s Cherry Picking
"If we ignore history, we're doomed to repeat it. And what happened in the natural gas industry is precisely what will happen. The FERC authorized deregulation of the...
taxable debt or not competing outside their service area (em serves the public interest, Brooks said.
The committee was particularly interested in the testimony of David Fletcher, chair of the Bristol (Va.) Utilities Board. Bristol has decided not to renew its purchased power contract with the Tennessee Valley Authority. On January 1, Bristol will obtain wholesale power from Cinergy Corp. (See "Public Power in a Competitive Electricity Market," PUBLIC UTILITIES FORTNIGHTLY, July 1, p. 28.)
TVA is still trying to "pirate" Bristol's industrial customers, Fletcher told the committee, by offering to sell them firm power at 2 percent below any rate Bristol might offer. This behavior, Fletcher said, "could be motivated only by a desire to harass and penalize" the city and to discourage other TVA distributors from going to the marketplace for cheaper power. The TVA reportedly views it differently. Chair Craven Crowell told The Wall Street Journal, "They [Bristol, Va.] can leave, but they can't take our territory with them." To which Fletcher replies, "We consider Bristol's service area to be Bristol's territory (em not TVA's."
In addition, Fletcher said, TVA now is asking Bristol for $54 million in stranded costs "up-front," although there are no such provisions in their contract and no other wholesale customers are being asked to pay such costs. TVA's behavior, Fletcher said, "is very monopolistic and paternalistic."
Affordability: Business vs. Residential
Residential concerns were voiced by representatives of the American Association of Retired Persons, the National Grange and the Electric Consumers Alliance.
John McManus, a member of AARP's National Legislative Council, believes that individual states will be better able to provide a "guarantee of affordability" to residential consumers. "They're closer to the people," he said. He also voiced the fear that "while deregulation is almost always beneficial to big businesses, its impact on small consumers is less certain."
One of AARP's top priorities is that any federal legislation should "ensure that residential customers are among the first to benefit from competition." Industrial customers already have electricity prices that are half residential consumer rates, he said.
Chip Julin added that while commercial accounts do not get the same breaks that industrial customers do, aggregation services should help level the playing field for all classes, including residential customers.
Vann E. Prater, chair of the Electricity Consumers Resource Council and director for electricity affairs and procurement for Amoco Corp., represented industrial customers. ELCON supports a federal date-certain that will provide customer choice to all classes simultaneously. He also noted that stranded costs "can be an indication of surplus or obsolescent production capacity. Such assets are a drain on the economy." ELCON also supports reforming PUHCA and PURPA. As for the debate regarding public power issues, "While important, [it] should not delay the benefits of choice."
Electric Consumers' Alliance Executive Director Robert K. Johnson was blunt: "Consumers will win, and consumers will lose, as the electric industry is restructured." His written testimony included a 64-page study criticizing a report by the Citizens for a Sound Economy Foundation, entitled "Customer Choice, Consumer Value," which claims that competition would lead to