Two Cato analysts suggest a return to the past-vertical integration, but now with no state regulators.
The defeat of the energy bill in...
unrestricted market, and are unlikely to accept that price signals alone can protect the environment.In particular, it is extremely unlikely that environmental groups will drop their demands for some form of priority for renewables.
Transmission Lines: EMF Is Still Out There
Few issues generate as much public debate as those related to transmission. Among the hot topics are health effects associated with EMF, the need for new projects, and environmental impacts.
The construction of new transmission lines during the '90s was slowed significantly by controversies over possible health effects from exposure to EMF associated with electric facilities. The EMF issue has been quiescent for the past few years for two reasons: (1) major reports--notably studies conducted by the National Research Council/National Academy of Sciences--appear to be creating a scientific consensus that exposure to EMF is not a problem; and (2) nobody has been building anything. Once utilities return to building facilities, the controversy likely will start anew.
Even though the science now suggests that EMF is not a health problem, EMF will remain a political problem. So long as power lines are ugly--and only engineers believe they are not--people will object, claiming their objections are based on concern about health effects. Health concerns are a far more potent political argument than aesthetics. The new scientific evidence may give local officials more backbone in the face of controversy. But some people will continue to be genuinely concerned about health effects, others will continue to exploit the issue for political advantage, and some local officials will genuinely or cynically embrace EMF as an issue.
Whether a new project is needed at all is always debated. People don't want to talk about alternative routes unless they're convinced the project is needed. In the past, state regulatory bodies provided a certificate of need. It is not clear whether that will continue. If the industry is really going to be put on a free-market basis, then the market may decide whether there is a need.
Applying this same market logic to transmission, state regulators conceivably could say that it is unnecessary to issue a certificate of need for transmission lines. The utility may be free simply to decide to invest its own money at its own risk. The good news is that that would reduce regulatory costs. The bad news is that the public, unused to letting market economics decide whether a transmission line is needed, may spend more time challenging project need. If the state bows out of determining project need, local land use plans will continue to be in force. Utilities siting lines soon may need to deal with a plethora of local entities, all of which have veto rights.
Environmental studies are a different matter. In most states requiring the preparation of environmental impact studies and reports, these requirements do not go away because of deregulation. Except in the rates and marketing arena, FERC and the state PUCs do not have the authority to remove most of the environmental regulations that require participation and provide public access to information.
Deregulation? It's No Excuse