Does the utility industry have the financial strength sufficient to meet the combined challenges of: (1) sharply increasing and highly volatile fuel and purchased-power costs; (2) significant...
Bipartisan Energy Politics? 105th Congress Takes on Electric Restructuring in Earnest
Johnston, whose Senate sting and Energy Policy Act experience have given him a 24-year perspective of energy, says the issues haven't even been thought out yet. ACE, which calls for a transition to a wholesale market with open-access transmission, is positioning itself as a friend of the residential consumer. To extend competition to the retail market, the group calls on federal legislators to clarify jurisdiction, provide for reciprocity and ensure that stranded costs and recovered, among other guarantees.
"That's the job we have, to educate the Congress on what the real interests are and what the real economics of this thing are," Johnston says. "It's a vast educational job.
"We think we know more about the answers that anybody since we're the big utilities."
One issue still has ACE stumped, the former senator admits: "We haven't solved the question of how to grant that residential consumer his fair share of the pie. We're dedicated to doing that ... because we're going to end up being his provider of last resort."
He says ACE will try to get cooperatives on its side, as they also are weighed down with stranded costs. Johnston has told industrial users that he doesn't think they'll get competition without taking care of stranded costs.
People in the industry ought to realize "competition is a good thing properly arrived at, and they simply cannot break the utilities in the process," the ACE strategist says. "I mean the country won't allow for that. It's nice to say, 'Well, they made some bad investments, so let them go down the drain.' But when you really examine it, first of all the investments were prudent at the time they made them. If you let them go down the drain, it has terrible economic effects, especially on residential consumers."
"Bankruptcy" is what he's implying. It's a word being used frequently by utilities these days, especially those faced with restructuring mandates in New Hampshire.
Murkowski, too, is concerned about bankruptcy utilities.
But Irwin A. "Sonny" Popowsky, president of the National Association of State Utility Consumer Advocates, insists that NASUCA members don't want stranded costs recovered 100 percent. He met with a Bumpers aide and DOE officials early in the year.
"Any federal legislation that mandates stranded-cost recovery is a bad deal for consumers, because I think that we don't need a federal mandate to have retail choice in the first place," says Popowsky. "I think we can convince Congress that's a bad idea. If the utilities are able to claim a constitutional or a federal statutory right to recover 100 percent of stranded costs, then there may not be much point in going forward. But I also believe that regional differences could derail it."
Some issues are a natural for a federal solution, such as those on the environmental front. "In Pennsylvania you can't pass a law that says you can't burn dirty coal in Ohio," Popowsky says.
"I think what Congress and the Administration are going to do is to outline key policy areas that need to be addressed to restructure