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Oklahoma's Nickles Would Scrap Utility Franchises

June 22, 1998
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Oklahoma's Nickles Would Scrap Utility Franchises

Oklahoma's Republican Sen. Don Nickles has introduced a whole new approach to the electric restructuring debate, proposing a bill that would strip states of their authority to grant franchises to utilities and open local markets to competition.

The bill, the Electric Consumer Choice Act, would eliminate electric monopolies and prohibit undue discrimination against consumers purchasing electricity in interstate commerce. It also would provide for access to local distribution facilities and allow a state to impose reciprocity requirements on out-of-state utilities seeking to enter in-state markets.

The Nickles bill is based on the premise that the electric energy market is either in or affects interstate commerce, therefore state constraints violate the Commerce Clause of the Constitution. It would amend the Federal Power Act to eliminate the protection provided for state regulation that establishes, maintains, or enforces an exclusive right to sell electric energy or that unduly discriminates against any consumer who seeks to purchase electric energy in interstate commerce.

Proponents of eliminating local franchises claim it is the least intrusive way of accomplishing restructuring. Rather than imposing a new ISO bureaucracy, it would simply allow others such as independent power producers and microgenerators to compete. Clyde W. Crews of The Competitive Institute in Washington told a GasMart/Power audience earlier this year that IPPs and industrial users would have a profit incentive to cooperate with other industries such as cable and telephone which are making new connections with homes and businesses.

Changes going forward in these industries provide a "window of opportunity" for new means of electric power generation and distribution. In addition, just the threat of competition from third-party power delivery or distributed power would force utilities to lower prices and offer better service.

Ellen Beswick

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