New realities demand new direction from utilities.
Electric Industry Splits Over National Choice Bill
Schaefer measure wins praise from UtiliCorp, Enron, and others, but EEI wants relief on stranded costs."The Electricity Consumers Power to Choose Act," introduced by Rep. Dan Schaefer (R-CO), while designed to bring competition to the electric industry, has definitely attracted controversy. The bill has evoked strong reactions from industry players as well as intense lobbying efforts on the part of promoters and detractors. Everyone, it seems, wants to put in their two cents as the bill makes its way across Capitol Hill. (Lack of time and election-year politics are expected to delay the bill's passage until next year.)
And in case industry debate over the merits of customer choice should prove dull, Schaefer added a twist (em a scheme to promote the use of renewable energy in electric generation. Borrowing from the Environmental Protection Agency's Acid Rain Control Program, the Schaefer bill would require power producers (regulated or not) to obtain "renewable energy credits" that could be traded much as emissions allowances. Power producers would submit these credits to the Federal Energy Regulatory Commission (FERC), based on the quantity of power they generate.
Introducing the bill at a press conference, Schaefer referred to a recent study by Citizens for a Sound Economy, which found that retail choice would cut monthly residential electric bills by at least 43 percent, adding $191 billion to the nation's gross domestic product. Schaefer, chairman of the House Commerce Subcommittee on Energy and Power, held a series of hearings on electricity deregulation over the last year. He has concluded that giving all retail consumers the right to choose among competitive providers of electricity can provide significant savings for even the smallest consumers.
Although the bill in its original form finds favor with a number of utilities (em including UtiliCorp United, Wisconsin Power & Light, Enron, Cinergy (em the Edison Electric Institute (EEI) has reservations. EEI president Tom Kuhn points out that 47 states and the District of Columbia already are examining and experimenting with varying approaches to retail competition, and that the bill would overrun current activities. Kuhn also says the bill would enable large customers to bypass the costs of low-income assistance programs, environmental programs, universal service, and stranded investment. To prevent such an uneven effect, Kuhn wants Congress to create a level playing field by eliminating tax and financing differences and preferences among utilities. Kuhn also finds the bill's stranded-cost provisions inadequate. Merely suggesting that states consider the issue, he argues, fails to assure stranded-cost recovery.
The PURPA Reform Group, a coalition dedicated to changing PURPA, also finds fault: "Chairman Schaefer ignores the federal government's responsibility for high-priced PURPA power and its corresponding obligation to ensure that utilities are not forced to bear these federally mandated costs," said Arthur Adelberg, PURPA Reform Group chairman and vice president of law and power supply at Central Maine Power. Adelberg called on Schaefer to halt mandatory PURPA power purchases this year, and to ensure recovery of costs incurred under PURPA.
Organized labor chimed in with a laundry list of problems. John J. Barry, president of the International Brotherhood