Note: Text Only Example. This letter was sent to several organizations.

April 10, 1997

As I am sure you are aware, the Commerce Committee is examining the question of whether or not the Congress should enact legislation concerning the electricity industry. This is a complex policy area, and it is important to have as full an understanding of the facts as possible before the Committee reaches any decisions.

In order to gain a better understanding of the relevant issues, I would appreciate your answers to the following questions. To ensure these are received on a timely basis, please provide your response by May 9, 1997. Please feel free to skip a question if you do not have enough information to answer it. Also, please feel free to send any additional comments you may have on these issues.

1. How has the increased competition in wholesale electric markets affected consumers in your State to date?

2. What role has your office played in any state proceedings on retail competition? What position has your office taken on the issue of whether or not retail competition would benefit consumers and on the issue of whether or not federal legislation mandating adoption of retail competition by a date certain, or any other type of federal legislation, is needed? Do you believe there are substantial differences among the various states' consumer advocates, and why or why not?

3. Some proponents of federal legislation mandating that states adopt retail competition by a date certain argue that substantial numbers of large industrial customers recently have negotiated favorable rates with their public utility commissions. Such proponents have further argued that residential and small commercial consumers lack bargaining power to achieve similar rate reductions. Finally, these proponents argue that federal legislation is essential to ensure that smaller consumers are not economically disadvantaged relative to large industrial customers.

   a. Please indicate whether or not you agree with the three premises outlined above.

   b. In particular, please indicate whether you have reason to believe that large industrial customers are being favored in rate negotiations before public utility commissions relative to smaller commercial and residential customers. What type of state statutory direction generally governs such rate determinations? Historically, how have states balanced the interests of different customer classes? Is this changing?

   c. What position has your office taken in recent rate proceedings concerning large industrial customers' requests for rate reductions?

   d. In general, have consumer electricity prices in your State been rising, holding steady, or falling, and why?

4. What are the most difficult issues to resolve in connection with utilities' stranded costs? To the extent your State has adopted, or is considering adopting, retail competition, has there been an attempt to distinguish between costs which were prudently incurred and those which were not? If Congress were to enact legislation mandating that states adopt retail competition by a date certain, what, if any, provisions relating to stranded costs should be included? Is securitization a useful tool, and how would it affect different interests?

5. Some proponents of retail competition hold the view that all electricity resources should be sold at market prices and that state authority to regulate retail rates should be eliminated. Could such a policy result in rate increases for customers that currently receive the benefit of such low-cost resources? In a restructured electric utility industry, who should receive the benefits of these low-cost resources -- utility ratepayers, utility shareholders, or simply the highest bidder?

6. Recently there has been increased discussion of the need for Congress to enact "reciprocity" requirements barring retail sales of power by parties located in states which have not adopted retail competition to parties in states which have adopted retail competition.

   a. Do you have a position on this issue?

   b. Which interests would benefit from a federal reciprocity requirement, which would not, and why?

7. Does your State currently have adequate tools to protect the interests of low-income electricity consumers if Congress were to mandate retail competition by a date certain? If such legislation were enacted, do you have any recommendations as to how Congress should approach this important issue?

8. Do you have any concerns about reliability of service or the ability of the interstate transmission or local distribution systems to handle the transactions that would occur if retail competition became more prevalent?

9. Are rural and urban consumers in different positions with respect to their relative ability to bargain for competitive electricity prices? Are all consumers similarly situated in terms of aggregation?

10. Some proponents of retail competition have argued in favor of federal legislation requiring states to adopt retail competition regimes which include mandatory unbundling of those services currently provided by local distribution companies. What advantages and disadvantages might this pose for consumers? Do you have any recommendations?

11. There is a wide divergence of opinion as to whether or not the Public Utility Holding Company Act of 1935 (PUHCA) should be modified or repealed. In view of the recent merger trend, PUHCA's protections have significance for all states, whether or not they traditionally have been served by a registered holding company.

    a. Do you believe PUHCA is a significant impediment to competition, at the wholesale or retail level, or can "effective competition" be achieved regardless of whether Congress enacts changes to PUHCA?

    b. Do you believe Congress should modify or repeal PUHCA, why, and under what, if any, conditions?

    c. Should Congress enact legislation to modify the holding in Ohio Power v. FERC, 954 F.2d 779 (D.C.Cir. 1992)?

    I realize preparing a response to these questions will take time and effort on your part, and I appreciate your help in providing information to further my understanding of the important issues involved in the ongoing debate on restructuring the electric power industry. Should you have any questions, please contact Sue Sheridan, Minority Counsel, at (202) 226-3400. Your response should be sent to:

    The Honorable John D. Dingell, Ranking Member
    Commerce Committee Democratic Office
    564 Ford House Office Building
    U.S. House of Representatives
    Washington, D.C. 20515

    With every good wish.

    Sincerely,

    JOHN D. DINGELL
    RANKING MEMBER
    

    
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