Consumer Push to Re-Regulate Electricity

Several consumer groups last week took steps toward pushing for re-regulation nationally and in several states, denouncing efforts to deregulate the electricity industry as flawed.

A new report, "Reconsidering Electricity Restructuring," was released Thursday in Washington, DC, by the Consumer Federation of America (CFA) and Consumers Union (CU), pointing to three years of power price spikes and brownouts in various regional and state wholesale markets as an indication that supply and demand conditions are not right in the power business.

California's current struggles are cited by CFA and CU as having a dampening effect on efforts elsewhere in the nation to open up electricity markets.

In a separate take-it-or-leave-it gesture earlier last week, California consumer advocates on Nov. 28 handed the state's governor and state legislature an ultimatum to rollback electric industry restructuring and insert the state in an expanded role over the development and operation of power plants. If the elected officials fail to act, the consumer activists plan to put another measure on the statewide ballot in 2002 (see Daily GPI, Nov. 30).

"As California policymakers learned to their dismay, the interstate market is critical to electricity competition," said Mark Cooper, CFA's research director in Washington. "State officials who decide to deregulate before an effective interstate market exists must accept responsibility wherever a market failure occurs."

The CFA/CU report recommended four policy areas that need attention before electric deregulation can move forward:

  • State measures to prevent consumer abuse.
  • Assure regional transmission operators (RTO) or other independent grid operators are focused on the public interest and the issues of open access and reliability of the system.
  • Open up generation market through "demonopolization" and "deconcentration."
  • Install effective demand-side management programs.

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