Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Public Power: An Inexpensive Insurance Policy Against Consolidation

Fortnightly Magazine - September 1 1997

to complain about public power's exemption from meaningful state economic regulation. In a deregulated competitive marketplace environment, one wonders what sort of "economic jurisdiction" would be "meaningful."

Mr. Munson may be concerned for the consumers served by public power and rural cooperative systems in states like California and Pennsylvania, where customer choice applies only to the IOUs. The public power and co-ops may opt out if they choose. Speaking only for public power, the legislatures in those states apparently appreciate the value of local control, one fundamental precept of public power. As Mr. Munson observed in his article in the Progressive, such local control is important because it is "responsive to local communities rather than to absentee corporate interests."

Mr. Munson doesn't need to worry about public power's customers. In California, the Sacramento Municipal Utility District is beating the private power company schedule for the start of customer choice by six months. In other parts of the country, some public power systems are moving forward to provide customer choice in the absence of a state mandate. As a practical matter, no public power system could survive by denying its own customers a choice of suppliers when competing utilities are offering it.

As to public power's lobbying for exemptions from federal transmission-access legislation, Mr. Munson appears terribly confused. This provision of law was enacted primarily to address anti-competitive practices of the private utilities in denying transmission access. Public power did not argue, however, for an exemption from FERC jurisdiction when Congress was considering the Energy Policy Act in 1992 and none was provided. Every public power system with transmission is subject to a FERC order under that law.

True, public power systems are not automatically covered under the provisions of FERC Order No. 888. But bear in mind that Order No. 888 is premised on a FERC finding that the IOUs had provided transmission access on unduly discriminatory terms and conditions. This finding supported the generic approach to opening their transmission facilities. In any event, several public power systems with transmission have filed tariffs with FERC or belong to regional transmission groups that have filed. In addition, if a public power system seeks to take advantage of tariffs filed under that order, it must provide reciprocity. Mr. Munson is just simply wrong in asserting that reciprocity is not required.

Some Suggestions

If Mr. Munson and the Northeast-Midwest Institute are truly interested in taking steps to move from a regulated monopoly to a competitive electric marketplace, there are policies they might pursue that will remove impediments to competition and provide benefits to consumers. For example:

• Advocate repeal of restrictive federal and state laws and other policies that make it unduly difficult for municipalities to take over provision of electric service for their citizens;

• Challenge securitization proposals to finance retail stranded costs that will burden customers for decades to come;

• Oppose the secret rate deals that private utilities strike with industrial customers to the disadvantage of residential and commercial customers and to the detriment of an open and competitive marketplace;

• Challenge the excessive transmission charges