EISA, NEM Battle Price Caps, Re-Regulation and Lack of Supply
More power generation, more competitive choices for customers
and less regulation are the keys to limiting power price increases,
according to the Electric Power Supply Association (EPSA), and the
National Energy Marketers Association (NEM), which are mounting
separate attempts to diffuse growing public outrage over energy
NEM is urging state public utility commissions (PUCs) and
Congress to help fight against the recent price volatility in
wholesale energy markets across the nation. NEM will hold an
Industry Leadership Roundtable Oct. 30-31, and EPSA will convene
a stakeholder summit on Aug. 29, "The Summer of 2000: Lessons
Learned during the Transition to Competition," to identify and
discuss possible solutions that would bring competitively priced
power to consumers.
"At our April meeting, [Energy] Secretary Richardson warned the
country about price spikes and possible shortages. Now that it has
come to pass, many politicians are surprised and are calling for
actions that could make matters worse," said Craig Goodman,
President of NEM.
Why are more generating facilities not being built in Southern
California and other energy-short areas? "It is because arbitrary
price caps, after-the-fact price revisions and other regulatory
interventions into the free market send misleading signals to
market participants," according to a position paper being
circulated by EPSA.
NEM says that Congress is responsible for "stripping down"
restructuring legislation in the electricity industry to the point
where there is no meaningful or constructive overhaul in sight. In
response to widespread price volatility, state legislatures, along
with PUCs, have established a series of regulations including price
freezes, roll-backs and discounts. Demand is increased due to lower
prices, but new plants are not being built to meet that demand. NEM
believes these actions have "exacerbated a shortfall in new power
"You can't legislate or regulate lower prices, block new power
plants from coming on line, and then expect prices to remain
stable," said Goodman. "Retail customers suffer when regulators
fail to provide for truly liquid wholesale markets. Either the
federal government needs to mandate price decontrol and grant FERC
the powers necessary to get the job done, or the states will have
to fully unbundle utility rate bases quickly and fairly so
consumers can start shopping for competitively priced energy with
shopping credits that reflect the full costs of serving retail
load. Under partial decontrol, consumers are forced to pay twice
for these services, whether they want them, or not."
Lynne H. Church, EPSA's president, said, "The events this summer
in San Diego clearly show that we have not reached full
competition. Much work needs to be done so consumers won't be faced
with unnecessary market volatility and higher prices for power.
Re-regulation isn't the answer, full competition is." In the
position paper, "Real Competition is the Solution, Not the
Problem," the group notes the lack of sufficient generating
capacity in many parts of the country, and blames in part,
excessive environmental and other local regulation which has
delayed siting and construction.
Also, EPSA maintains, in order to send the correct signals to
the market, new equipment and controls are needed so consumers can
cut their usage during peak periods to save on their electric
bills. Customers also should have the option to purchase energy
cost insurance as a risk management tool for small users.
EPSA's stakeholder summit will convene in Chicago. Invited are customer representatives,
consumer advocates, regulators, energy experts, regulated utility officials
and competitive power suppliers. The all day meeting will be held at the Radisson
Hotel, O'Hare near the Chicago airport. A copy of the EPSA position paper
can be found on the EPSA web site, www.epsa.org.
NEM's Roundtable will be held in The Woodlands, TX. NEM will extend invitations
to leaders in the energy information, services, technology and telecom-bandwith
industries to join NEM's Policy Development Team in discussing these issues.
More information can be obtained at NEM's web site, www.energymarketers.com.