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Consumer Groups Push to Re-Regulate Electricity

Consumer Groups Push to Re-Regulate Electricity

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

A new report, "Reconsidering Electricity Restructuring," was released Thursday in Washington, D.C., 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.

The sponsors of a failed 1998 anti-electricity deregulation ballot measure, Harvey Rosenfield and Douglas Heller, of the Foundation for Taxpayer and Consumer Rights in Santa Monica, CA, offered a six-point "reform" proposal that is aimed squarely at what the consumer activists allege are abuses by the state's investor-owned utilities, merchant power plant operators and state energy regulators.

Southern California Edison Co., one of the major architects of the state's 1996 electricity industry restructuring law, quickly reacted with a prepared statement calling the proposal "misguided" and one that "would hurt consumers and threaten the foundation of California's economic recovery."

"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."

"Deregulation of electricity (in California) was a disastrous mistake," said Rosenfield, who originally came to prominence when he helped win voter approval for California's 1988 insurance industry reforms. "It must be fixed to protect our health, safety, our economy and the environment. When we say fixed, we do not mean a superficial fix that protects politicians and the utility companies.

"Elected officials created this mess four years ago, and it is the job of Gov. Davis and the (state) legislature to fix it."

Some of the consumer advocates' six points are being made by other stakeholders, such as refunds to San Diego consumers who paid retail electricity rates three and four times greater this summer, but their call for a return to integrated resource planning, creation of a "state power authority," expropriation of existing private sector generating facilities and institution of a windfall profits tax are not so far being formally suggested by any of the state's other energy stakeholders.

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

(1) State measures to prevent consumer abuse.

(2) 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.

(3) Open up generation market through "demonopolization" and "deconcentration."

(4) Install effective demand-side management programs.

Richard Nemec, Los Angeles

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