever they choose and share none of the obligations of transmission networks traditionally borne by utilities. Even many vertically integrated electric utilities favor "competition" (em as long as regulators guarantee their monopoly franchises and rates that allow them to recover their costs.

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