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Study Gives State Regulators' Views on Municipalization

Fortnightly Magazine - September 1 1996

A Terra Group study, State Regulators See New Role for Munis in Deregulated Electric Markets, finds that regulators increasingly see themselves as advocates for residential and small commercial customers, who likely will be hurt by deregulation. In most states, staff members believe investor-owned utilities (IOUs) will continue to serve the majority of retail customers, but many feel the transition to a competitive market inevitably will leave small customers with higher rates, creating new incentives for municipalization in specific regions or communities.

The study also says municipal leaders agree that public support is the key to a successful municipalization campaign. Increasingly, such campaigns are led by a core group of activists who build durable grassroots organizations that can sustain their efforts for months or years. In contrast to "traditional" municipalization efforts, they draw their support from a broad-based coalition of local interests, not from one or two industrial sponsors. Most highly visible, recent municipalization efforts (em e.g., Las Cruces, NM; Palm Springs, CA; Falls Church, VA (em clearly fit that mold. The study concludes that such trends are likely to accelerate, especially if wholesale competition ultimately raises prices for smaller consumers, or even if it delivers economic benefits equally.

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