FTC Probes Retail Power Deregulation Plans

At the request of Reps. W.J. "Billy" Tauzin (R-LA) and Joe Barton (R-TX), the Federal Trade Commission (FTC) last week said it would look into "possible jurisdictional limitations" on states' authority to design successful retail competition plans, and whether additional federal legislative or regulatory action is required.

While retail competition should provide customers with lower prices, a higher quality and greater variety of products/services and more innovation, this "may not develop instantaneously...after decades of pervasive regulation and local franchised monopolies," the agency said. "Moreover, the effectiveness of competition may be affected greatly by the rules that govern the operation of the market and that provide incentives to guide market participants' behavior."

The agency wants to know what's working in the states, what's not working and what needs to be fixed. It plans to issue a report that will discuss the advantages and disadvantages associated with different approaches to specific electric restructuring issues, as well as identify what additional federal legislative or regulatory actions may be needed.

The lawmakers requested the FTC review largely in response to the problems stemming from the deregulation of the California power markets, which has prompted several states to either delay or threaten to delay deregulation of their retail markets. The states include Nevada, Montana, West Virginia and Arkansas. Four other states --- Louisiana, Colorado, Alabama and Mississippi --- have decided that restructuring is not in the public interest.

Per the request of Barton and Tauzin, the FTC said it would update its July 2000 staff report, entitled "Competition and Consumer Perspectives on Electric Power Regulatory Reform." For the report, it is asking states to respond to a series of questions addressing the benefits and drawbacks of their retail power competition programs.

It poses a total of 37 questions that cover six categories --- history and overview of retail electricity program, consumer protection, retail supply, retail pricing, market structure and other issues. The questions can be found on the agency's web site at www.ftc.gov.

The agency said it would examine state plans that allow customers to choose their generation supplier, and those with unique approaches to retail competition. The states may include, but aren't limited to, Arizona, California, Illinois, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Texas, the FTC said. It noted it would work with individual states to understand the various features of their plans, and to collect information relevant to understanding the market reaction to a particular state's plan.

Comments are due at the FTC on April 3. Written comments should be submitted in both hard copy and in electronic form. Six hard copies of each submission should be addressed to Donald S. Clark, Office of the Secretary, FTC, 600 Pennsylvania Ave. NW, Washington D.C. 20580. The submissions should be captioned "V010003 - Comments Regarding Retail Electricity Competition." Electronic submissions may be sent to retailelectricity@ftc.gov.

For further information, contact Michael Wroblewski at (202) 326-2155 or at mwroblewski@ftc.gov, or John Hilke at (303) 844-3565 or at jhilke@ftc.gov.

Susan Parker

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