Electric Restructuring: NOt by FERC AloneVito Stagliano

Fortnightly Magazine - October 15 1995
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The restructuring of electric utilities is fundamentally a matter of national policy (em not a regulatory issue. Regulators are ill-suited to make national policy because they are conditioned to act within the limits of authority specifically granted by legislation, rather than to seek a fresh statutory mandate in response to changed conditions. Policymakers must assess political, social, economic, technological, regional, and national factors to measure the need for reform. They must also decide what level of regulation is suitable.Regulators tend to justify action on the basis of legal precedent; too narrow a field to accommodate the probability that regulation itself may have contributed to the conditions that require reform. It is not coincidental, then, that each of the major reforms undertaken during the last two decades in the electric, natural gas, and petroleum sectors1 was crafted by policymakers in the Cabinet, usually without the involvement of regulators and often against their will.

The role of the FERC, in the practice and tradition of federal governance, is limited to that of policy implementer, not policymaker. Indeed, none of the statutes that grant regulatory authority over the electric power industry extends a policymaking role to the FERC: not the Federal Power Act; not PURPA; not EPAct. Those directly affected by the restructuring process should be concerned that the FERC currently finds itself the sole, uncontested agent in the field of federal electricity policy.

THE POLICY VACUUM

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