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Restructuring: It's Not Unpatriotic Anymore
Consumer advocates, utility chiefs, regulators, and analysts offered conflicting visions of retail competition's future at NASUCA's 1996 Capitol Hill Conference.
The National Association of State Consumer Advocates ( NASUCA) conference, "Restructuring the Electric Industry: What Are the Costs and Benefits to Consumers?," was held on February 29 and March 1 in the Rayburn House Office Building. The event was co-sponsored by Rep. Dan Schaefer
(R-CO), chairman of the Energy & Power Subcommittee, but the congressman was conspicuously absent, apparently attending a committee hearing.
Conference speakers, however, spoke their minds and defended their positions on a topic now debated at public utility commissions (PUCs) in at least 37 states. William L. Massey of the Federal Energy Regulatory Commission (FERC), a keynote speaker, said the nation was undergoing a "celebration of competition" driven by customer choice.
"Why shouldn't customers get to choose their electric supply?" he said. Competition and choice could release innovation and entrepreneurial genius "in this somewhat stodgy and old-fashioned industry. How long would it have taken the U.S. Postal Service to create Express Mail without some competition from Federal Express?"
The economic stimulus from competition could be huge, Massey argued. Cash revenues from retail electric reach $260 billion a year in the United States (em more than the combined revenues of the natural gas, telecommunications, and airlines industries. Quoting Merrill Lynch, Massey noted that an aggressive national movement toward wholesale and retail competition could save consumers $31 billion annually.
That's an alluring prospect for policymakers and lawmakers.
Scott Hempling, a Silver Spring, MD, attorney and consumer advocate, spoke about generation, noting that while people say there will be competition in generation, not many suggest how it works. The first step, he said, is to remove entry barriers:
"I can't begin to tell you how many states have begun investigations by preparing models rather than analyzing entry barriers. How you take a model that you hope will be competitive and impose it on a market with a dozen entry barriers is beyond me."
Debate on electric restructuring has succeeded, Hempling said, in that "people are now allowed to challenge the system on intellectual grounds (em without being labeled unpatriotic. That's real progress."
He warned that the restructuring debate shouldn't take place isolated from the merger trend: "We're talking about changing the role of government or maintaining the role of government in this industry. Having discussions about restructuring while mergers are happening across the hall, and not linking the two, is an error."
Hempling also said that a phased-in approach for retail wheeling should favor residential, not industrial, users: "That's not a political move to get the votes, that's a move rooted in the reality.... We have the most to learn about treating residentials.... Maybe we better find out first whether we're going to do it for the most difficult people."
"The reality is we have a phase-in issue now where the big are going first," countered John Anderson, executive director of the Electricity Consumers Resource Council (ELCON). "If we can work together, maybe we can remedy these problems."
In response to Hempling's