As electric restructuring rockets to the top of state public utility commission agendas, regulators find themselves pushed in every direction. Pushing the hardest, in most cases, are legislators,...
Murkowski's Senate Panel Hears Consumers Groups
Pocketbook issues, like all others, tend to split along political lines.
Meeting on June 12, Sen. Frank Murkowski (R-Alaska) and members of the Senate Energy and Natural Resources Committee focused for the first time on what customers really think about choosing their own energy vendor.
Nevertheless, despite the shift toward pocketbook issues, and away from so-called "inside-the-Beltway" concerns, the testimony came largely from organized consumer groups, and it appeared split down political lines: urban vs. rural, private vs. public, business vs. residential.
Jurisdictional topics came into play (em such as whether restructuring should fall under the federal or state governments (em but as committee member Sen. Dale Bumpers (D-Ark.) warned, speaking to those who have opposed a federal mandate, "We're past that point."
Customer Aggregation: Urban vs. Rural
Customer aggregation rose high on the priority list of several participants, including G.A. "Chip" Julin, president of the Building Owners and Managers Association International and chair of Morlin Management Corp.
The commercial real estate industry in the U.S. spends more than $20 billion annually on electricity, Julin said. One-third of a typical office building's operating expenses go to electricity. With 85 percent of office buildings owned by small businesses, he said, even a modest rate reduction of 10 percent would "significantly impact the bottom line [and] improve America's competitiveness," Julin said.
"That's why BOMA International has placed utility deregulation as the number one issue on commercial real estate's advocacy agenda for the 105th Congress."
"I can see the value of aggregation in cities, but how good will it be for 50 customers 50 miles apart?" asked Sen. Craig Thomas (R-Wyo.). "We're not sure aggregation will work universally, but it should be available universally," responded Julin.
Carol Everman, speaking for the National Grange, which represents 300,000 rural members, came down squarely against federally mandated retail wheeling. "Large wholesale power brokers have argued that they cannot deal with regulations that differ from state to state. They should try harder. Tax structures, land-use regulations and labor laws make each state unique. Indeed, every aspect of doing business differs from state to state. ... It is our hope," she continued, "that we could support some type of state-developed pattern or model for national retail wheeling legislation, but at this time there is no proposal we can support."
Local Finances: Public vs. Private
Joe Brooks, a member of the city council of Richmond, Va., appeared on behalf of the National League of Cities to "sound the alarm" for public power issues. He noted that for municipalities, deregulation could threaten preemption of local franchising, zoning and taxing authority. He urged Congress to "act soon to address the private use issue, [or] the unintended consequences would be that for millions of constituents ... the outcome of deregulation would be higher, not lower, prices."
Under current federal tax laws, Brooks explained, if 10 percent of a municipal utility's electricity, or $15 million worth, is sold outside its service area, then the municipality's bonds are no longer tax-exempt. Neither of the two options available to a muni system (em replacing existing debt with