Senate Panel Continues Inquiry into Electricity'sw Future

Fortnightly Magazine - May 15 1996
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If the new rules of electric industry competition don't permit stranded-cost recovery, the credibility of the U.S. government would be seriously undermined. Or so an executive of one of the country's largest utilities told a Senate energy panel."We just have to keep in mind we incurred these costs based under what the rules were," said Jerry Jackson of Entergy Corp. "If the government is going to change those rules . . . but not [make] sure the past commitments were honored, we'd have a very serious issue in respect to the credibility of the United States."

Jackson was one of nine witnesses to testify before the Senate Committee on Energy and Natural Resources on March 28. Witnesses represented small business, independent power, public power, cooperatives, and medium and large utilities. The hearing was the second in a series of oversight hearings on competitive change in the electric power industry.

Although witnesses were asked to respond to

S. 1526 - a bill introduced by Sen. J. Bennett Johnston (D-LA), ranking Democrat on the committee - and

10 related questions, most of the debate focused on retail wheeling and stranded costs.

Like Jackson, Daniel Waters of the Southern California Public Power Authority said Congress must assume some responsibility for stranded costs. The 1989 Energy Policy Act prohibited the burning of natural gas in utility boilers, pushing utilities toward nuclear solutions, now stranded investment. Ironically, the low-cost competition today is natural gas-fired turbines.

"I can assure you we will all make mistakes, as we unravel the historic regulatory compact," Waters said. "Let's let those few states that have the most serious cost problems lead the way."

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